Newbuilding orders scale back on international shipping fair
Wednesday, 13 June 2012 | 00:00
Shipyards around the world were scrambling for newbuilding orders during these past few days, when the international focus of attention was Hellas, hosting the biannual international fair of Posidonia, which traditionally draws most major shipyards. According to the latest report from Clarkson Hellas, "the newbuilding market has been a little quiet this week with both owners and yards alike journeying to Athens for this year’s Posidonia. Historically the event has offered an excellent opportunity for both the yards and owners to meet and finalise discussions and has, in the past, often led to numerous contracts being signed. However, in a pattern reminiscent of 2012 so far, the volume of activity has certainly been lower than previous years, though we have still seen orders placed in the Tanker, Dry and Gas sectors.
With the summer holiday period now looming on the not too distant horizon, attention will begin to shift to how the market will evolve in the second half of the year. Within China especially, the excess supply of capacity along with the continued limited demand, will most likely sustain the recent downward pressure on pricing. The hope must remain for the yards that not only will the global economy begin to pick up again, but also, on a purely shipping basis, that the extensive design development work carried out throughout 2012 will begin to reap benefits as the year progresses" said Clarkson Hellas.
In a similar report, Piraeus-based shipbroker Golden Destiny mentioned that "shipyards are struggling to survive with South Korean shipbuilders being in the frontline by winning the biggest share of newbuilding activity this year among Japanese and Chinese yards. IHS Fairplay data showed that South Korean shipbuilders won 4,73 million dwt of new orders in the first quarter of 2012, while Chinese builders had 4,35 million dwt and Japanese 2,8 million dwt. In Europe, Germany’s P+S Werften, one of the big few yards left in the country, is under pressure to agree on EUR 110million ($137,5 million) in cost cuts and debt relief to assure another EUR 182 million from the federal and state budgets in an emergency aid. Furthermore, STX France has extended short time working during summer, as the unit of South Korea’s STX is facing falling volume of business. Union leaders at the French yard said that they have been told that existing short time working will be prolonged this summer with 12,700 days of lay-off planned for July and August. From the end of May, newbuilding business keeps its low track with no more than 10 fresh contracts being reported in the last two weeks as the imbalance in the freight markets persists and the oversupply issue hunters the prosperity of investors" said Golden Destiny.
It continued by mentioning that "in the dry bulk carrier sector, the activity remains subdued as the BDI hovers again below the psychological barrier of 1,000 points mark, while some new deals came to light in the tanker and gas tanker segment. Offshore newbuilding projects are still in the preference of investors with Daewoo Shipbuilding and Marine Engineering of South Korea receiving its first order for LNG FPSO at a value of 909.8Bn won ($777 million). The project will be built for Malaysia’s Petronas for delivery in June 2015 and is about 300m in length, 60m in width and can store up to 180,000 cubic meters of LNG 20,000 cubic meters of liquefied carbonized hydrogen condesates".
Overall, the week closed with 14 fresh orders reported worldwide at a total deadweight of 292,000 tons, posting a 100% week-on-week increase due to a 75% increase in the offshore newbuilding activity. This week’s total newbuilding business is down by 30% from similar week’s closing in 2011, when 20 fresh orders had been reported and containers were grasping the lion share by recording 6 newbuilding contracts. In terms of invested capital, the total amount of money invested is estimated at region $1,255 billion with 57% of the total number of orders being reported at an undisclosed contract price. The offshore segment appears the most overweight by holding 80% of this week’s total amount of money invested due to the high valued LNG FPSO contract won by DSME of South Korea.
Golden Destiny added that "in the tanker segment, Norwegian Frontline following its previous order placed in the aframax segment for four units of 115,000dwt in Chinese yard, Guangzhou Longxue, it has now confirmed a LPG contract for up to six 82,000 cu.m units from Jiangnan Shipyard Group at a price below $70 mil each. Frontline’s newbuilding investments are being justified by its completion of a $210 million private placement with an agreement to acquire a total of 16 firm newbuilding contracts and eight fixed price optional contracts in the crude and product markets. In the MR tanker sector, private equity Alterna Capital of USA has doubled its existing orderbook by exercising its option from an earlier order placed in April for two more 50,000dwt units at STX Jinhae for delivery in 2014.
In the container segment, newbuilding activity has been dwindled significantly from last year’s levels with Japanese shipbuilders facing strong competition from Chinese and South Korean yards. An interesting box ship alliance was disclosed this week among Japanese shipbuilders Mitsubish HI and Imabari Shipbuilding to collaborate on box ship technology. The groups said: “Mitsubish HI and Imabari Shipbuilding will become capable of flexibly accommodating bulk orders, construction of multiple ships of the same design, thus strengthening and expanding their respective business for high value added container carriers.” Both yards believe that their strategy is viable because lines are increasingly moving towards ultra large container ships that offer lower slot costs. The three year collaboration agreement encompasses all box carriers of all sizes and propulsion systems. The yards will consider the appropriate ship type, propulsion system and other technological features. In the liner segment, state-owned China’s Huanghai Shipbuilding is setting a shipowing arm and sources suggest that is going to order a 30,000dwt multipurpose vessel at a price in the region of $30 mil for its new outfit. Furthermore, China’s Jinhai Heavy Industries is said to have won an order for four 28,000 dwt multipurpose units from a domestic owner for delivery in 2014 at an undisclosed contract price, while the order is at the stage of letter of intent" concluded Golden Destiny.
Nikos Roussanoglou, Hellenic Shipping News Worldwide