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Despite huge orderbook, newbuilding ordering activity picks up last week

Wednesday, 08 February 2012 | 00:00
Despite the record numbers of deliveries during 2010 and 2011 and a similar pattern expected to unfold during 2012 as well, thus leading freight rates to extreme lows or even negative levels, as experienced this week in an extraordinary case, involving Glencore, ship owners appear to have returned to shipyards for a series of new deals, which were put on hold as a result of both the Korean and Chinese markets being on holidays for the most part of January. According to Clarkson Hellas’ latest weekly report, «with both Korean and Chinese shipyards returning to work post Lunar New Year – it will be interesting to see how marketing approaches unfold. With reports of new business being negotiated and concluded the newbuilding market continues to maintain a relative level of activity, against what is becoming an increasingly strained macro environment.
With Dry rates now having dropped to some of the lowest levels, post Lehman, as well as an increased strain on the European debt market making financing both existing and new orders increasingly challenging, it is certainly a tough environment for owners and shipyards alike.
Nevertheless, this is not to say that we have reached a stalemate in the market, and it is likely that
necessity from the shipyards perspective will drive buying sentiment. With yards in Korea, China and Japan all facing an exposure to 2013 – it is likely that they will be forced to offer competitive pockets of pricing to try and catalyse buying interest. It is also becoming increasingly evident, that those who remain relatively cash rich and there to take a long term view and position in shipping, remain poised to take advantage of these opportunities – the question looms as to how sustainable this will be from both a supply and demand perspective” said Clarkson Hellas.
It went on to conclude by saying that “the other piece of interesting news this week is the merger announcement between Universal and I.H.I. Shipbuilding. Whilst this has been in discussion for some 4 years now – it is interesting to see this come to fruition in what is becoming an ever more challenging environment for Japanese shipyards – Consolidation in broad terms is certainly a feasible path for the Japanese shipyards to embark on and it remains to be seen if the Universal / IHI merger may an indicator of things to come” said the shipbroker.
In a separate report, Golden Destiny said that “the week closed with little to comment on the newbuilding business as the slump of the freight markets, with the BDI falling to historical lows since 1986, has immobilized the placement of new contracts. Only 10 orders had been reported this week, 44% down from previous week, with the offshore segment attracting most of the volume of newbuilding transactions at a total invested capital of about $197 mil tons. At a similar week in 2011, 18 newbuilding transactions had been reported with containers being protagonists, while in the bulk carrier and tanker segments 2 and 3 new units had been reported respectively” said the Piraeus-based shipbroker.
It went on to report that “in the bulk carrier segment, two 35,000 dwt handysize units are said to have been placed by Russian owned, but Belgium registered, Pola Shipping, at China’s Qingshan Shipyard for delivery during the second half of 2013. No newbuilding price has been revealed, but sources are suggesting that Chinese yards are currently seeking $22-$23 mil for such ships.
In the tanker segment, U.S. listed Top Ship is said to have placed an order for two 51,000dwt MR product tankers at a newbuilding price between $31,5mil and $33mil each, with an option for two more units, at STX Offshore & Shipbuilding (Dalian), but sources reveal that the contract is not fresh. Top Ships is said to have signed the order at the end of last year, but the deal just came to the light. Finally, in the offshore segment, notable order has been the placement of six anchor handling tug supply vessels by Shipping Corporation of India at ABG shipyard for delivery during 4/2013-2/2014 at a price of $ 16.83 mil each” said Golden Destiny.
Meanwhile, in the equally interesting demolition market, the shipbroker’s report said that “rates have shown an improvement with India leading the market and Bangladesh trying to compete. The recovery of the Indian rupee against dollar has pushed the demo rates upwards urging owners to remove their overaged fleet from the current oversupplied market, mainly in dry bulk and tanker segments. Prices for dry vessels are edging to $500/ldt with China appearing very week from Chinese New Year holidays and Bangladesh still trying to resolve its import tax issue. Rates for wet units are even more attractive, xs $500/ldt, and the freight market fundamentals call for more intense scrapping activity, for vessels that are less than 25yrs old, following Japan’s Mitsui Osk Line decision to proceed with further crude carrier vessel disposals. The week ended with 21 vessels reported to have been headed to the scrap yards of total deadweight 1,111,794 tons. In terms of the reported number of transactions, the demolition activity has been marked with a 40% week-on-week increase, due to 100% and 40% higher volume of demolition transactions in the bulk carrier and tanker segment respectively, whereas there has been a 12.4% rise regarding the total deadweight sent for scrap. In terms of scrap rates, the highest scrap rate has been achieved this week in the bulk carrier segment by Pakistan for a panamax unit built 1984 with lightweight of 11,802tons at $515/ldt. Tankers and bulk carriers have grasped the lion share of this week’s total demotion activity, 29% and 33% respectively, with India winning 38% of the activity. At a similar week in 2011, demolition activity was down by 33% from the current levels, in terms of the reported number of transactions, 12 vessels had been reported for scrap of total deadweight 578,898 tons with bulk carriers grasping 50% of the total number of vessels sent for disposal. India and Pakistan had been offering $465-$470/ldt for dry and $500/ldt for wet cargo, while Bangladesh market had been inactive from the demolition scene” concluded Golden Destiny.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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