Ship owners looking for more investment opportunities in newbuilding market
Tuesday, 06 March 2012 | 00:00
It may have been argued over and over that the more newbuilding orders are placed the longer it will take for the shipping markets to recover, but ship owners are still actively pursuing investment opportunities, arising from lower pricing. In its latest weekly report, Clarkson Hellas said that “with further Holidays in the Far East this week – the market has been a little more subdued this week – however with continuing reports of new business
being concluded there is arguably enough opportunity present to keep things interesting. The burning issue in the market continues to centre around efficiency – and with shipyards and owners continually placing an increased emphasis on improvements in efficiency of ship design, against the backdrop of a bullish outlook for Bunker pricing, there is no doubt that this will continue to be a key factor taken into consideration for those contemplating newbuilding” said the report.
Clarkson Hellas went on to mention that “with substantial efficiency improvements now being offered across the entire spectrum of asset classes – facilitate by improvements in engine designs, energy saving devices and optimised hull forms, there is certainly an argument for buyers to take advantage of new technology and competitive pricing. This has arguably triggered some activity for both the Dry and Wet sectors so far this year – however - despite improved designs also being offered in the container sector, we have only seen one
newbuilding deal concluded so far this year in this sector! This was for a sole 4,800 TEU container vessel at CSC’s Jinling Shipyard and saw a some ten per cent drop in pricing from when the last vessels were contracted of this size in China in June last year. The small to mid container sector of say 2-5,000 TEU enjoys a very sparse orderbook, especially in terms of a percentage against the Vessels already in the fleet and so with the greater efficiencies these various new designs offer, we do not believe it will be long before we start seeing some more contracts being inked. The interesting thing will be seeing if the Operators will be ordering for their own account, or if it will be Beneficial Owners ordering either on speculation or against long term charter contracts. The even more interesting point for consideration in the current challenging debt climate and typically inability today of the KG’s to support is demand for what was once their bread and butter tonnage, is that will we see a greater number of non-German buyers taking advantage and ordering. In the end, it remains to be seen where the pricing will go today for these container designs, with the Yards, especially in China so very keen for orders of this size at the moment and certainly a story to follow over the upcoming months” concluded Clarkson Hellas.
In a separate report, Piraeus-based shipbroker Golden Destiny, mentioned that “the downward activity of newbuilding continues with dry bulk and tanker segments experiencing a dearth of business bringing memories of the year 2009, when shipping players had showed a strong conservativeness amid economic turmoil and lower newbuilding prices had emerged. At a similar week in 2009, only three new building contracts had been reported, one in the bulk carrier and two in the tanker segment. Cosco Corperation of Singapore is expecting the plunge of newbuilding business to persist with a new direction in newbuilding prices as players are unwilling to pen new orders under the current freight and economic market uncertainty. Wu Zi Heng, vice chairman and president of Cosco, said that there may be a greater pressure on the prices of new vessels as their customers may be reluctant to commit to new orders for vessels in the short terms. The gloomy business outlook has hit Singapore listed Cosco Corp, which reported a 44% plunge in net profit for its financial year 2011” said Golden Destiny.
It carried on by stating that “overall, the week closed 16 fresh orders reported worldwide at a total deadweight of 560,600 tons, posting a 69 % week-on-week decline from last week’s record business of 52 new orders. This week’s total newbuilding business is down by 36% from similar week’s closing in 2011, when 25 fresh orders had been reported with bulk carriers and containers grasping 28% and 48% share respectively of the total ordering activity, whereas now bulk carriers are now holding only 12.5% of the newbuilding business with offshore units grasping the lion share, 44% share of the total newbuilding transactions. In terms of invested capital, the total amount of money invested is estimated at region $400 mil with 88% of the total number of orders being reported at an undisclosed contract price. In terms of invested capital, the most overweight segment appears to be the offshore and LNG segment with hefty investments for two drilling rigs in Samsung of Korea at about $600 mil each and two LNG units at a total cost of $400 mil.
In the bulk carrier segment, notable order is being reported for two post panamax units of 95,000dwt by Chinese player, Fujian Shipping for construction at Fujian Provincial Communication Transportation group at an undisclosed contract price with delivery in 2014, which are considered to be the largest vessels built by this owner.
In the tanker segment, MR units continue to be more popular newbuilding candidates than crude carrier vessel types with the Kuwait Oil Tanker placing four 46,400dwt units at Hyundai Mipo of South Korea for delivery in August of 2014” concluded Golden Destiny.
Nikos Roussanoglou, Hellenic Shipping News Worldwide