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Newbuilding orders pick up as shipyards’ policy of aggressive pricing is working

Newbuilding contracting activity thus far in 2017 has been much more brisk than during the same period of 2016, as shipyards’ pricing has been much more aggressive, thus attracting more orders. In its latest weekly report, shipbroker Allied Shipbroking noted that “up till now the year has shown considerably better activity levels in the newbuilding front then what had been seen over the majority of 2016. It seems as though some of the aggressive pursued by shipbuilders marketing has started to pay off. The new financing structures on offer and considerable price discounts has started to attract the attention of some owners, although they are still relatively few in number”.

Allied added that “at the same time it seems that the prevailing belief amongst most owners is that we are set to see a further drop in newbuilding prices, something that may well be proving to deter most potential buyers from taking any hastily made actions right now, while given that we have yet to see any real spark or vigor in the freight markets of the main bulk ship types such as dry bulkers and tankers, there seem to be limited reasons to real push buyers onto the new ordering route”.

Meanwhile, in the S&P market this past week, ship valuations’ expert VesselsValue noted that in the tanker market there were no sales to report, while values have remained stable. In the dry bulk market, values were also stable over the course of the past week. “Modern Capesize vessels have softened slightly due to a decrease in charter rates. Panamax values have remained stable, Flama (80,500 DWT, Feb 2011, STX Offshore) sold for USD 14.8 vs VV value of USD 14.2 mil. Modern Supramaxes have firmed this week, Brilliant Phoenix (61,200 DWT, April 2016, I-S) was sold for USD 22.6 mil vs VV value of USD 21.58 mil. The Indigo Felicity (28,400 DWT, Jan 2010, Imabari) was sold to Giavridis Maritime for USD 7.5 mil vs VV value of USD 7.89 mil, softening mid age Handy Bulkers”, said VV. It added that in the container market, things were also slow, with no sales reported, while values remained unchanged over the week before.

According to Allied Shipbroking, in the S&P market, “on the dry bulk side, things were slightly slower this week in terms of activity, though not by a whole lot and possibly more of a reflection of the decreased number of sales candidates being circulated in the market for the larger size segments. At the same time the number of hadysize bulkers that have been put up as sales candidates has increased considerably especially in the vessels in the mid high 30,000 dwt range. As a note to our previous week’s reported sale of the M/V “DARYA BHAKTI” (56,060dwt, built Japan 2005), we now understand that the price is in the region of high US$ 8.0m. On the tanker side, activity dropped considerably once more, with a good portion of the sales reported this week being old sales that have only now come to light”, said the shipbroker.

Meanwhile, in the demolition market, “all older tonnage has firmed due to increased scrap rates”, said VV. Allied added that “despite the turmoil being seen in the Indian Sub Continent with regards to shifts in safety regulations, the market seemed to have gained further ground with prices on offer by most shipbreakers having quickly recuperated any losses noted in the weeks prior and have also gone beyond any price levels noted over the past twelve months. Demo candidates circulated in the market are still relatively few in numbers, pushing end buyers to be more aggressive as they try to satisfy their increased appetite. At the same time local steel prices are still holding firm, with demand for scrap steel keep relatively hot thanks to the increased demands from local steel producers. Despite the positive movements being noted, a touch of caution should be held as the market is still fairly fragile as it now depends heavily on any decisions to be made from local regulators, though to what extent this will have a negative impact on the overall market is debatable as any new regulations are likely to more heavily focus on tanker vessels which currently take up a very small fraction of the total activity being concluded”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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