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New Year brings newfound optimism in newbuilding market

The entry of 2017 has marked a surprising newfound upwards momentum in the newbuilding market, as shipbrokers are reporting a significant bump in ordering activity. In its latest weekly report, shipbroker Allied Shipbroking said that “the New Year seems to have brought a slightly positive tone to the market, as a number of new orders seemed to have been concluded over the past two weeks (though the focus continued to be on the more specialized units)”.

According to Allied, “we are already starting to hear rumors of the emergence of specialized funds which are planning to be set up for the exclusive use of supporting newbuilding orders, trying as such to bridge the funding gap and give some favor towards the newbuilding order against that of seeking a modern secondhand. Secondhand units still hold an upper hand thanks to their considerably low price levels, however financing will play an even more important role in the Sale & Purchase market this year, as the number of cash rich buyers continues to decline. At the same time, there is keen focus to see what sort of restructuring we will witness in the market over the next 12 months, especially since we have already seen a breakdown of the efforts to consolidate some of the largest shipbuilders in South Korea and at a time where we will continue to see a draught in new orders”.

Meanwhile, in a separate note about the way that the S&P markets have been progressing, ship valuations’ specialist, VesselsValue noted that in the tanker market, “Suezmax values have softened in both modern and older tonnage. The Devon (157,700 DWT, 2011, Samsung) and Eugenie (157,700 DWT, 2010, Samsung) sold enbloc to Great Eastern Shipping from Bretta Tanker Holdings. Devon sold for USD 38.6 mil vs VV value of USD 39.36 mil and the Eugenie sold for USD 36.4 mil vs VV value of 37.07”. In the dry bulk segment, VV said that “Panamax values have firmed in all ages except for resale and modern Supramax values have softened. The BSI Cadogen (81,300 DWT, 2016, Hudong Zhonghua) was bought by Alpha Bulkers Shipmanagement from Berkeley Shipping for USD 20.7 mil vs VV value of USD 19.8 mil. The Redwing (53,400 DWT, 2007, Chengxi) was sold by Eagle Bulk Shipping to Nanjing King Ship Management for USD 6.2 mil vs VV value of USD 7.15 million”. Finally, in the container segment, VV said that there were no container sales to report this past week, but older tonnage across all container types has seen a firming due to an increase in scrapping rates.

Similarly, Allied said that “on the dry bulk side, activity continued to hold firm over the past two weeks, giving a positive end to 2016 and starting off 2017 on an equally strong footing. Buyers’ focus seemed to have been centered on the more modern tonnage with a fair split amongst most of the dry bulk size segments, though Capes seemed to have been lacking in transactions. Despite this prices have held fairly stable across the board for now, however there is a sense that there is strong buildup of upward pressure under the surface and we might be on track for some fair gains to be noted over the coming weeks. On the tanker side, there was a couple of high profile transactions taking place, with some of the bigger size segments seeing a fair amount of activity after several months of nothing going on. There was not much to be seen in the product tankers range, though this will likely to be a momentary gap in the market which will surely be filled over the coming weeks”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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