Ship owners Still Favor S&P Market Over Newbuilding Orders

Ship owners seem to be more inclined to invest in secondhand tonnage, rather than committing to long-term investments, i.e. newbuilding orders, as regulatory and market uncertainty is clouding the industry’s prospects. This seems to be a trend which will persist throughout the year, given that the second half of 2019 will be characterized by retrofits and conversions, ahead of the IMO 2020 rules.

In its latest weekly report, shipbroker Allied Shipbroking said that “owners seem to remain reluctant to proceed with orders in the dry bulk sector, with the few impressive deals being noted in previous weeks proving to be the exception rather than the rule right now. The unexpected freight rate slump during the first two months of the year has significantly affected interest for newbuilding projects. Prices have remained relatively steady so far this year, having lost any positive momentum they had picked up during the second half of 2018. On the tankers side, appetite amongst owners seems to have increased this year, with several orders being reported so far. This past week, 3 new orders were placed across different size segments, depicting the positive outlook for the tankers’ sector as a whole. This increased interest for new orders has started to provide a boost in offered prices, while further increases may well be noted soon given the expectations for a much better freight market performance this year”.

On a similar note, Clarkson Platou Hellas added that there were “no confirmed dry orders to report this week and just one tanker contract. Clients of Maran have added a single 157,000dwt Suezmax to their orderbook at Daehan making a total of three units. Delivery of the latest addition is due within the end of 2020. In gas, Samsung announced an order for four LNG carriers from a yet to be confirmed buyer. Delivery is due from 2021 with all four vessels due by the third quarter of 2022”.

Meanwhile, in the S&P market this week, in the dry bulk sector, shipbroker Banchero Costa said that “the Post-Panamax “Tender Salute” 95,700 dwt 2011 built Imabari was sold to Cobelfret at $17 mln. Dubai based buyers Aswan Trading were behind the purchase of the “Glovis Donghae” 97,000 dwt 2004 built Oshima basis SS/DD due in May this year. It is worth noting she was sold to current Owners 2 years ago at just $6.2 mln. The “Calhoun” 76,800 dwt 2006 built Sasebo failed and was apparently fixed to East European buyers at region $10.6 mln. Two modern Ultramax, “Loch Ness” 61,200 dwt 2016 built Shin Kurushima and “African Loon” 61,250 dwt 2016 were sold at $23 mln and $22.6 mln respectively to Greek buyers. The older Supramax “Navios Meridian” 50,300 dwt 2002 built was sold to Chinese buyers at $7.1 mln. Canadian buyers took over the “Paradise Bay” Handymax with Ice class 1C 46,200 dwt 2003 built Oshima for conversion to self-discharger. Price reportedly in the region of high $9 mil. Graanul Shipping of Estonia has doubled its Handysize fleet by purchasing a sister ship from same Owners, “Nord Mumbai” 36,600 dwt 2012 Hyundai Vinashin. In the tanker segment, the older LR1 “Genmar Compatriot” 72,700 dwt 2004 built Dalian with SS/DD immediately due was sold for $6.75 mln to undisclosed Greek buyers. In the MR2 segment, “Isola Bianca” 50,900 dwt 2008 built SPP achieved in the region of $15.4 mln, whilst “High Strength” 46,500 dwt 2009 built Naikai was reported sold to c. of either Cape Shipping, Greece or Transocean, Monaco MC for $16.4 mln basis T/C attached until 4Q19 at mid/high $15,000/d. The older “Chiltern” 45,000 dwt 1999 built Halla was sold to undisclosed buyers for $6.9 mln. In the MR1 segment, the “Lavela” finally found buyers in Socomar, Monaco at a price of $14.6 mln whilst the older “Port Stewart” 38,800 dwt 2003 built GSI was sold to undisclosed interests for $6.8 mln”, Banchero Costa concluded.

In a separate note on the S&P market, Allied added that “on the dry bulk side, several fresh deals were concluded this past week. Buying focus seems to have been primarily on the Panamax segment lately. This may well depict the negative outlook currently prevailing on the larger Capesize segment. Based on the current freight market performance, expectations are for activity to still remain relatively subdued, with owners likely waiting for a clear sign of strong market improvement before making any haste decisions. On the tankers side, activity showed some signs of improvement this past week, but with transactions being limited to just the product tanker size segments. The positive market outlook for the products market has boosted interest, something which should follow through to the next couple of weeks, possibly allowing for some further price gains. On the other hand, interest for crude oil tankers seems to have stagnated for the time being”, the shipbroker concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide