It could be a blessing in disguise in terms of helping alleviating the oversupply of vessels in the global market, but certainly the new trend emerging in ship financing shouldn’t be viewed as something positive, quite the opposite. According to Clarksons latest weekly report, the continuing dithering of European leaders to reach a deal on a suitable rescue package for the Eurozone, merely heaps more pressure on the banks and their ability (or inability) to lend to the shipping community; this issue remains prevalent in the newbuilding market, with owners and shipbuilders trying to understand the longer term implications of the turmoil in the financial world.
Clarksons said that “some of the implications are pretty clear, the flight to quality will continue, liquidity will remain tight in the ship finance markets and buyers will remain cautious in the light of both the shipping and the financial risk of an investment today. However, the longer term impact is more difficult to judge, as it is impossible to tell at the moment what measures governments will be able to take to prop up the financial system and whether this current difficult period will come to be seen as the bottom or close to the bottom of the market, or whether we are entering a new and more difficult phase for shipbuilding.
Whilst there are clearly legitimate concerns about the ability of some owners to finance the orderbook and to fund new deals, many others are still relatively cash rich and will see this period as one of opportunity rather than concern; as a result, for many owners, newbuilding activity may well continue to be driven by traditional shipping market considerations, against a backdrop of a volatile economy and strained debt market, as opposed to being totally inhibited by the financial markets; however there is no doubt that this volatile environment is certainly impacting sentiment and creating a much more conservative and cautious demand side” concluded Clarksons.
In a separate report, shipbroker Golden Destiny said that the week ended with the newbuilding sentiment being at quite firm levels with no contracting activity for a second week in the container market. “The ordering business in the offshore segment continues with platform supply vessels being on spotlight, while the primary two main segments, bulk carriers and tankers, have grasped 31% and 22% respectively of the total number of units ordered. In the LNG segment, the ordering spree seems to have no end with 4 more fresh LNG units ordered this week in South Korean yards. What is noteworthy is some uncovered business that came to light this week again by Japanese shipbuilding industry in the bulk carrier segment for panamax and capesize units, with no further details emerging for the contractor owner or the newbuilding price. In the past, we revealed some hidden Japanese newbuilding business that pushed the newbuilding momentum to higher levels of activity, but this week we decided to not report these contracts due to the misguidance they create for the firmness of the ordering momentum. Furthermore, some activity has been noticed by Chinese yards for bulk carriers, panamax and kamsarmax size, but the contractor owner has not been yet revealed and we remain cautious before reporting them” said the Piraeus-based shipbroker.
According to the report, overall, the week closed with 36 fresh orders reported worldwide at a total deadweight of 3,966,600 tons, posting a 125 % weekon-week increase due to 175% higher activity in the bulk carrier segment and 8 fresh tanker orders. This week’s total newbuilding is up by 44% from similar week’s closing in 2010, when 25 fresh orders had been reported with bulk carriers, tankers and containers grasping 36%, 24% and 32% share respectively of the total ordering activity. In terms of invested capital, the total amount of money invested is estimated at region $1,16 billion with 58% of the total number of orders being reported at an undisclosed contract price. The most overweight segment appears to be the LNG market by grasping about 74,5% of the total invested capital this week.
“In the bulk carrier segment, a post-panamax order has been revealed by Archer Daniels Midland of USA for the placement of three 95,000 dwt units in Oshima shipbuilding of Japan for delivery in 2014 at a price of $36 mil each. The vessels are designed to reduce carbon emissions by 25% compared to today’s modern units.
In the tanker segment, new ordering business came to light in the crude market with the placement of new units in Korean yards. SK Shipping of South Korea has placed an order for three VLCCs of 319,000 dwt in Hyundai at an estimated price of region $100-$102 mil with delivery in 2013, while Geden Lines of Turkey has ordered three aframax units of 115,900 dwt in Samsung for delivery in 2013-2014.
In the gas market, Stena Bulk of Sweden is said to have ordered four LNG units with Daewoo and Samsung of South Korea at a total cost of $870 mil with delivery in 2014-2015. The two LNG units with gas capacity excess of 170,000 cu.m are estimated to cost $217-$220 mil each, while the other two of 160,000 cu.m are contracted at a price region of $215 mil each” concluded Golden Destiny.