S & P 

Declining freight indexes and the looming spectre of the Chinese New Year have contributed to a sluggish start to 2012 for the S+P market, with some markedly low levels being paid, notably in the larger sizes.

Cape size M/V HANJIN MADRAS (150,977 dwt 1990 blt Hyundai) reported sold to undisclosed buyers at US$ 10m; a touch above scrap levels.

A couple of mid-90s Panamaxes reported sold to Chinese buyers; Korean controlled M/V EASTERN QUEEN (70,196 dwt 1994 blt Daewoo) is sold for US$ 10.9m with due drydocking in July and Japanese controlled M/V FAIR WIND (69,058 dwt 1995 blt Imabari) at US$ 10.5m. A newbuilding handysize from the Indian ABG Shipyard ¨C ABG Hull 333 (32,000 dwt 2011 blt ABG) understand she is committed to Singapore based buyers for US$ 22.8m.

The open hatch M/V ALADDIN RAINBOW (32,260 dwt 1999 blt Kanda) has obtained US$ 14m; transaction includes a charter back however rate/period remains undisclosed. M/V SOUTHERN FIGHTER (29,478 dwt 1998 blt Japan) is reported sold to Greek buyers at US$ 12m with a timecharter back to sellers for two years at an above market $10,500 per day while the M/V DIAMOND GLORY (28,515 dwt 1997 blt Tsuneishi) is sold at US$ 12m on a charter free basis.

On older tonnage segment Greek buyers, on a transaction understand concluded earlier this month, paid region US$ 6.7m for M/V DEVRPAYAG (47,349 dwt 1986 blt Daewoo); M/V SEA WAVE (45,090 dwt 1984 blt Govan) obtained US$ 4.8m while M/V IKAN ALTAMIRA (42,489 dwt 1985 blt Mitsui) to Chinese buyers for US$ 4.2m. Finally, the laker M/V ZUNI PRINCESS (28,166 dwt 1984 blt Hitachi) has been sold to Syrian buyers at US$ 4.2m.

Not much to report in the tanker S+P market, however interest remains alive as offers are being invited over the next weeks on a number of crude tankers and the numbers of inspections taking place highlight the continued interest in purchasing tonnage at the right price.

A controlling interest of 70% in pair of Hartmann-owned product carriers has been sold to U.S.investors. The vessels are M/T MOUNT GREEN and M/T MOUNT ROBSON (40,000 dwt 2007/2004 blt Saiki). The investment reported to be based on a very firm price of US$ 27m and US$ 24m respectively.  This is obviously not a conventional transaction and understand that Sellers retain 30% ownership and they will continue to undertake technical and commercial management.

Following her arrest by creditors the small product M/T VASI (12,923 dwt 2008 blt STX) reported sold to Singapore interests at US$ 8m at auction took place in Cape Town.

The reported sale of the product carrier M/T STENA CALYPSO (9,996 dwt 2002 blt Gdynia) at US$ 18.5m looks on the very high side in present market, however understand that vessel is sold for offshore conversion; together with her unique features (diesel electric propulsion and exceptional manoeuvring capabilities) may justify the investment from the buyers’ perspective.

DEMOLITION 

Another week, another obstacle for the market to overcome in relation to Bangladesh!

No sooner than the market heard the long awaited news Bangladesh was officially open once again, then further reports followed to say that no buying will take place until a local issue had been resolved.

The Bangladeshi government recently imposed a 5% income tax on ships being imported for scrap, a decision not favourable to the local ship breaking community and therefore all the ship breakers locally decided to boycott purchasing any new tonnage until this new tax was either completely abolished or significantly reduced. It is unknown when any mutual agreement will be decided which only causes further anxiety amongst the recycling market knowing that the return of the Bangladesh market is vital to the industry. In addition, and another major issue at present, is the fact that there is a lack of U.S. Dollars internally that is needed to support the industry, and this will have a major impact of establishment on Letters of Credit opened by the local banks on behalf of the shipbreakers. It is reported that a couple of Chinese owned bulk carriers had been committed for delivery Bangladesh at the beginning of last week, however these sales subsequently failed to materialise.

Indian has again forced itself into the number one position as price levels improved this week. The reason for this week¡¯s increase is down to the Rupee strengthening against the U.S. Dollar (the best rate seen for some time), the domestic steel market having seen positive improvements and to an extent, the expectation that Bangladesh was returning to the fore. However as reported above, should the situation not improve in Bangladesh in the coming weeks, then the sudden increase in rates seen from the Indian market could potentially tail off again to numbers that are more profitable to the local

industry.

Elsewhere, Pakistan remains eager for the larger tanker units, however, surprisingly given the current freight conditions, few units are being circulated in the market. But with the more favoured gas free conditions (men entry only compared to hot works for India and Bangladesh), the general consensus is that such units will currently find Pakistan as their final destination.

China continues to provide a competitive streak for tonnage completing in the Far East area, however the fast approaching New Year festivities may, next week, ensure a quieter period envelopes the local scene. Currently however, prices levels remain anything from region USD 420-450 depending on the vessels specification.

NEWBUILDING  

The year has begun with a subdued start and with Lunar New Year holidays on the horizon in the Far East we don¡¯t expect January to be the most active of months in the Newbuilding market.

However that is not to say that the market is devoid of opportunity. The most immediate challenge for both Korean and Chinese shipyards will be one of managing production. The current landscape in terms of production schedules for yards is jagged ¨C with pockets of 2013 capacity still vacant, particularly in China. Even in Korea though, where capacity was reserved for outstanding options, there still remain these awkward pockets of vacant capacity that do need to be committed.

With strategy meetings in Korea to be held over the forthcoming weeks, it is plausible that we may see a push across certain sectors post Lunar New Year, as the shipyards aim to address these outstanding production issues. In China, the approach seems more immediate and with certain yards within the state sector having struggled to secure business in 2011, the pressure is on fill the outstanding 2013 capacity which is growing ever more imminent. With the demand side in no immediate rush to move, coupled with a continued tightening of debt availability, there seems to be no immediate rush to book new business. That being said, with certain sectors poised to present some enticing opportunities, it will be interesting so see how the story develops and whether yards will be competitive enough to entice buyers back into ordering!

In terms of reported business this week it has been relatively quiet; In Dry, it has been reported that Chengxi Shipyard have won an order from domestic owner Ningbo Fonwa Shipping for a pair of 49,000dwt Bulk Carriers with delivery Scheduled within 2013. No other details have been released.