Ship owners have concluded one more week of slow newbuilding ordering activity, spooked by the oversupply of vessels, which has plagued freight rates. An additional reason has been the lack of financing, at least for many European-based ship owners, with banks in the region looking to boost their balances and avoid risky sectors. According to the latest report from Clarkson Hellas, "the newbuilding market has been somewhat subdued this week again and a much lower number of contracts being signed than twelve month ago.
The interesting dynamic we are starting to see this year though is that of the Japanese Yards coming more and more to the fore, not only in terms of design, but also now looking much more competitive commercially. No doubt this week’s news of the Yen dropping to its weakest level against the Dollar in more than 11 months, hitting 84.18 Yen to the Dollar in Asian trade yesterday, will no doubt be of some relief in the short term to the beleaguered Japanese Yards, especially those with berths open in the second half on next year! With the Yen spending most of the second half of last year well below the 80 mark and as such the Yards somewhat holding off their commercial marketing as long as they can, they will no doubt be pleased with the Bank of Japan’s monetary policy to tackle deflation to allow them to take less of a loss when accepting USD denominated contracts today.
The Japanese designs seem to be market leading, especially on the dry bulk side of the business and with Yards becoming more and more willing to open up to foreign owners, rather than the previous insular nature of just dealing with their existing customer or domestic owners. We expect in the coming weeks there will remain more and more discussions taking place and no doubt firm business being concluded, especially as some of these new design concepts offer more than a 30% saving on the current vessels on the water. With fuel consumption one of the biggest concerns of the owners and operators going forward, this massively improved efficiency, if on acceptable commercial terms from the yards will certainly be the good for our market going forward" said Clarkson Hellas.
In a separate report, Piraeus-based shipbroker Golden Destiny said that “in the newbuilding market, trends have been turned to previous weekly levels with an average of newbuilding business less than 20 newbuilding contracts. After the strong activity in the bulk carrier segment of last week, offshore support vessels regained their strength monopolizing this week’s business. The offshore market’s newbuilding appetite will persist high with Maersk Drilling planning to double its existing fleet of 16 semi-submersibles and jack up rigs by 2016, since the offshore oil and gas segment is anticipated to remain high on the back of tough crude oil prices and strong demand. Maersk’s Drilling Managing Director, Jan Holm, said that the present global demand for oil is about six to seven times of what Saudi Arabia produce today and over the next 20 years. He added that the era of “easy oil” is gone and there is an increasing need to find oil in harsher environments and deeper waters. The only potential risk is a dip in E&P expenditures by the oil majors if oil prices retreat, but the current fundamentals do not support a downfall” said Golden Destiny.
It carried on by saying that “overall, the week closed with 15 fresh orders reported worldwide at a total deadweight of 49,301 tons, posting a 65 % week-on-week decline. This week’s total newbuilding business is down by 29% from similar week’s closing in 2011, when 21 fresh orders had been reported with bulk carriers and containers grasping 52% share respectively of the total ordering activity. In terms of invested capital, the total amount of money invested is estimated at region $2,05 billion with 73% of the total number of orders being reported at an undisclosed contract price. Notable ordering business has been in the offshore segment for a FPSO construction in South Korean Shipbuilder Daewoo Shipbuilding & Marine Engineering for INPEX Corp of Japan with delivery in the second quarter of 2016 at a price of about $2billion” concluded Golden Destiny.
Meanwhile, in the demolition market “Bangladesh market remains under pressure with disappointing price levels offered, while India still grabs the highest activity at levels around $460/ldt for dry and less than $500/ldt for wet units. In terms of volume of demolition transactions, there has been a rise during the year to date from previous yearly levels with 229 vessels reported to have been headed to the scrap yards before the end of March, up by 52% from a similar period last year. In the bulk carrier segment, around 90 vessels are estimated to have been scrapped compared with 52 last year, and more are expected to come on line for disposal as the BDI still hovers below 1,000 points with capesize and panamax earnings being far bellow from $10,000/day. The week ended with 17 vessels reported to have been headed to the scrap yards of total deadweight 697,988 tons. In terms of the reported number of transactions, the demolition activity is standing at the same levels of previous week, whereas there has seen a 5.6% rise regarding the total deadweight sent for scrap, with a 100% higher scrapping removals in the tanker segment. In terms of scrap price, the highest scrap rate has been achieved this week in the container segment by India for a handy unit of 1,388 TEU
with 6,851 ldt built 1992 at $513/ldt. Bulk carriers and tankers have grasped the lion share of this week’s total demotion activity, 53%, with India winning 9 out of the 17 total demolition transactions. At a similar week in 2011, demolition activity was 12% down, in terms of the reported number of transactions, 15 vessels had been reported for scrap of total deadweight 349,507 tons with bulk carriers grasping 47% of the total number of vessels sent for disposal. Scrap prices were floating at current levels. Bangladesh and India had been offering $470-$490/ldt for dry and $495-$515/ldt for wet cargo” concluded Golden Destiny.