It’s been a less than lacklustre week for newbuilding ordering business, on the back of holidays in China and Easter in Europe, which had their negative impact in the conlusion of more deals in the market. In its latest report, Clarkson Hellas mentioned that “the newbuilding market has been particularly quiet this week due, in no small part, to the combinationof the holidays in the Far East in the early part of the week, being directly followed by the impending holiday period across much of the West!” said the report.
It went to state that “as we commence the 2Q of the year - it is interesting to take a year on year comparison in terms of contracting volume against the same period for 2011. For the 1Q 2012 we have so far seen 201 contracts placed at Yards globally, inclusive of offshore orders coupled with conventional tonnage. This is in stark contrast to the same period in 2011, which saw approx. 415 contracts placed within the same sectors – so a fall in activity of some 50% over the same period. The 1Q of 2012 has certainly proved to be challenging for owners and shipyards alike. From a trading perspective - the BDI has dropped from an average of 1365 for the 1Q of 2011 to an average of just 867 for the 1Q of 2012 – and there is no doubt that a weak trading environment coupled with an increasing challenging debt market has directly translated into a reduction in newbuilding volumes. Yards that are diversified will be best placed to take advantage of the niches of the market that still yield opportunity – however for those dependant on a much narrower product mix – the 2Q of the year will be challenging and it will be interesting to note whether the pressure build up from the 1Q translates into another dip in values over the next quarter”, concluded Clarkson Hellas.
In a separate report, shipbroker Golden Destiny said that “in the newbuilding market, a downfall has been posted from two previous weeks’ high levels of activity, when close to 40 new transactions were reported, while now the sentiment fell from a 64% lower business in the bulk carrier segment. The offshore remains on the spotlight with drilling rigs and deepwater vessels holding a high amount of money invested for the construction of new units.
Overall, the week closed with 23 fresh orders reported worldwide at a total deadweight of 792,000 tons, posting a 43% week-onweek decline. This week’s total newbuilding business is up by 264% from similar week’s closing in 2011, when 21 fresh orders had been reported with only two newbuilding contracts in the bulk carrier segment and eleven in the tanker. In terms of invested capital, the total amount of money invested is estimated at region $1,84 billion with 31% of the total number of orders being reported at an undisclosed contract price. In terms of invested capital, the offshore segment appears the most overweight by holding 83% of this week’s total amount of money invested. Notable ordering business has been in the offshore segment, the construction of a semisubmersible drilling rig by North Atlantic in Jurong Shipyard of Singapore at a cost of about $650 million” mentioned Golden Destiny.
Analyzing each segment of the market, the report said that “in the bulk carrier segment, a fresh order came to light in the capesize segment for an 180,000 dwt unit by China Steel Express Corp. Taiwan for construction in Universal of Japan at a price of $55,5mil. In the handymax segment, Guangdong Lanyue Energy Development is said to have contracted ten 51,000 dwt units from Taizhou Kouan at a price of $25 mil each with deliveries end 2013. In the supramax segment, Israeli shipowner, Ray Shipping, is said to be in close discussions with Hyundai Mipo of South Korea for four 56,000 dwt units at a price of $25mil each with delivery from the end of 2013. In the tanker segment, oil major BP shipping is rumored to be in the plans for the construction ten aframax and four suezmax units at the current low newbuilding price levels, at a time when the newbuilding orderbook pressures the freight market perfomace. In the product/MR segment, Tankers Inc of Denmark has placed an order for three 50,000dwt units at Hong Listed Guangzhou Shipyard International for delivery in the first half of 2014, with an option for three more, at a price region $33-$34 mil each. In addition, UK based owner Elandra, which is being linked to energy trader Vitol, is said to have placed an order for 10 medium range product tankers, 52,000dwt, at South Korea’s SPP Shipbuilding for delivery between March 2013 and early 2014. Market sources reveal that Elandra has placed the order in middle of last year, but the deal just came to the light.
In the gas tanker segment, Navigator Gas is said to have ordered up to six 22,000 cbm ethylene carriers at Jiangnan Shipyard of China at a total cost of up to $300mil. The initial order is for up to two firm units, with an option for four more, for delivery in the first quarter of 2014.
In the offshore segment, Keppel Fels of Singapore has announced that it has entered into a letter of intent for a harsh environment accommodation semi-submersible unit at a value of $315 mil with delivery in July 2014. The order will be based on the Floatel Superior design to be constructed for Sweden’s Floatel International. In addition, Keppel has won an order for a jack up rig from Perforadora of Mexico for delivery in 1q 2014 at a price of $205mil.
Furthermore, Seadrill of Bermuda said its subsidiary North Atlantic Drilling has contracted a new harsh environment semi submersible drilling rig from Jurong Shipyard of Singapore for delivery in 1q 2015 and will be built to the Moss CS60-design. Seadrill estimates total project costs for the rig to be about $650mil, with 20% of the yard price being payable at contract signing with the rest on delivery. Finally, Norway’s Farstad Shipping said it has contracted two anchor-handling tug supply vessels from compatriot shipbuilder STX OSV. They will be built to Rolls-Royce’s UT 731 CD-class standard design and will be similar to six vessels previously ordered by the same owner in 2006 and 2011. Delivery is booked for 1Q 2014” concluded Golden Destiny.