In the wake of the largest oversupply of dry bulk carriers in decades, ship owners seem to have ended their almost two-year buying spree. According to new shipbroker reports, newbuilding orders for dry bulk carriers have been dwindling with most owners looking to cash in on the container segment and to a less extent in the tanker sector of the market.
Based on the latest weekly report from Clarksons, there have been continued reports of business again in the market this week - and whilst the focus remains primarily on the Container sector - we are also starting to see a resurgence of interest in the mid sized tanker market and pockets of dry business also being concluded.
“As was discussed earlier this month, both the tanker and dry bulk sectors have seen a greatly diminished level of activity so far this year when compared to the same period last year. Within Korea, amongst the small and medium yards, this lack of ordering has been taking its toll. With little enquiry in these sectors, combined with increasing shipbuilding costs/pricing caused by rising steel prices and adverse currency fluctuations, there have been almost no new orders signed so far this year. As such, we are now seeing an increasing number of these smaller facilities fail to secure support from their creditor banks - and with an inability to issue refund guarantees and in many cases facing insolvency and court protections - the future for this strata of yards is certainly challenging if not bleak.
It is yet to be seen whether a similar story will develop within China. With many of the smaller yards having also developed up on the back of large scale dry bulk ordering. This sector continues to remain depressed and due to this it could well be necessary for the Government and Domestic Banking sector to support the yards - to prevent a similar outcome to that witnessed in Korea - however with State shipbuilding quite distinct from the private sector, it is questionable as to whether such support would be extended - and it is likely that Chinese shipbuilding will go through a period of consolidation.
In terms of reported business; In Dry, Wilmar Holdings have signed 1 option 1 x 81,500dwt Geared Kamsarmaxes at Jinhai Heavy with deliveries in End 2012 and early 2103. Although the price has not been disclosed for these, feel it will be in the region of USD33 Mill per vessel. Sungdong are reported to have won an order for a further one 82,000dwt Kamsarmax from Kyla Shipping with this vessel due to deliver in 2Q 2013.
In Wet, Scorpio Tankers are understood to have ordered 5 option 3 x 52,000dwt MR Tankers at Hyundai Mipo with deliveries of all 5 of the firm ships due in 2012. In addition to these, Knutsen NKY are reported to have ordered 1 option 1 x 123,000dwt Shuttle tankers at HHI with deliveries due in Jul/Sep 2013.
Finally, in Containers, Evergreen are reported to have signed 10 x 8,000 TEU Container ships at CSBC, Taiwan. These ships are provisionally scheduled to deliver from 2013 onwards, pricing has not been revealed” said Clarksons.
In a separate report, shipbroker Golden Destiny said that there has been again a significant slowdown of business with no transactions revealed in the bulk carrier segment. “The week ended with 24 orders reported in total, equalling a total deadweight of around 619 mil tons at a total invested capital of region $2,5 bn, with weak sentiment also in the container and offshore segments that are normally bursting of activity. The ordering momentum has slowed down by 70% from last week’s activity and no special trends have been revealed towards specific vessel types and sizes.
In the container market, the post panamax ordering trend is still hot as market rumours suggest that Greek shipowner Economou has inked a letter of intent with South Korea’s Samsung Heavy Industries for a series of 4+4 13,000 TEU units, but the owner has not yet confirmed the deal. In terms of invested capital, the most overweight segment appears to be the offshore with almost 80% of the total capital invested for special project vessels. At a similar week in 2010, the newbuilding activity was up by 150% than current levels with 61 new contracts to had been reported worldwide and bulk carriers winning 80% share of the total volume of reported newbuilding activity”, concluded the report.