The newbuilding market "remains very much reflective of the global economic condition; with volatility, expensive and limited finance and challenging trading conditions permeating across many shipping sectors, further investment into newbuild contracting is not an straightforward endeavour" Clarksons Hellas said in its latest weekly report, adding that nevertheless, there has been enough of a steady stream of dealflow for the mid‐sized shipyards to maintain a level of activity in the market – although buyers price expectations remain challenging for shipyards to accommodate. For the larger capacity shipyards in both China and Korea, where facilities and production are optimised for larger sized conventional tonnage, 2012 has proved a very challenging year to date.
According to the report, "with no immediate signs of recovery in terms of Large Crude markets and speculative LNG demand, coupled with an increased pressure on newbuilding prices for these sectors stemming from competitively priced, old design resale opportunities coming into the market from over exposed owners and problem contracts, the conventional segment of the market for the larger asset classes is certainly under pressure – and with the major yards continually looking to leverage business from these sectors, it is likely that the final quarter of 2012 will not buck the trend that the year seems to have followed to date.
In terms of reported business, Norwegian Buyers, Global Car Carriers have signed contracts for 6 units of 6,700ceu PCTC’s at Jinling Shipyard, due for delivery in 2014. Montana Shipping are reported to have ordered 6 x 8,500 DWT MPP vessels at Jiangzhou Union Shipbuilding for delivery in 2014 and 2015" Clarksons Hellas concluded.
In the meantime, "vessels ongoing deliveries hunt the healthiness of the dry bulk market with approximately 243 panamax vessels being delivered so far this year, from 274 panamax vessels delivered for the whole 2011, while for the end of this year panamax deliveries are on pace to a total of 417 vessels, 52% more than they were delivered last year, according to data from Commodore Research. Capesize deliveries are on pace to total 281 vessels, 9% more than they were delivered last year, handymax deliveries are on pace to total 363 vessels, 11% more they were delivered in 2011 and handysize deliveries are on pace to 365 vessels, 26% more than they were delivered in 2011, while panamax orderbook is going to be the most hefty among other vessel categories for 2013", Golden Destiny said this week.
It added that "in the shipbuilding industry, Japanese builders Universal Shipbuilding, a subsidiary of the steel group JFE, and IHI Marine United have completed their merger with the creation of a new combined company with the name Japan Marine United to operate as of October 1st. In a joint statement, Universal and IHI said Japan Marine would combine their engineering resources to improve vessel designs and technologies. “Among the various synergies that it will expect to realise rapidly, the product lineup will be expanded, productivity at each shipyard will be improved by consolidating ship types and product development will be accelerated by bringing together energy-saving and eco-friendly technologies,” said the statement. “In addition, capabilities for responding to large-lot orders and procuring equipment and materials under more competitive terms will be realised through expanded scale, and efficiencies will be improved through the integration of administrative functions.”
In South Korea, 21st Century Shipbuilding yard proceeded with liquidation as it failed to win new orders to generate cash. According to Korean Reports, liquidation became inevitable as the medium-sized, privately owned yard completed its existing orderbook. Furthermore, a small South Korean yard, Sekwang Shipbuilding is said to be concentrated on ship repairing after failing to secure new orders to run its newbuilding business.
Under the current fall of newbuilding demand distressing shipyards’ revenues, South Korea has expanded financing support for its struggling shipbuilders by $3,5 billion for this year, according to Seoul’s Yonhap news agency. The additional loans will be available from the two state-run lenders-Korea Finance Corp. and Korea Development Bank-and five commercial banks, including Kookmin Bank, Yonhap said. Furthermore, Korean government allowed Export-Import Bank of Korea to inject more liquidity in South Korean shipbuilding industry by raising its credit ceiling to 60% of borrower’s equity value instead of 40%. Korean government has also requested from Korea Development Bank, Korea Exchange Bank, Woori, Kookmin, Hana and Shinhan to provide credits worth of about $3,5 billion to shipbuilders. According to government data, South Korea’s ships exports amounted to $30,4 billion in the first eight months of this year, down more than 20% compared to 2011" it concluded.