Ship owners around the world have taken a step back so far this year, as the wave of new building deliveries, together with the hefty ordering activity of the past, have taken their toll in most of the shipping segments, hurting earnings and causing even prominent shipping companies to either default, or suffer steep losses. Amid this business environment, it is no surprise that newbuilding ordering activity in 2012 is focused in segments not so heavily fragmented, like LNG carriers, where the promise for high earnings is big, as well as more fuel efficient vessels, a product of today's challenging marketing conditions and tomorrow's obligations undertaken by the maritime community, towards a more environmentally-friendly way of conducting business.
According to the latest report from Clarkson Hellas, "with shipyards in the major exporting regions all reporting and exhibiting significant year on year drops in new contracting activity, there is no doubt that the market continues to remain challenging, particularly for the larger and more conventionally orientated facilities. With conventional demand so far being focused primarily on the mid‐sized segments of the market, those yards geared up for the larger spectrum of asset class have found 2012 a struggle. Fundamentally, aside from the depressed nature of the shipping markets, it has been the volatility and constraints of the macro financial environment that have been a real and key inhibitor for shipbuilding and particularly investment into the capital intensive asset segments of the market" said Clarkson Hellas.
It added that "for the moment, the market therefore remains largely price orientated, with the key drivers behind investment decisions being seemingly focused on a long term play on depressed asset values. It remains to be seen as to when Owners will have enough confidence in the larger segments of the market, to commit investment against the same motivation and with shipyards under continuing pressure, it is very much a game of wait and see as to when values become enticing enough again and more importantly whether the macro environment will exhibit enough stability to allow for this to translate into actual contracting activity" it noted.
In terms of reported business the report mentioned that "in dry, it has now finally been reported that Clients of Norse Management (UK) Ltd have ordered two option two 82,000 dwt Kamsarmaxes at China’s SWS. It is understood the contracts were actually penned back in June, the pricing is circa USD 27.5 Mill and the delivery for the firm Vessels will be from July 2014. Zhejiang Yangfan have won some further business this week, however this time four option two 39k dwt Handysizes for Clients of Unishipping, the Netherlands. We understand these Vessels will deliver from October 2014 and costing the Owner around USD 23 Mill per Vessel.
The Car Carrier market has again seen further orders with Clients of NYK placing two Mitsubishi designed 7,000 CEU Vessels at both Shin Kurushima and Imabari. Both Yards are set to deliver one Vessel in 2014 and the second in the first half of 2015. We are unaware thus far of the pricing of the deal" the report concluded.
In a separate report, Intermodal has reported that "on the newbuilding front, there was a tad more activity reported this week as we saw a number of owners showing keen interest for several niche markets. Things are still looking fairly difficult for most of the lower tier yards as most of the recently reported orders have been going to major yards, especially in S. Korea. It seems as though interest for specialised sectors such as Gas carriers, PCTCs and Container vessels continue to inspire interest for further investment. This sectors however will likely remain out of reach for many shipyards who do not have a proven track record on these vessel types. In terms of reported deals this week, the most notable order was that placed by Switzerland's Atlanship at S. Korea’s Hyundai Mipo for 2 stainless steel coated Fresh Juice carriers (23,000dwt) for delivery between 2013 and 2014 at a reported price of around $ 40.0m each" it concluded.