"Subdued" is now the middle name used for newbuilding ordering activity, a trend which has prevailed in the world's market during the past few months. Ship owners are avoiding placing too many orders, until they have a better understanding of the world's economy rebound prospects, as well as the rate of market absorption of the still huge orderbook. After all, across all shipping segments, from dry bulk carriers, to tankers and container ships, the general consensus is that tonnage is already heaving oversupplied, causing freight rates to stay low and hurt the financial performance of most shipping companies. Amid this environment, efforts from shipyards, anxious to boost their berth utilization, to entice ship owners have worked in some cases of rather aggressive price reductions, but in general, newbuilding orders are way below 2011 levels.
Lower earnings has also led many ship owners to push back their newbuilding investment programmes, opting to postpone any decision-making, at a time when financing is also hard to come by; this is another reason why newbuilding orders are tumbling down from the highs of the recent years. Not to mention that a ship owner which enough cash has a plethora of vessel choices from the second hand ship purchasing market, which offers almost anything one can desire at attractive prices.
According to the latest weekly report from Clarkson Hellas, "it has been a quiet week in the Newbuilding market with levels of new enquiry remaining relatively subdued and very few orders. This is not to say however that the market has been completely devoid of activity, but yet again that activity has been concentrated in the more niche areas of the shipping markets, such as Offshore, RoRo and the PCTC markets.
As has been previously mentioned many times, yards globally have had to come to terms with how to fill capacity after their rapid expansion over the past few years, and more and more have had to branch out into new areas to keep themselves fed in these lean times. With this in mind, we have continued to see a softening of pricing as the yards try and bring about a new supply/demand equilibrium where owners will again begin ordering, whilst trying to take what meager offerings are currently available in the marketplace! However, with yards continuing to suggest they are now offering berths at direct cost, it remains to be seen how long this pattern can continue for or whether a new round of consolidation begins amongst the yards, as the on‐going challenges of the current market further takes its toll" said the world's biggest shipbroker's Hellenic department.
It added that "Korea has had more success than others in 2012 in managing to diversify into new areas and many of the major yards have continued to announce new business within the Offshore sector particularly and look to be making strong progress towards their order targets for the year end. With so much of the major yards revenues last year made up of these offshore projects, it continues to look like 2012, as predicted, will follow the same pattern" it concluded in its weekly analysis of the market.
Meanwhile, "in terms of reported business, Tsakos has returned to Sungdong to place an order for 1 option 1, 157,000 DWT Suezmax shuttle tanker with delivery pencilled in for October 2014. Hyundai Mipo have also reported with much fanfare the successful order of a 35,000CBM LPG Carrier from Japanese owner, JX Shipping with delivery expected in July 2014.
After rumors back in early October, it now appears that Siem Car Carriers have confirmed 2 option 6 x 6500 ceu PCTCs to be built at Weihei Samjin Shipyard with the first delivery expected in 2014. Lastly, STX Finnyard have been able to announce that clients of Tui Cruises GmBh have now declared their option at the yard at a reported price of USD 607.5 million with delivery expected in 2015" the report noted.