GDSA WEEKLY SECONDHAND / DEMOLITION / NEW BUILDING MARKET ANALYSIS

The week ended with some mixed feeling as the secondhand market tries to keep its pace with dry investors waiting further correction in secondhand asset prices. Tankers are still on the spotlight with with smaller size units being more popular. The secondhand ship purchasing activity is standing 68% down the newbuilding volume of transactions. The ordering interest in the main segments, bulk carriers and tankers, seems to follow a slow pace of volume, but gas tankers and containers are still grasping investors’ appetite with positive future prospects on the demand side In the container market, the sliding freight market has put a break on the secondhand ship purchase plans of the players, but the newbuilding market remains unaffected.
Overall, the week ended with 25 transactions reported in the secondhand and demolition market, while the highest activity has been recorded in the newbuilding market with 54 fresh orders reported worldwide.

SECONDHAND MARKET
In the secondhand market, 16 vessels reported to have changed hands this week at a total invested capital in the region of US$122.9 million, 5 transactions reported with undisclosed sale price. In terms of the reported number of transactions, the S&P activity is standing at similar levels of last week, while is down by 33% comparable with previous year’s weekly S&P activity when 24vessels induced buyers’ interest with bulk carriers grasping 50% share of the total volume of S&P activity. In terms of invested capital, bulk carriers have attracted almost 79% of the total invested capital with handysize vintage units still being on the frontline.

NEWBUILDING MARKET
In the newbuilding market, eventhough a retreat mode of business has been set the last two weeks, a bursting of activity has been revealed again with container business dominating in the scene, grasping 46% of the total volume of newbuilding business. A significant increase of ordering activity has been witnessed also in the bulk carrier segment, 100% week-on-week positive change. Overall, the week closed with 54 new orders reported worldwide, up by 145% from previous week’s activity and up by 40% from similar week closing in 2010 when 40 new orders had reported worldwide with tankers grasping 55% of newbuilding business. In terms of invested capital, the container market appears the most overweight segment due to massive postpanamax units ordered of 18,000 TEU by Danish liner operator Maersk, grasping 52% of this week’s total invested capital.
In the bulk carrier market, one contract emerged this week in the panamax segment for four units by Ocean Agencies, UK placed in China’s yard Dayang at $32,5 mil each for delivery in 2012 and in the handysize segment for two 36,000 dwt bulkers placed in Samjin Shipbuilding Industries of China by undisclosed contractor . Furthermore, Chinese player Shenzhen Ocean Shipping is expanding its coastal fleet by placing four units of 65,000 dwt and four of 50,000 dwt in two Chinese yards under the control of state owned China State Shipbuilding for delivery in 2013.
In the tanker market, some activity has been recorded this week in the crude segment by Knutsen NYK Offshore Tankers for a third shuttle tanker of 129,000 dwt at Hyundai for delivery in October 2013.
In the gas market, Greek shipowner Thenamaris is in talks with Korea’s Samsung Heavy Industries for the construction of two LNG units, but further details of the contract have not yet revealed. Furthermore, the gas shipping arm of Angelicoussis is said to have renewed its order placed on May with Daewoo Shipbuilding and Marine Engineering for two more units of 159,000cbm at a cost of excess $400 mil for delivery in 2014. Options for further two similar ships have been arranged as a part of the contract.
In the container market, the financial shipping arm of Hyundai, HI Investment & Securities has booked three 4,500 TEU postpanamax units for delivery in 2013. HI Investments is said to have already raised $131million to fund the first two vessels. In the post-panamax segment, MITSUI OSK Lines of Japan is said to have ordered two post panamax units of 8,600 TEU in compatriot shipyard Mitsubishi for delivery in 2013 to serve the Asia – Europe trade route. Moreover, Maersk Line exercised its option with Korea’s Daewoo Shipbuilding and Marine Engineering to build an additional 10 triple-E ships, originally order placed on February for another 10 similar units, for delivery in 2014-2015. Maersk line CEO Eiving Kolding said that the ships underline company’s strong commitment to the Asia-Europe trade and fit well with their current ambitions for the future development and trade. The vessels are called the “Triple-E” class for the three main purposes behind this creation – economy of scale, energy efficiency and environmentally improved- the ships will set a new industry benchmark for size and fuel efficiency. The option that the company has for another 10 more units may not be exercised. However, the Danish owner is said to be in discussions for another 10 boxship units of 10,000 TEU for deployment on the fast growing South American trades. Players suggest that the price of the 10,000 TEU units will not exceed the cost of $100 mil each.
In the sub-panamax boxship segment, Middle Eastern energy company Abu Dhabi National Oil Co (Adnoc) is said to have inked a letter of intent to construct 15 units of 2,600 TEU for delivery in 2013 & 2014 in South Korea’s STX Offshore and Shipbuilding at a cost of up to $600 mil.
In the passenger / cruise sector, market sources reveal that South Korea is poised to seal its first cruise ship contract of region $1 bn deal for Utopia Residences of the U.S. The shipbuilding nation was trying for more than a decade to secure a cruise ship contract and some believe that this deal will open the door for more similar contracts in the future.
In the offshore segment, players are placing every week new orders. Following the high valued orders by Dryships for another drillship and Seatankers Management for platform supply vessels, this week Havila Shipping of Norway has placed an order for a platform supply vessel in its own shipyard at Leirvik at $64 mil and Keppel FELS of Singapore has clinched a deal with Norway’s Standard Drilling for four jack up drilling rigs at $193 mil each.

DEMOLITION MARKET
In the demolition market, the monsoon period in India seems that has put a downward pressure in scrap rates, while there is a general feeling that levels may drop even further as the situation in Bangladesh is still unclear and owners do not appear very confident to commit their vessels under such environment. There are fears that a possible foreclosure of Bangladesh on the beginning of July will bring a large volume of scrap tonnage in the shipyards of Alang, pushing prices downwards. Since the end of April, scrap prices have lowered by $15/ldt-$30/ldt for dry and $20/ldt-$30/ldt for wet cargo with India and Bangladesh offering now $480-$495/ldt for dry and $510-$520/ldt for wet cargo. Pakistan managed to win one more unit this week on the dry market, a panamax unit of 12,067 lightweight for quite firm price at $495/ldt. On the other hand, the activity in China’s Shiprecycling industry has been muted again with prices falling below $460/ldt despite expectations for a firming of the market within the monsoon period.
The week ended at a significantly slower pace of activity with only 9 vessels reported to have been headed to the scrap yards of total deadweight 497,674 tons. In terms of the reported number of transactions, the demolition activity has been marked with a 47% week-on-week decline and in terms of the total deadweight sent for scrap there has been a 30% decrease. Bulk carriers for one week more won the lion share of scrapping business with two capesizes heading to the scrap yards. In terms of scrap rates, the highest scrap rate has been achieved this week in the liner segment by India for M/V “BM Challenge” 17,422dwt OF 6,555 ldt at $505/ldt, while in the wet market India has paid the firm price of $515ldt for M/T “IRAN RAJAI” of 39,339dwt of 9,974 ldt. At similar week in 2010, demolition activity was up by 68% than the current levels, in terms of the reported number of transactions, 22 vessels had been reported for scrap of total deadweight 683 mil tons with tankers holding 45% of the total scrapping business and India offering the highest levels $375/ldt for dry and $400/ldt for wet cargo.

GREEK PRESENCE
Greek players seem to have strengthened their position in the LNG segment with some activity coming to the light by the Greek owner Thenamaris and the gas shipping arm of Angelicoussis, while in the secondhand market they have purchased two small size units at a total invested capital of $14,4 mil.