The last days, the industry has witnessed a burst of demolition activity with firming market sentiment, while the secondhand ship purchasing activity have shown some signs of softness as we have entered the traditionally lull summer period with purchase interest in the bulk segment being still apparent and limited buying activity in the tanker and container segment. In the newbuilding market, it is evident that the shift in the ordering trend towards containers and gas tankers is going to be continued as we move towards the third quarter of the year with new more deals coming to the light by LNG and container players.
Overall, the week ended with 27 transactions reported in the secondhand and demolition market, posting a 29% increase from a similar week in 2010 when 21 transactions had been reported, while the highest activity has been recorded in the newbuilding market with 43 fresh orders reported worldwide.

SECONDHAND MARKET
In the secondhand market, 15 vessels reported to have changed hands this week at a total invested capital in the region of US$184 million, 2 transactions reported with undisclosed sale price. In terms of the reported number of transactions, the S&P activity is up by 36.4% from last week’s activity and up by 67% comparable with previous year’s weekly S&P activity when 9 vessels induced buyers’ interest with tankers grasping 55% share of the total volume of S&P activity. In terms of invested capital, bulk carriers have attracted almost 53% of the total invested capital with vintage units still being popular purchase candidates. Notable deals for modern units were an enbloc resale of two bulk carrier handysize units of 30,000 dwt for delivery in 2011 from Tsuji Jiangsu at excess $24,5 mil each and in the tanker segment the sale of the aframax tanker “TORM MARGIT” of 109,672dwt built 2007 for $47,5 mil.

NEWBUILDING MARKET
In the newbuilding market, the massive order for 25 river / sea tankers by Volga Shipping Company, Russia has boosted again the ordering volumes this week, up by 72% from last week’s levels, giving false impression for the newbuilding business. There has been a soft market sentiment lately as the freight rates for the dry and wet market are being pushed downwards with players being skeptical for the placement of new orders, given the plethora of new vessel deliveries. Gas carriers and containers have been in the frontline as newbuilding investments, while offshore vessels follow with high demand for platform supply vessels and drilling rigs. Overall, the week closed with 43 new orders reported worldwide, being in parity with the levels of similar week in 2010 when 24 bulk carriers contracts had been reported. Once again it is difficult to estimate this week’s total invested capital, since 95% of the total newbuilding transactions are reported as an undisclosed contract price.
In the bulk carrier segment, Mitsui Engineering & Shipbuilding has announced a contract to build two 66,000 dwt units for an undisclosed contractor to be delivered by 2014. The two “Neo Supramax 66 BC’ bulk carriers” that will have a post panamax beam of 36m are considered to be the next generation, low-fuel consumption vessels. What is noteworthy is the news that the Australian iron ore producer Fortescue Metals Group is planning to order up to six 250,000 dwt ore carriers in South Korea or China. Market players say that the group is developing its own ports that will be able to accommodate its units. Sources suggest that if the vessels are going to built in Korea they would like cost in excess of $480 mil in total, more than $80 mil each unit. In the handysize segment, Japan’s Kitanihon Shipbuilding has received an order from Taiwan’s Unison Marine to build two units of 28,000 dwt at an undisclosed contract price for delivery in the third quarter of 2012. The yard, which specializes in chemical tankers, has decided to enter the handysize market last year after sluggish demand for its main product, chemical tankers. In the supramax segment, new Turkish shipping player Aruna Shipping has placed an order for three 56,000-dwt units at South Korea’s Hyundai Mipo Dockyard for delivery in August/November 2012 and March 2013. One source close to the deal says that the Turkish company booked the bulkers two months ago, but the deal was not reported. Deputy General Manager of Aruna says that they pay between $30-$31 mil for the units, including extras.
In the tanker segment, Aker Philadelphia confirmed that it might win the first US orders for crude tankers in half a decade. The yard has signed a letter of intent to build two 115,000dwt aframax tankers for delivery in 2014. Definitive agreements are expected in third quarter of the year.
In the gas tanker segment, sources suggest that Dryships of George Economou has penned an order for four 159,000 cbm LNG units in South Korea at a total cost of $848 mil, with an option for two more units, for delivery in 2014.
In the container market, although the trend of ordering mega containerships of 8,000-18,000 TEUS persists, it seems that some operators are not so keen to follow similar movements and expand their fleet via these massive newbuilding contracts. Chief operating officer, Lim Sim Keat, of Pacifc Shipping Trust said that acquiring mammoth containerships and leasing them to charterers is not an attractive proposition to the company. They feel that those large containerships do not fit into their business as they can only be deployed in the Far East-Europe trade and they are not liquid enough as they are suitable for one trade and not many charterers will have use for it. Meantime, German firm Peter Dohle has been the latest shipowner to order ultra large containerships as it has signed a letter of intent for eight 10,000 TEU vessels from China’s Yangzijiang Shipbuilding. The Singapore listed shipbuilder has joined with Dohle in a three way agreement with China Development Bank to provide $1 billion to finance the order. Ren Yuanlin, CEO of Yangzijiang, said in a statement that the co-operation agreement is not only important to the yard and its customer but it is also important for stronger bilateral economic ties between China and Germany.

DEMOLITION MARKET
In the demolition market, the situation for the reopening of the Bangladesh remains pending, while in India prices are going high, surpassing the barrier of $500/ldt, due to mainly firm steel prices Despite the announcement that the Bangladesh market has been granted an extension till October, the Bangladesh Environmental Lawyers Association (BELA) made an appeal to the extension and the decision was reviewed again by the Supreme Court with the market remaining shutdown. Pakistan and China have been left behind with expectations for a hard competition between India and Bangladesh. The news from the Bangladesh market buoyed the sentiment in India with some units fetching levels well in excess of $500/ldt including a large amount of bunkers remaining on board. Pakistan won one bulker in its scrap yards with China witnessing more activity in its scrap yards at levels of excess $450/ldt.
The week ended with 12 vessels reported to have been headed to the scrap yards of total deadweight 557,302 tons. In terms of the reported number of transactions, the demolition activity has been marked with a 50% week-on-week decline and regarding the total deadweight sent for scrap there has been a 21% drop. Bulk carriers continue to dominate the demolition scene grasping 67% of this week’s total demolition activity. In terms of scrap rates, the highest scrap rate has been achieved this week in the bulk carrier sector by India for a panamax unit of 64,780dwt “HANDY V” OF 11,349 LDT at $530/ldt incl 700tons of IFO remaining on board. India has attracted 50% of the total demolition activity offering $515/ldt for dry/general cargo and $540/ldt for wet cargo. At a similar week in 2010, demolition activity was standing at similar currently levels, in terms of the reported number of transactions, 12 vessels had been reported for scrap of total deadweight 694 mil tons with only two bulk carriers scrapped and India offering the $400/ldt for dry and $440/ldt for wet cargo.

GREEK PRESENCE
Greek investors’ interest persist for container and LNG newbuilding investments, while in the secondhand market this week appear to be away. In the newbuilding market, Technomar Shipping has inked a pair of 6,700 TEU vessels for delivery in 2013 at an undisclosed contract price, while it has placed one more similar order of two units back in May. In the LNG segment, Greek investor appear the same active with rumours suggesting that Tsakos Energy Navigation has started discussions with South Korea’s Hanjin Heavy Industries on LNG-carrier newbuildings. TEN has revealed its intensions in the LNG segment as its chief executive Nikolas Tsakos has admitted that they view LNG transport as integral in the overall energy chain and they will continue to explore tangible opportunities in order to expand their footprint in this promising sector. Additionally, Dryships of George Economou is said to have placed an order for four LNG units of 159,000 cbm in South Korea, at a total cost of $848mil, for delivery in 2014.