Attractive pricing, coupled with long-term prospects in freight markets usher ship owners to continue investing in new building vessels, despite the more than unfavorable current market conditions. According to the latest report from Golden Destiny, “in the new building market, more business came to light this week with activity in all main segments, bulk carriers, tankers and containers, against fears of late recovery in the shipping environment. Market players seem that they seek for more newbuilding investments so as to explore the bottom lows of the prices that yards are offering, while Japan is slipping behind due to price competitiveness from yen appreciation against dollar. However, some hidden business has been revealed this week with robust activity in the tanker segment for small product carriers and liners. The notable deal of this week was revealed in the bulk carrier segment with the ordering of two Very Large Ore Carrier units of 405,000dwt by BW Group (Berge Bulk) of Norway in Bohai Shipyard for delivery in 2014. The units will be long term chartered to Vale Brazil and the order leaves questions about the investments strategies of shipping conglomerates as they seem that dismiss fears of oversupply in the capesize segment. Overall, the week closed with 56 new orders reported worldwide, up by 87% from a similar week in 2010 when 30 contracts had been reported with bulk carriers grasping 50% of the activity. In terms of invested capital, the passenger / cruise sector appears this week the most overweight segment due to the investment decision of Carnival for placing three newbuilding units at a total cost of close to $2,15 billion. The offshore segment has experienced no activity the last days, while it used to be the most heavily invested segment in previous weeks” said the Piraeus-based shipbroker.
In a separate report, Clarksons said that “with the Korean yards due to return from their holidays next week and resume construction within their facilities, we hope the lull in the market as witnessed this week will be short lived and contracting will again begin to pick up. Of course with many Owners away for their own summer vacations this may take a little longer to really get going again.
Whilst the newbuilding market has been understandably subdued this week the Global Financial Markets have not. The Bank of Japan has again waded into the markets in an attempt to stem the appreciation of the Yen. Whilst this was effective on the day, seeing a 3.5% reverse swing it remains to be seen what the long term effect is on the currency. This intervention will likely give the Japanese yards some comfort in the knowledge that the Japanese export market has not been completely forgotten by its Government, however until there is a significant depreciation in the value of the Yen back to levels witnessed last in 2010 in the 90s (yen per dollar) then it is likely the Japanese yards will continue to struggle to compete with their Far East rivals.
This intervention has not however been the only source of news in the Financial markets with both uncertainties in Europe, along with a certain deadline in the US adding to a great deal of turbulence and a seeming loss of confidence. We will need to wait and see whether this uncertainty in the market (and the conservative investment attitudes that typically follow) will have an effect on the Ship building market, as both owners and shipyards return from their vacations and take stock for the remainder of the year” said the world’s leading shipbroker and researcher.
In terms of business concluded in the bulk carrier segment, Greek owner Capital Product Partners, a division of parent Capital Maritime & Trading, entered the bulk carrier sector for the first time by ordering one kamsarmax unit in Sainty Shipyard of China for delivery in 2014. Moreover, Cardiff Marine of Greece has added two more 176,000dwt units at Shanghai Waigaoqiao for delivery in 2014, mentioned Golden Destiny. In the tanker segment, the majority of the business came from the Japanese yards by domestic owners, while one MR unit has
been placed in Korean Hyundai Mipo for delivery in 2013. In the container market, following the ordering plethora of post panamax units this week new deals emerged in the handy sector. German owner Hermann Buss has placed an order for four 1,705 units in Chinese yard Guangzhou Wenchong, which has a long history of building tonnage for German owners, for delivery in 2012 and 2013 at an undisclosed contract price. More fresh business has also been revealed in the handy sector by Sinotrans of China and Pan Continental Shippping of South Korea. In total, 8 orders is estimated to have been placed for container units in the handy sector this week, but this does not imply that the mega containerships’ ordering trend has been faded out.