The newbuilding markets are reportedly reactivated but at lower levels than in the previous months, while scrapping activity has been substantially higher, thus helping the alleviation of the pressures of tonnage oversupply, which has plagued both the dry bulk and the tanker markets, especially when it comes to larger sizes.
According to the latest report from Clarksons, “the newbuilding market has continued to remain relatively quiet this week with only modest levels of enquiry being witnessed. Owners, for the most part, remain cautious in making moves as they wait to see how the pricing story in China develops. That being said however, this week has seen reports of various new orders being placed, although in general are in slightly more niche sectors, but at least does suggest that some are prepared to move.
Whilst supply will always be a driving factor in pricing movements it is not the sole factor. With economic factors continuing to remain relatively bleak, including the ongoing European Debt crisis and a general lack of confidence in the world market, there has been an increased reticence amongst owners to order. This drop off in demand is yet another challenge the yards are having to face as they look to fill their capacity and with some now voicing an inability to continue to take orders at current price levels, it again suggests a period of consolidation may be necessary in the upcoming months” said Clarksons.
In a separate report, Piraeus-based shipbroker Golden Destiny said that the previous week’s high newbuilding momentum seemed be just exceptional due to a large number of orders revealed in Japanese yards in the bulk carrier segment and high levels of activity in the offshore segment. Overall, the week closed with 13 fresh orders reported worldwide at a total deadweight of 499,800 tons, posting an 80% week-on-week decline with activity in the bulk carrier segment being only for two very large ore cape units contracted by undisclosed Norwegian owner in Chinese yard at region $60 mil each. This week’s total newbuilding business is down by 74% from similar week’s closing in 2010, when 50 fresh orders had been reported with bulk carriers and containers being the protagonists by grasping 52% and 20% share respectively of the total ordering activity. In terms of invested capital, the tanker segment seems to be the most overweight due a 6 chemical units order of 19,800 dwt stainless steel tankers placed by UK owner, Zodiac Maritime Agencies Kitanihon Shipbuilding of Japan at an estimated price of $35 mil each, $210 mil in total. In the bulk carrier segment, Japanese yard Oshima Shipbuilding is rumored to have received a ten newbuilding orders for its newly developed energy efficient 77,000dwt and 82,000dwt bulkers, which reduce fuel consumption by 10-15%, for delivery after 2014. The Japanese shipyard has developed the world’s most energy efficient ships, which helped it for winning new bulker orders, according to asiasis. Furthermore, some news came to the light that the Canadian shipowner Fednav is looking in an order for up to four ice class strengthened capesize bulkers, valued nearly at $200mil per unit, to transport iron ore from Accelor Mital’s $5bn Baffinland iron ore project” said Golden Destiny in its weekly analysis.
On the other hand, in the demolition market, the shipbroker said that the last two weeks there has been a sense of stability in the price levels offered in Indian subcontinent region and China with India leading the market in terms of volume of transactions and prices. “In Bangladesh, the deadline of the last extension given in the market approaches and there are slow signs of scrapping activity till country’s ship recycling activities are secured again. India is paying region $505/ldt on the dry side with tankers seeing premiums excess $530/ldt if they contain specific amount of bunkers or stainless steel. However, the market may experience again some firmness in the levels offered in Chittagong as we move near to the review of Bangladesh extension. In the Pakistan, the levels offered are $15-$20/ldt below from their Indian and Bangladeshi counterparts and minimal activity is been recorded. As Ramadan period has now ended and Bangladesh may close again mid October there are hopes for stronger scrapping activity in Gadani.
The week ended with 23 vessels reported to have been headed to the scrap yards of total deadweight 1,063,319 tons. In terms of the reported number of transactions, the demolition activity has been in the same levels from previous week’s high levels, while there has been a 40.6% increase in terms of the total deadweight sent for scrap. In terms of scrap rates, the highest scrap rate has been achieved this week in the bulkcarrier segment for a 82,513dwt vessel built 1983 with a lightweight of region 14,947tons that has been sent for beaching in Bangladesh at $543/ldt. Bulk carriers continue to be the most popular scrap candidates grasping 60.8% and liners follow with a 26% share, whereas scrapping activity in the tanker segment remains limited with only 2 units reported for scrap. India and China are in the frontline by attracting most vessels, while this week they won 26% and 21.7% respectively of the scrapping business. At a similar week in 2010, demolition activity was standing at 69.5% lower levels, in terms of the reported number of transactions, when 7 vessels had been reported for scrap of total deadweight 236,806 tons with tankers holding 43% of the total volume of activity and only one panamax bulk carrier sent for disposal. India and Pakistan were offering $395 -$405/ldt for dry/general cargo and $430-$445/ldt for wet cargo, while Bangladesh market was inactive” concluded Golden Destiny.