In Hellenic Shipping News 20/04/2015
Ship owners have converted a large number of dry bulk Capesizes newbuildings to tankers during the first quarter, leading to the highest ordering activity since the first quarter of 2007. As such, the demise of the dry bulk market has led to a surge of ordering activity for the yet booming tanker market. According to the latest weekly from shipbroker Gibson, “confirmed orders above 25,000 dwt totalled 84 units amounting to 12.1 million deadweight tonnes and include 19 Aframaxes, 18 Suezmaxes and 13 VLCCs. Robust ordering for clean tonnage was also apparent and included 17 LR2s, 12 LR1s but just 5 MRs. 50% of all orders were contracted in January (42) falling to 25 in February and just 17 in March. It comes as no surprise that the bulk of the orders were placed in Korean shipyards with 57 orders (63%) of all confirmed contracts”.
However, “one of the key features of ordering activity during this quarter has been the number of Capesize drybulk carriers (180,000 dwt) which have been converted into tanker contracts. Our records show that during the 1st quarter, 15 Capesize orders were confirmed as transferring to 8 LR2s, 4 Aframaxes and 3 LR1s which has helped to swell the tanker orderbook. We are also aware of other owners waiting in the wings to do similar deals to reduce their dry cargo exposure. Very recently an order for 4 ice class 1A Aframaxes for TMS Tankers has emerged, the first contract for ice class tonnage in this size range since November 2010. In January, AMPTC placed an order for 2 coated Suezmaxes (or LR3s) both for delivery in 2017. This order has created a great deal of interest in this segment as questions remain over product berth infrastructure capable of handling this size of unit. In January, Knutsen NYK Offshore ordered another DP2 shuttle tanker from Cosco Zhoushan. The order had a timecharter attached and will operate in offshore Brazil. Navig8 added 2 more ‘wide beam’ LR1s to their existing order of 10 similar vessels. Wider beam LR1s have gained popularity, designed to provide additional cargo capacity and fit the new enlarged locks on the Panama Canal”, said Gibson.
The London-based shibroker added that “in terms of numbers, we have already reached 50% of the total orderbook achieved in 2014. Today, perhaps owners are being more selective in the vessel types contracted evidenced by some of the more niche tonnage mentioned above. As we start the 2nd quarter of the year, there are perhaps many economic and political uncertainties that could apply the brakes to slow ordering activity. It is also noticeable that Hedge Fund and Private Equity funding has taken a lower profile and could be an indication that shipping has lost its allure for this type of investment. However, newbuilding prices continue to remain tempting which could attract further investment, although concerns about the delivery profile going forward may dissuade owners from further investment. What is also certain is that tanker owners do not want to take the backlash of the failings of the dry cargo market”, it concluded.
Meanwhile, in the crude tanker market this week, in the Middle East, “VLCC Owners had to endure a rather frustrating week. Previously they had benefited from the post-Easter rush to fix, and had been hopeful/confident of pushing their envelope a bit further, but thinner than anticipated end April demand, and a stubborn witholding policy by Charterers towards their May programmes, combined to let rates slip back to an average ws 60 East and low ws 30s to the West. Things are now becoming more active, however, and there should now be a good scrap to set the mark for the bulk of the month’s demand. Suezmaxes started slowly..ended busier, but availability remains sufficient to deaden any real upward ambition, and rates stay at around ws 80 East and mid ws 30s to the West accordingly. Aframaxes bumbled along at an unchanged 80,000 by ws 105 to Singapore, and look as if they will continue bumbling similarly over the near term”, Gibson concluded.
