In Hellenic Shipping News 04/06/2015
Newbuilding activity is still a far cry this year, when compared to last year’s frenetic pace of contracting. In its latest report, shipbroker Allied Shipbroking noted that “with activity shown to have been drastically reduced during the course of the past five months, this weeks reported contracting does not show any change in market conditions. There was a short burts in new contracts on the tanker front that came to surface this week, with most centered around product carriers and many looking a trend towards the larger LR size segments”.
According to Allied, “some of the reported orders continue to be switches from previously ordered dry bulk vessels such as the case of this weeks switch by Singaporeans Cara Shipping. At the same time and with exception to the product tankers which are likely to see a small surge in activity over the coming weeks if not months, the rest of the market has been unable to show any respecta-ble signs of life. This is something that has also followed the trend in offered prices thus far, with discounts compared to previous years being noted in all ship sectors. As things stand now however, it looks as though there may well be further discounts in price as even at these current levels shipbuilders are finding it hard to market their future shipbuilding slots”.
In a separate report, shipbroker Intermodal said that “the end of spring season found the newbuilding market in the same unchanged stage of the past months, with weak activity and non-existent dry bulk ordering prevailing, while conversions and options are still making up a good part of the most recent reported deals. Prices appear to have momentarily stopped their downward movement but we reiterate our opinion that there is more room for further corrections during the summer season, where slower activity usually prevails. At the same time, the trend of converting bulker orders seems to be holding strong. Orders that were placed following the good market the sector enjoyed back in the end of 2013, continue to trouble owners behind them and it seems that a big part of those who still can, will opt for converting their order usually to a tanker one, while without trying to sound too pessimistic, we hope history won’t repeat itself and whatever tanker orders – original ones or conversions – are currently being placed, won’t come back to haunt their owners a couple of years down the line as it is currently happening with big bulkers. In terms of recently reported deals, China Shipping Development placed an order for four firm LR2s (115,000dwt) at Dalian, in China, for a price of $52.0m each and delivery set between 2017 and 2018″.
Meanwhile, in the demolition front, Allied noted that “with the monsoon season slowly showing its face this week in the Indian Sub-Continent and the upcoming government budget announcements for both Pakistan and Bangladesh set to be released this week, the market has started to show its typical slowdown. It is unlikely that either of these two will have considerable effects for the remaining months of the year, yet even this typical slowdown might leave a market a touch softer from where it found it and possibly lead to a different approach by breakers once this issues have been moved out of the way. The fear amongst most owners is that any such change in market perception in terms of pricing, will have a detrimental effect on the continual removal of overage units, something that’s proved to be detrimental in up keeping some sort of counterbalance to the over-supply issues faced by some sectors. Given however that the vast ma-jority of activity that has been reported during the past couple of months has centered around the dry bulk sector, it is likely that even at a touch softer prices to what we had seen during the past five months, the demolition market will still be able to keep activity going, while making the decision for most owners of overage units favorable compared to the cost of passing any upcoming surveys”.
Intermodal added that “demolition prices in the Indian subcontinent appear to have stabilized for now, following a month of significant discounts that have left the market with a lower new normal in terms of activity volume and price levels matching the year’s lows back in the beginning of March. Whether the summer season will continue in the same mood is too soon to tell. Breakers in Bangladesh and Pakistan will focus on the outcome of their countries’ respective budgets, both due before the end of the week. Should rumors for increased tax on the industry are announce, this will normally affect both prices and breakers’ appetite to acquire tonnage. On the other hand things in India seem to be slightly better, and this is evident in the presence of sales involving Indian breakers, who now seem a bit encouraged by the revival of both local steel prices and the Indian Rupee. Prices this week for wet tonnage were at around 225-385 $/ldt and dry units received about 210-370 $/ldt.”, the shipbroker concluded.
