With Golden Week and National Holidays in both Japan and Korea this week, shipbuilding orders have taken a step back, as evidenced also by the fact that the only major newbuilding deal reported, involving Hellenic ship owners was the one where Med.
Maritime contracted three more 1,700 teu container ships.
According to the latest weekly report from Clarksons, the market has been a little subdued in terms of activity in the Far East. Nevertheless - there continue to be reports of new business being concluded, with the container sector continuing to dominate the bulk of new orders in accordance with the broad trend of the year.
“Whilst this interest in the container sector has been well received and assimilated by those yards with good Container experience - it has meant that shipyards have been forced to re-evaluate their existing position on Dry and Wet - and this has in turn lead to a more innovative drive to improve design concept and efficiency for both dry and wet sectors - in an attempt to re-invigorate interest in these sectors.
As a direct response, efficient ship designs have become an increasingly important factor in winning new business, especially in light of the continuing rise in bunker pricing and consequent operating costs. We continue to see the yards and design houses work to develop these new designs, in which improvements to Fuel consumption and efficiencies are being witnessed through new hull forms, utilising new engine types and many other innovations. As, or when, appetite returns to these sectors, it should be anticipated that the yards to have done the most in terms of developing these designs will be the ones best placed to benefit from any changes to the current demand cycle” said Clarksons.
In a similar report on the newbuilding market, Piraeus-based shipbroker Golden Destiny said that after almost three weeks of intense activity the ordering sentiment has cooled off in the bulk carrier segment with containers looming as the protagonists of the newbuilding scene. The week ended with 37 units reported on order, equalling to a total deadweight of around 3,2 mil tons, representing a 43% negative w-o-w change. The total invested capital of this week is more than $2,2 bn of dollars with containers grasping the 62% share of the total ordering activity. The offshore segment has been on the sidelines, while no ordering interest has been revealed for the gas carriers. However, market holds an optimistic view for further newbuilding business in the LNG or LPG segment.
In terms or reported business; In Containers, Hanjin Subic are reported to have won an order from Zodiac Maritime for 4 option 2 vessels of their 6,600TEU container design with the vessels scheduled to deliver within 2013 and 2014. Zodiac are also reported to have signed a deal at Daewoo Mangalia for 4 option 4 vessels of 9,000TEU in size with the firm vessels again due for delivery within 2013 and 2014. SITC have also been busy and have increased their order for 1,100TEU containerships at Yangfan, originally 8 vessels signed last year to a total order of 10 + 6 units due for deliveries throughout 2013 and 2014 at a price in the region of USD18.1 Mill pre vessel.
In Dry, KC Maritime are reported to have signed 2 option 2 x 82,000dwt Kamsarmax Bulk carriers at Daewoo Mangalia set to deliver in 2013. Yangfan meanwhile have won more business, this time with Hongxiang for 2+2+2+2 x 205,000dwt Capesize bulkers to deliver from End 2012 and through 2013.
In the first quarter of 2011, the new orders totaled 227 vessels, the new low since the third quarter of 2009. According to the statistics of Clarkson, there were only 8 tankers of 667,000 dwt ordered in the first three months which was the lowest lever ever since 1996, while the orders for tankers hit 75 vessel of 13.8m dwt in last 3rd quarter.
Bulker carrier orders for the first quarter stood at 79 vessels of 6.6m dwt, dropping significantly compared with last second quarter (279 vessels, 31.5m dwt). However, the performance was much better than that of the second quarter of 2009 (31 vessels of 3.2m dwt).
ICAP Shipping pointed out shipyards continued ordering new vessels in the last year due to the low price. As the result, 2011 new orders were trapped by adequate orderbook and terrible shipping financing. Besides, newbuilding prices are very likely to keep current high level because of the increasing materials and labor costs.
According to the statistics of China Association of National Shipbuilding Industry (CANSI), many bulk carrier orders were cancelled in the first quarter. Big shipyards are showing great interests in LNG carriers.
In the first quarter of 2011, China’s combined newbuiding output hit 14.46m dwt, basically the same with last year, while new orders and orderbook came up to 10.91m dwt and 190.04m dwt respectively. Shenyin & Wanguo Securities pointed out current Chinese new orders were continuing the restorative rise which has began since 2010. However, it is difficult to keep this increasing tendency.
The traditional products structure of domestic shipyards, which focuses on bulker carriers and tankers, is facing severe challenges under the double blow of bulker overcapacity and sluggish shipping market. In the first quarter, the cancelled orders came up to 21 vessels of 1.075m dwt nationally, which accounts for 0.57 of the total orderbook and mostly are bulker carriers.
In addition, shipyards are getting more tough financial problems. As some shipbrokers said that newbuilding bulker price has dropped by about 30% and the shipyowners’ payment ratio has gone down to 40% or even 20% from the original 70%-80% after the financial crisis. Many bulkers built in 2011 have entered secondhand market with parity or even lower prices.
LNG carrier orders has boomed recently in international market with Golar LNG ordering four 160,000 LNG carriers from Samsung and its compatriot Hyundai getting a big order of 6 LNG carriers. Besides, many big shipyards are considering or in negotiation for LNG newbuildings.
Domestically, CSIC has successfully carried out R&D on LNG carriers and is trying to market its independently designed LNG ship type internationally. The group has kept its leading position in LNG carrier sector in China. Rongsheng also has planned to enhance its research and development on drilling vessels and LNG carriers.
About 30 percent of China's coastal shipping companies are suffering a loss due to overcapacity and high fuel price, Xu Zuyuan, vice minister of transport said.
According to Xu, some 40 percent of the country's inland shipping firms are also suffering a loss.
Data from the ministry shows China's cargo handling capacity from major ports was 2.08 billion tons in the first quarter, up 14.3 percent year-on-year. However, as oil and human labor are getting more expensive, shipping companies, especially those which are smaller in size, have suffered from shortened demand.
"We are at the edge of loss since exports decreased with yuan's appreciation," said Zhang Zuohai, general manager of China Container Line (Shanghai) Ltd.
According to Zhang, the company is losing its clients from Europe and the United States since some of them have turned to cheaper markets such as India and Vietnam.
Recently, China's shipping stocks have been in bad performance also.
China, if measured by the number of ships it produces and the number of orders it receives for such vessels, is the foremost shipbuilder in the world.
Still, the country needs more time to become a real superpower in the shipbuilding industry, said a senior industry official.
China became the foremost shipbuilder in the world in 2010 and aims to become the builder of the most advanced ships by 2015, Li Dong, vice-director of equipment industry department of the Ministry of Industry and Information Technology, told a press conference on Saturday.
In 2010, China built ships with a total deadweight capacity of 65.6 million tons, accounting for 43 percent of the deadweight capacity of ships built in the world, he said.
In the same year, China received orders for the construction of ships with a total deadweight capacity of 75.2 million tons, making up 54 percent of the new orders in the world.
Also in 2010, the country was trying to catch up with unfulfilled orders for ships with 195.9 million tons of deadweight capacity, accounting for 41 percent of the unfulfilled orders for ships in the world.
"China has surpassed South Korea to become the foremost shipbuilder in the world," said Steen Brodsgaard Lund, executive vice-president and head of maritime services Asia-Pacific of the Germanischer Lloyd SE , a German classification society based in Hamburg.
"This momentum is likely to be maintained as China's booming shipbuilding industry is now on its way to become the world's leading shipbuilding nation from a quantity perspective and also continues to make impressive quality improvements."
Li said China, as part of its 12th Five-Year Plan (2011-2015), is looking to move from being a great sea power to a shipbuilding superpower.
Still, the country lags behind other shipbuilding powers in its ability to innovate and improve the technology used on seagoing vessels, he said.
Hu Keyi, technical director of Jiangnan Shipyard (Group) Co Ltd, is confident China enjoys great prospects in the shipbuilding industry.
"I want to answer those who wrongly hold that China's shipbuilding industry is too weak to compete with those of other nations, such as Japan and South Korea," he told China Daily in an exclusive interview this year. "As a matter of fact, after more than 10 years of rapid development with support from both State-owned banks and government policy, we can build high-end ships just as well as our counterparts."
Hu conceded China lags behind countries like Japan, the United States and South Korea in the construction of high-tech ships. Still, he said, China has advantages.
Shanghai Jiangnan Changxing Heavy Industry Co Ltd, which is affiliated with the 146-year-old Jiangnan Shipyard, recently received an order from a German ship owner for the construction six containerships, each with a capacity of 9,000 twenty-foot equivalent units.
"Those are the largest of their kind that have ever been designed in China," Hu said. "The order shows Chinese shipyard's ability to build containerships in accordance with international standards."
He said business between Chinese shipyards and overseas clients will spread the reputation of vessels made in China.
Till late April, domestic secondhand bulker prices have been going more ups than down, secondhand containerships have basically kept the same price level while tanker sector has gained mild upturn. The combined trading volume has been a little sluggish with bulker, chemical carriers and offshore sectors being relatively active. Statistics show that totally 62 vessels of 65,095dwt with a value of CNY 122m were traded, rising by 30.61%, 30.62% and 52.11% respectively against previous week. Bulkers, tankers, containerships, barges, MPVs, offshore and chemical carriers respectively accounted for 47, 2, 1, 2, 2, 4 and 4 of the total.
International secondhand bulker price dropped, tankers rose and containerships also kept stable. The trading volume increased slightly to 31 vessels of 2.298m dwt, rising by 3.33% and 72.36% separately. Bulkers, tankers, containerships, Ro-Ro, chemical carriers, LNG carriers and tugs occupied 15, 8, 3, 2, 1, 1 and 1 of the total.
Totally 32 vessels of 226,500teu were delivered in April, a new high of single-month deliveries.
According to the statistics of Alpanliner, 41 containerships of 204,000teu are expected to be delivered in May, which will further break the supply and demand balance in container shipping. Besides, taking the boxships under construction in April and May into construction, the containership delivery in the first five months would hit 688,000teu globally.
Danaos Chief executive John Coustas expects the supply and demand equation to bode well for owners over the next two years but urges the industry to keep an eye on the orderbook.
In its New York-listed boxship operator’s first-quarter earnings report, the chief executive told investors: “We have noticed significant speculative ordering of newbuildings this quarter, which although not alarming at the moment, should be closely observed. However, we remain quite optimistic for the next 24 months as the demand supply balance will be in the owners' favour.”
John Coustas says speculative ordering is so far limited to the sub-5,000 teu sectors, but needs observing. The chief executive also says Danaos is not rushing to join an emerging new spree of containership ordering after only just completing a major refinancing.
Mr Coustas said that speculative ordering had so far been concentrated in smaller sizes, for ships with capacities less than 5,000 teu. “We have not seen any speculative large post-panamax ordering,” he said.
Mr Coustas said companies eager to contract newbuildings were either “people who had no exposure to the container market and want to get in” or those with older vessels taking the opportunity to renew fleets.
In terms of S&P activity, the week ended with 51 sales reported in the secondhand and demolition market posting a 16% positive w-o-w change. The highest activity has been recorded again in the newbuilding market with 37 orders.
Overall, 32 vessels reported to have changed hands this week at a total invested capital in the region of US$ 402 million. In terms of the reported number of transactions, the S&P activity has been marked with a 23% positive w-o-w change, while is up by 39% comparable with previous year’s weekly S&P activity when 23 vessels induced buyers’ interest with bulk carriers grasping 26% share and tankers 52% of the total volume of S&P activity. In terms of invested capital, the most overweight sector for this week is the tanker segment grasping 47% of the total amount of money invested.
In the newbuilding market, after almost three weeks of intense activity the ordering sentiment has cooled off in the bulk carrier segment with containers looming as the protagonists of the newbuilding scene. The week ended with 37 units reported on order, equalling to a total deadweight of around 3,2 mil tons, representing a 43% negative w-o-w change. The total invested capital of this week is more than $2,2 bn of dollars with containers grasping the 62% share of the total ordering activity. The offshore segment has been on the sidelines, while no ordering interest has been revealed for the gas carriers. However, market holds an optimistic view for further newbuilding business in the LNG or LPG segment.
At a similar week in 2010, the newbuilding activity in the dry bulk and tanker segment was up by 55% and 60% respectively, while it now seems that the shipyards worldwide are trying to being evolved in the construction of more specialized units as the eager appetite for bulk carriers and tankers has faded out, although several spikes of activity has been recorded in some weeks.
Although there were fears during the last days that the Bangladesh Enviromental Lawyers Association will show resistance against the recent lifting of vessels' ban for scrapping, hungry buyers in Chittagong continue their purchases. Scrap prices in India remain firm at $500-$520/ldt for dry and $530-$540/ldt for wet tonnage, while Bangladesh levels are still not so competitive that the owners will risk sending their vessels for scrapping in Chittagong. China still tries to compete with its rivals at the low levels of $445/ldt for dry and $465/ldt for wet tonnage, while Pakistan is still on the sidelines paying less than India and Bangladesh and with no success for securing some more tonnage. Thus, India drives the market for one week more; as there is still uncertainty in Bangladesh and the temporary spike in levels do not yet offer comfort for the vessels’ beaching.
The scrapping spree for capesize tonnage continues with two more large units heading to the scrap yards this week. The demo deal grasping the headlines of this week is for a VLOC “ALSTER N” 305,000dwt of 41,500 ldt fetching $510/ldt in Bangladesh. In general, bulk carriers seem to dominate the demolition scene due to sharp volatility of the freight market.
The week ended with 19 vessels reported to have been headed to the scrap yards of total deadweight 1,396,745 tons. In terms of the reported number of transactions, the demolition activity was almost the same however in terms of deadweight sent for scrap there has been a 78% increase. In terms of scrap rates, the highest scrap rate has been achieved this week in the tanker sector by India for a tanker of 28,750dwt “WASEL” at 568/ldt. India this week attracted almost 58% of the total demolition activity. Comparing to a similar week in 2010, demolition activity has been decreased by 13.6%, when 22 vessels had been reported for scrap. China was leading the game by paying $400/ldt for dry and $425/ldt for wet cargo and Bangladesh was offering just $325/ldt for securing dry and $410/ldt for wet cargo.
The week ended with the little activity by Greek investors. In the secondhand market just one transaction has been reported of a panamax bulkcarrier, while in the newbuilding market Eastern Med. Maritime contracted 3 more 1700teu containers. The total investment of the Greek presence is calculated at region $ 31.5 mil in the secondhand market and $ 90mil in the newbuilding market.
In the government’s 11th five-year plan, Chinese shipbuilding realized leaping development to grow as one of the shipbuilding giants in the world. However the industry development in the 12th five-year plan would be more challenging and complex.
Chinese shipbuilding industry gained gratifying results during the 11th five-year development plan and the three main indices of the industry made great breakthrough in 2010. The newbuilding output, the new orders and the order book hit 6.56m dwt, 7.532m dwt and 1.91dwt, accounting for 43.6%, 54.8% and 41.2% respectively of the global total. However, behind the excellent performance, Chinese shipbuilding is confronted with more severe situations and challenges.
Director the ship department with MIIT Chen Yingtao put forward that the 12th five-years would be the essential period for China’ shipbuilding industry to transform from a “big” shipbuilding powerhouse to a “strong” shipbuilding giant. Currently Chinese shipbuilding industry encounters six main challenges to overcome: uncertainty of domestic and economic development, long-standing demand shortage in the international market, gradually intensified competition among shipyards, the release of new international shipbuilding regulations and policies; increasing raw materials and labor cost as well as inflation pressure and price instability from appreciation of the yuan.
Nevertheless, to our delight, Chinese shipbuilding industry is in growth under the sound domestic macroeconomic surroundings and good financing situations and still boasts its advantages in technology, capital and market. In the significant transformation period for
The concrete development target of