Chinese shipbuilders have secured the majority of last week’s reported orders, bolstering further China’s status as a top shipbuilding nation.
New Times Shipbuilding has won a contract for the construction of eight 63,000 dwt bulkers from Cyprus-based Frontmarine, according to Allied Shipping Research.
The ships are slated for delivery in 2020 and are valued at USD 26.5 million apiece, pushing the total value of the deal to USD 212 million. The deal is said to include additional options.
Qingdao Wuchuan Heavy Industries has been tied to an order for up to eight 86,000 dwt bulkers. Chinese owner Fujian Guohang Ocean is said to be behind the contract, which includes three firm ships and options for five newbuilds, Asiasis said.
The trio is scheduled for completion in 2019 and is estimated to have fetched around USD 90 million in investment.
South Korean counterpart Hyundai Heavy Industries has reportedly won an order for two 400,000 dwt bulkers from compatriot Hyundai Glovis, while Japanese yards, including Tsuneishi, Sasebo Heavy Industries, and Mitsui Engineering nabbed orders for one small bulker each.
Separately, Chinese Chengxi Shipyard has been linked to an order for up to four 56,000 dwt tankers, placed by HK Kai Sheng International Shipping, data from Allied Shipping shows.
Under the terms of the deal, the Chinese yard will build two tankers, scheduled for completion in 2019 and 2020 respectively. Two additional units are optional.
The newbuildings are priced at around USD 30 million apiece.
Ship owners are contracting newbuilding vessels left and right over the past week, as 2018 and the Holiday Season are just a couple of weeks away. In its latest weekly report, Allied Shipbroking said that it was “another week with plenty of activity being reported in the Newbuilding market, after many weeks of high volatility and sluggish fresh interest noted. At this point, both of the main sectors driving the market, namely the Dry Bulks and Tankers showed a fairly healthy appetite in placing new orders. It is true that the new high reached in the overall Dry Bulk freight index has helped further boost the interest for new orders, changing the mind of many who had second thoughts as to the robustness of the market from the downward correction that was noted in previous weeks. Beyond this however, the surprising aspect to this market has been the activity which came from the Tanker side, where the state of the market with its bearish mode, would seemingly be uninspiring for many potential investors. As things stand down, the trend in the Newbuilding market indicates that we can expect many more interesting projects coming to light before the close of the year, as most will be trying hard to secure both the favorable price levels that are still being quoted as well as the growing options in terms of financing made available from a number of major Chinese shipbuilders”.
In a separate report, Clarkson Platou Hellas said that "in Tankers, Teekay Shuttle Tankers have extended their series of 129,220 DWT DP2 Shuttle Tankers at Samsung Heavy Industries by declaring an option for two additional units. Being the 3rd and 4th vessels in the series, this duo will be delivered in 2Q 2020 and built to be LNG dual fuelled. A couple of orders to report in Dry, starting with Jiangsu New YZJ signing a contract with China Development Bank Leasing for five firm plus five optional 208,000 DWT Newcastlemaxes. The firm vessels are set to deliver throughout 2019 and 2020 and will go on charter to Cargill. On the smaller sizes, Fujian Southeast Shipbuilding have won an order for two firm 20,500 DWT from domestic owners Fujian Anda Shipping and Fujian Shengda Shipping. Delivery is due in 2019", the shipbroker said.
Meanwhile, in the S&P market this week, Allied Shipbroking said that "on the dry bulk side, things lit up this past week, as interest started to re-emerge, especially on the Handysize segment. A fair amount of transactions with a strong focus on the older tonnage helped show that the is still some positive momentum to be had. With overall freight earnings having improved this past week and with the General Index having reached an almost 4 year high point, it may well be the case that competition amongst buyers may well start to intensify once more. On the tanker side, activity dropped back down to the average levels we have become accustomed to during this past year. Prices are still looking to have stabilized, although there is still a fair amount of debate in the market as to how much these price levels reflect reality as there are hardly any "willing" sellers out there that would be moved by such sort of price offers. Given the ongoing lack of transactions, this gap between buyers and sellers is pointed out fairly well".
Similarly, VesselsValue said this week that in the tanker market there is a softening in MR values. "MR2 Tanker Seaways Ariadmar (46,200 DWT, Jul 2004, STX Offshore) sold for USD 11.2 mil, VV value USD 12.22 mil. MR2 Tanker Caletta (51,700 DWT, Apr 2011, Hyundai Mipo) sold to Pallonji Shipping for USD 21.8 mil, VV value USD 23.29 million". In the dry bulk segment, "there has been a softening in Capesize values. Slight firming of Supramax values. Capesize CPO Asia (180,000 DWT, Mar 2011, Daewoo-Mangalia) sold to Seanergy Maritime Corp for USD 25.5 mil, VV value USD 27.66 million. Ultramax Equinox Melida (61,300 DWT, Jun 2016, Dalian COSCO KHI) sold to Vrontados Shipping for USD 25.5 mil, VV value USD 23.63 mil. Supramax vessels Orient Orchid & Orient Jasmine (55,600 and 56,100 DWT, Feb 2012, Mitsui Tamano) sold en bloc to DryLog for USD 35.0 mil, VV value USD 33.86 mil. Handymax Sunroad Mitoya (23,200 DWT, Apr 2011, Kurinoura Dock) sold for USD 8.5 mil, VV value USD 8.49 million", the ships' valuations expert concluded.
Newbuilding ordering activity has picked up pace over the past week, but for the most part, ship owners are still very much focused in the S&P market, which offers much more flexibility of ships’ anc capital’s usage. In its latest weekly report, shipbroker Allied Shipbroking said that “this week we continued to see activity hold firm with interest still on the rise, despite still at relatively soft levels when compared to historical averages. Given the most recently reported contracts we have yet to see any major shift in terms of pricing, while at these price levels a fair share of shipbuilders are still unable to compete and as such hold a seat in the sidelines. It is now surprise that for the moment Chinese shipbuilders are taking up the lion share of new contracts being placed and have even managed to get a strong share in sectors such as that of tankers and containerships, where traditionally they where at a disadvantage when competing with the S. Korean and Japanese yards. This week we witnessed a fair amount of activity split between the dry bulk, tanker and containership segments, all of which have felt a fair amount of pain in their respective freight markets over the past two years and as such could be a possible reflection on the more promising prospects now held by most market participants”, Allied said.
In a separate newbuilding note, Clarkson Platou Hellas said that the was “one order to report in Dry, with DSIC receiving an order for ten firm 25,800 DWT Bulk Carriers from Dalian Success Innovation Group. The vessels are set for delivery in 2019 and 2020 and will be built at Dalian Shipyard Industrial Development, DSIC’s subsidiary. In the Container market, Marlink have extended their series at Fujian Mawei, now backed by Bertram Rickmers’, Rickmers Reederei for a further order of two plus two 1,162 TEU Container Carriers. The scrubber fitted duo are slated for delivery within 2019”.
Meanwhile, in the S&P market, Allied said that “on the dry bulk side, there is still a fair amount of activity being seen in the market though still with limited effect on the overall price levels being seen. Overall it looks as though we may well have some slight downward corrections on some size and age segments which had shown faster paced gains than what they could sustain. At the same time firm buying interest in parts of the Supramax size segment shows that the possibility for further price gains there before the end of the year still holds. On the tanker side, the positive momentum in terms of activity has held for yet another week, with a healthy number of large crude oil carriers changing hands and at relatively firm price levels. Support seems to have finally shown face, with buyers now willing to face the fact that it looks as though this is a low as prices can go for the time being”.
Also, in a weekly note, ships’ valuations expert VesselsValue said that in the tanker market, “values remain stable this week for tankers. Few sales have been seen, with sales exclusively in the VLCC and Suezmax sectors. An en bloc deal bought by Ridgebury Tankers including VLCCs’; DHT Utik (299,500 DWT, May 2001, Daewoo), DHT Utah (299,500 DWT, Jan 2001, Daewoo), DHT Eagle (309,100 DWT, Jan 2002, Samsung) Sold en bloc for USD 66.5 mil, VV value USD 59.46 mil. VLCC Artois (298,300 DWT, Jul 2001, Hitatchi) sold for USD 22.0 mil, VV value USD 19.41. Suezmax Teide Spirit (159,400 DWT, Oct 2004, Daewoo) sold for USD 18.8 mil, VV value USD 19.05 million”.
In the bulker segment, “it has been a quiet week for Bulker sales with values remaining stable. An en bloc deal bought by Ridgebury Tankers to include Capesize vessels; Alexandria VII (178,000 DWT, Feb 2010, Jiangnan Shanghai Changxing), Rhodes VI (178,000 DWT, Jun 2009, Shanghai Waigaoqiao Shipbuilding) Sold en bloc for USD 48.0 mil, VV value USD 49.88 mil. Panama Golden Heiwa (76,600 DWT, Mar 2007, Imabari) sold for USD 13.25 mil, VV value USD 13.41 mil. Handymax Jupiter II (27,000 DWT, Jun 2009, Zhejiang Shipbuilding Co) sold for USD 6.25 mil, VV value USD 6.24 million”, VV said.
Finally, in the container shipping sector, “Post Panamax values softened slightly this week, with Panamax values firming following an en bloc transaction. Handy and feedermax values remain stable. Panamax containers; Apl Oakland (4,730 TEU, Apr 2008), APL Denver (4,730 TEU, Jun 2008), APL Los Angeles (4,730 TEU, May 2008) and APL Atlanta (4,730 TEU, Jul 2008) all built at New Century, sold en bloc for USD 96.8 mil, including a TC of USD 27,500 pd to CNC line until 2020”, VV concluded.
Activity in newbuilding orders seems to have slowed down a bit, compared to the past few weeks, but deals are still being done. In its latest weekly report, shipbroker Intermodal said that “if there is one thing that has constantly exceeded expectations so far this year this is newbuilding activity. The number of recent orders reported last week still shows healthy contracting activity in the sector, with the dry bulkers attracting most of the investment interest out there and perfectly aligning with the trend in the second-hand market. Most of the dry bulk orders still concern vessels of bigger tonnage, with Kamsarmax and Newcastlemaxes being the most popular lately. The revived love for dry bulk newbuildings has undeniably been supporting Chinese yards that still constitute the most popular destination for orders in the sector and that have been struggling to survive amidst the significant slowdown in dry bulk ordering in the past couple of years. Let’s not forget that Chinese yards back in 2015 secured around 36% of all orders confirmed then, while this percentage is estimated at around 26% in 2016 and 27%ytd. In terms of recently reported deals, German owner, Oldendorff Carriers, placed an order for three firm Ultramax bulkers (61,000 dwt) at NACKS, in China for a price in the region of $24.8m and delivery set in 2019”, Intermodal said.
In a separate report, Allied Shipbroking said that “after a week of poor activity in the newbuilding market, many people have been left with questions and uncertainty in terms of what to expect next. With the dry sector taking the lead again and leaving at the same time activity in the tanker side lagging behind, a healthier flow of new ordering has been created, keeping things very interesting in that respect. The main concerns on the other side, the tanker segment, has seen much uncertainty along with tight earnings which have hampered potential investment opportunities that might be in the works. On the other hand, with the freight market in the dry bulk segment showing signs of continued strength and resisting any significant downward movements, we should see in the coming weeks prices firming for modern second-hand sale units. If this trend is strong enough it should in turn push owners to return to the yards if they see second hand units as too costly and not worth the premium of having the asset now”.
Meanwhile, according to Clarkson Platou Hellas, “in Tankers, only one order to report this week with Hyundai Mipo Dockyard (HMD) taking an order from Clients of Central Shipping Monaco for one firm plus one optional 50,000 DWT MR Product Tanker. These will be built from HMD’s Ulsan facility and the firm vessel will be delivered in 1Q 2019. In Dry, Clients of Golden Ocean Group have ordered two firm plus two optional 208,000 DWT Newcastlemaxes at New Times Shipbuilding in China. The two firm units are set for delivery within 2019. For Kamsarmax, Clients of Tomini Shipping have signed a contract for three firm units with Taizhou Kouan for delivery in 2019. More Kamsarmax orders were there for Taizhou Kouan from Clients of. Aquavita International in Ukraine who has also placed an order for one firm plus one optional unit at Taizhou Kouan, which are slated for delivery within 2020”, the shipbroker concluded.
In the S&P market this week, Allied Shipbroking said that “this past week we have witnessed a greater volume of dry bulk sales compared to other segments, with a stronger preference for older vintage units over modern ones. We expect prices for modern second hand units to hold their values due in part to most owners not being sellers in this firming freight market, while owners of recently acquired tonnage looking to be more likely candidates as sellers, especially if they purchased these assets back in 2016. On the tanker front we expect the lack of sales to be partially due to the deteriorating freight market. Its very likely that most owners are reluctant to come down to buyer’s levels and thus we have not seen many transactions concluded. We expect the second hand tanker market to continue to falter for the next few months, until the oil market starts to show a more bullish face which should rekindle the freight market. With this being said, the only tankers reported sold this week were two small chemical tankers”, the shipbroker concluded.
2017 has seen US owners top the list of buyers of distressed tonnage, snapping up vessels sold at bank sales and at auction deals, VesselsValue said.
Asset values reached a 25-year low for bulkers, containers and offshore vessel types in 2016, with a spike in the number of bankruptcies and vessel seizures by banks. US owners have been buying these vessels, spending USD 624.1 million on 52 distressed vessels so far.
This comes in at just under double what Greece has spent, totaling USD 385.3 million. The next country on the list of top buyers is South Korea, having bought a total of 20 ships for USD 228 million.
Top three US companies which have purchased auction/bank sale vessels in 2017 include JP Morgan Global Maritime, Eagle Bulk Shipping and Navios Maritime Partners LP.
In 2016, US companies did not buy any vessels at bank sales or at auction, showing a marked shift in behavior, as explained by VesselsValue.
What is more, the type of vessels companies are buying is incredibly targeted. Specifically, companies have been only purchasing bulkers, containerships and offshore vessels. These asset types hit 25-year historical lows during 2016, with these values now rebounding.
Many in the markets are confident that continued scrapping and a reduction in ordering will balance out supply and demand, bringing asset values back in line. Savvy investors have been getting involved in the last 12 months in order to capitalize on the asset value increase．
China’s Yangzijiang Shipbuilding Holdings Ltd raised its 2017 order win target to $2 billion on Friday after exceeding its previous forecast and reporting a surge in third-quarter profit.
The company received new orders of 59 vessels with a combined value of $1.6 billion, year-to-date, it said in a statement on Thursday, above its previous $1.5 billion forecast and nearly double the 2016 figure.
Yangzijiang’s order book stood at $4.3 billion as of Sept. 30. It expects new orders worth $2 billion for 2018.
Yangzijiang is considering the acquisition of assets and technologies to build liquefied natural gas (LNG) and liquefied petroleum gas (LPG) vessels, Executive Chairman Ren Yuanlin told reporters on Friday.
Net profit rose to 866 million yuan ($130.5 million) in the third quarter, boosted by non-operating gains, from 281.2 million yuan ($42.4 million) a year ago, the company reported late on Thursday.
However, shipbuilding gross margins fell on exchange rate appreciation and an increase in raw material costs, both of which remain a concern for the company.
Shares of the shipbuilder, which has a market value of about $4.8 billion, were trading 4.5 percent higher on Friday, while the broader market was up 0.1 percent.
Market sentiment maybe in a better place over the course of the past few months, both in the dry bulk and in the wet markets, but newbuilding ordering activity is still showing large spikes week-in week-out. In its latest weekly report, shipbroker Allied Shipbroking said that “the fluctuation in activity in the Newbuilding market keeps the market on its toes, with the scene changing dramatically even on weekly basis. After building a strong trajectory over the past couple of weeks, indicating that we have entered in a firm final quarter, this past week showed us in turn that the healthy volume noted previously can’t be taken for granted. It is true that the slight downward correction in the Dry freight market, which troubled most as to its underlining meaning, has played its part in keeping the order placing to minimum levels. Taking into account also that the Tanker side, after a rather vivid week, returned to the indolent mode previously noted, the two main driving sectors were now lagging in interest, unable to boost the activity further. Given the volatility and the fact that a small turn in earning and/or the outlook can be of immediate impact in the investment planning of the market participants, it wouldn’t be to anyone’s surprise if activity in terms of new orders was on the rise once more”.
Meanwhile, in the S&P market this week, Allied Shipbroking said that “on the dry bulk side, we are still seeing a fair amount of activity though slightly softer than what had been noted during the past couple of weeks. Interest amongst buyers has been curtailed to some degree by the slight correction noted recently in terms of freight rates, though this is only a short term effect and we will likely push back into firmer interest in the coming days. At the same time prices are holding steady for the time being, with a further boost in freight rates being now required apparently in order to pull up buyers from their seats and drive for further competition to be noted. On the tanker side, we had a notable rise in activity this week, with a fair amount of units changing hands even in the larger size segments. Despite limited information being reported in terms of pricing for these most recent concluded deals, it looks as though prices are still holding at their current levels and may well even have some slight price rises in stall as prospects start to perk up”.
In a note this week, VesselsValue, a ships’ valuations expert said that “values have remained stable this month again. “Suezmax Hull 1304 (158,000 DWT, Dec 2017, Shanghai Waigaoqiao Shipbuilding) sold for USD 49.8 mil, VV value USD 52.23 million”. In the bulker segment, “a slight firming in Panamax and Supramax values has occurred. Supramax Spring Eagle (58,500 DWT, Jun 2010, Tsuneishi Cebu) sold for USD 15.35 mil, VV value USD 15.28 mil. Open Hatch King Yukon (32,300 DWT, Mar 2009, Kanda) sold for USD 10.5 mil, VV value USD 10.46 million”, VV concluded.
Greek drybulk shipping firm DryShips has expanded its fleet with a third newbuilding very large gas carrier (VLGC).
The high specifications vessel, capable of carrying liquefied petroleum gas (LPG), will be employed under a time charter on a fixed rate with ten years firm duration to an oil major trading company.
Expected total gross backlog associated with this time charter is up to USD 103.8 million, DryShips said.
Since the beginning of this year, the company has expanded its fleet with 16 vessels. Its fourth VLGC is scheduled to be handed over in January 2018.
In January 2017, DryShips enter into a "zero cost" option agreement to purchase up to four high specifications VLGCs, which were under construction at South Korean shipyard Hyundai Heavy Industries (HHI).
The ships in question were bought at a price of USD 83.5 million per unit.
DryShips earlier informed that the acquisition would be financed by using cash on hand, its undrawn liquidity under the new Sifnos revolver and proceeds from its issuer managed equity transaction.
On the heels of the two orders by containership majors CMA CGM and MSC for 22,000 TEU ships, the market fears there is a risk other carriers might follow suit further distorting demand-supply balance, which is already suffering from tonnage oversupply.
To remind, Mediterranean Shipping Company has opted for Daewoo Shipbuilding and Marine Engineering (DSME) to build eleven 22,000 TEU containerships for the company. On the other hand, French liner CMA CGM has ordered nine 22,000 TEU containerships which will be built by Chinese shipyards Hudong-Zhonghua Shipbuilding and Shanghai Waigaoqiao Shipbuilding (SWS).
Shipping consultancy Drewry believes that the ordering spree for more megaships is unlikely due to a combination of financing constraints, latent market overcapacity and the size of the existing orderbook.
Namely, banks have reduced their financing of the highly volatile shipping sector amid regulatory pressures to increase impairments associated with shipping loans. This has, in turn, resulted in shipping companies having to resort to alternative financing means which are rather scarce.
Furthermore, Drewry doesn’t believe that a new generation of much larger vessels will emerge in the long term. This is attributed to the diminishing economies and the fact that unit cost savings at sea are countered by higher costs at port.
As a result, this is expected to reduce the incentive to invest in ever larger vessels and act as a break on over ordering and excess capacity.
The port sector has already been faced with growing pressure from ever-larger ships as ports had to invest considerably in infrastructure so as to be able to accommodate these giants of the seas.
Between 2000 and 2016, a total of USD 68.8 billion in private investment was committed across 292 port projects aimed at improving port infrastructure and superstructures, according to the data from UNCTAD’s latest report Review of Maritime Transport 2017.
"Pressure from shipping lines to expand and dredge so as to accommodate ever larger ships, especially for transshipment operations, may not be worth the extra cost. Without additional volumes, increasing ship size alone will reduce the effective capacity of seaports as they would require larger yards and additional equipment to handle the same total volume," the report adds.
Rosier outlook for the future of the shipping markets has prompted a series of renewed newbuilding ordering activity, with dry bulk carriers leading the foray. In its latest weekly report, shipbroker Allied Shipbroking said that "for a second week in a row, we see a healthy volume in terms of ordering, confirming in a way the expressed anticipation early on in the year for a strong newbuilding market for the later part of this year. In the dry bulk sector, even if activity has considerably slowed down compared to previous weeks, we have seen another modest flow of new orders emerging this week, with the uptrend in momentum and the positive outlook coming from the freight market helping feed the market with more and more buying interest. On the other hand, for the tanker sector things remain pretty uncertain, with a mixed sentiment among the interested parties, keeping new ordering activity to a minimum. Having seen some notable movement this past week, we have yet to identify how things will be effected once we start to see a strong rise in quoted prices, or will an over confident shipbuilding industry hamper the positive momentum being noted with a too sudden rise in prices. As things stand down, with a further boost being seen from the financing aspect of things, there is an overall anticipate of the volume of new orders placed to continue strong", Allied said.
In a separate newbuilding report, shipbroker Clarkson Platou Hellas said that there were "a couple of orders to report in the newbuilding market this week. In Dry, Jiangsu New YZJ have won an order for two firm plus two optional 180,000 DWT Capesize Bulk Carriers from Mosvold Shipping. The two firm units are set for delivery within 2019. In Gas, Vitol have extended their series of 84,000 CBM VLGCs at Hyundai Heavy Industries by declaring an option for two more vessels. Being delivered in 2Q and 3Q 2019, the duo will be the 3rd and the 4th vessels in the series".
Meanwhile, in the second sales market, Allied noted that "on the dry bulk side, a fair amount of activity was reflective of the still ample buying interest seen in the market. Prices seemed to have momentarily plateaued , as most see the current price levels as a touch high given the overall freight market conditions noted. If the positive momentum however continues over the next couple of months in terms of earnings, it shouldn't be long before intense competition amongst buyers starts to mount once more, further driving asset prices up relatively quick. On the tanker side, activity continues to remain limited with a very limited number of units changing hands. We were able to see another VLCC change hands this week, with prices still remaining under pressure and having started to entice some buyers who are looking to grab any bargain opportunities that emerge. There is still however a sense amongst buyers that prices still have further drops to show", the shipbroker concluded.
In a separate note, ships' valuations expert VesselsValue said that in the tanker market, "values have remained stable this week with very few sales. VLCC Fujikawa (300,000 DWT, Apr 2004, Universal) sold for USD 27.2 mil to Dynacom Tankers with DD freshly passed, VV value USD 26.75 million". In the dry bulk segment, VV noted that "values have firmed for Capesize and Handysize vessels. Choully (182,000 DWT, Apr 2016, Japan Maritime United) sold for USD 44.8 mil, VV value USD 42.5 mil. Guan Hai 228 (80,000 DWT, Jun 2012, Fujian Guanhai) sold for USD 15.1 mil, VV value USD 15.3 mil. Neptune Pioneer (56,000 DWT, Apr 2007, Mitsui Tamano) sold for USD 12.5 mil, VV value USD 12.6 million". Finally, in the container market, VV said that values have remained stable in smaller tonnage. MPC Containers have bought the Tiger Goman (1,338 TEU, Dec 2007, Jiangsu Yangzijiang) and HS Liszt (1,350 TEU, Mar 2008, Jiangsu Yangzijiang) for USD 7 mil each both SS Due, VV value USD 7.38 mil and USD 7.65 mil respectively", it concluded.