The insatiable appetite for bulker newbuilds continued into last week as brokers reported orders for at least 14 bulker newbuilds being ordered.
The Chinese shipyards were the preferred choice for owners, with Jiangsu Yangzijiang Shipbuilding Group scoring a huge chunk of placed orders.
Namely, aside to Navibulgar's order for up to six 45,000 DWT bulkers World Maritime News reported on last week, Yangzijiang has secured orders for up to six more bulkers.
According to Intermodal Research and Valuations, Japanese Lepta Shipping has ordered one 180,000 DWT bulker from the yard and has an option to add one more vessel of the same size to its ordering tally. In addition, Norwegian Kumar has placed an order for two firm plus two optional 180,000 DWT Capesizes at the yard.
The three orders will keep the yard busy for the following two years, as the new ships are slated to start delivery in 2019 and continuing into 2020.
Chinese shipyard Dalian COSCO KHI Ship Engineering (DACKS) has been linked to an order for two Ultramax bulkers of 61,000 DWT placed by Singaporean Eastern Pacific. The company is said to be paying USD 24 million per ship, scheduled to join their owner in 2019.
Two more bulker orders have been tied to Shanghai Waigaoqiao Shipbuilding (SWS). Based on the data from Intermodal, Chinese Foremost Group exercised options for two 180,000 DWT bulkers at the yard, which are also set for delivery in 2019.
Since the beginning of the second half of this year, shipowners have ramped up dry bulk ordering, bringing the newbuild count to 110 new ships from July to September 2017.
The number has almost doubled when compared to 63 newbuilding orders from the first half of this year, according to the data from VesselsValue.
Ship owners are still mostly bullish when it comes to committing future capital for newbuilding investments. In its latest weekly report, Allied Shipbroking said that "we are still seeing a fair amount of activity emerge on the dry bulk side, as buying appetite continues to be firm with most looking to tie up any still available TIER II slots before the window of opportunity is closed shut. In this regard it is already proving difficult with only a hand full of yards still able to offer TIER II designs. At the same time, the rally that has been noted in the secondhand market has also helped boost appetite amongst ship owners, with the price gap between a modern vessel and a newbuilding closing fast and given that newbuilding prices are likely to climb over the next couple of months, many may well be placing these orders on speculation of an opportunity to flip them as resales at a later date and net the positive difference that they feel will be at hand. At the same time, shipbuilders have come out to market with a more aggressive marketing run, now looking to entice any potential buyers, while sentiment is high. This however is still mainly limited to Chinese shipbuilders, with S. Korean yards still out of play due to their requirements for higher prices and Japanese yards seemingly well occupied up until early 2020", Allied said.
In a separate newbuilding note, Clarkson Platou Hellas said that "this week in Tankers, DSD Shipping have extended their series of 50,000 DWT MR Tankers at Hyundai Vinashin by declaring an option for two additional units. Set for delivery in 2020, the duo will be the 3rd and 4th vessels in the series. Whilst there is nothing to report in other sectors, there are a couple in the Passenger / Cruise market. Fincantieri have announced an order for one 40,700 GT Cruise Ship by Silversea Cruises. Delivering in 2020, the vessel will be able to accommodate 596 passengers. VARD have won an order for one approx. 5,000 GT Cruise Ship from Coral Expeditions for delivery in 1Q 2019. This single unit will be built at VARD's Vung Tau facility in Vietnam and will be able to carry 120 passengers".
Meanwhile, in the S&P market, ships' valuations expert VesselsValue noted that it has been a quiet week for bulker sales, with values remaining stable. "Supramax Rak Ana (50,800 DWT, Jun 2000, Oshima) sold for USD 6 mil, VV value USD 6.54 million. Handy Bulker Zenith Explorer (28,300 DWT, Aug 2008, Imabari) sold for USD 8 mil, VV value USD 7.79 million." It added that in the tanker market, "few sales have taken place this week again with all values remaining stable. Isuzugawa (300,000 DWT, Jan 2004, Universal) sold to Eastern Mediterranean for USD 25.8 mil, VV value USD 26.05 million. The MR1 Tanker FD Sea Wish (40,000 DWT, Sep 2002, SLS) sold for USD 7.5 mil, VV value USD 8.82. The vessel sold in a bank sale with SS Due September 2017", VV concluded.
In a separate note, Allied Shipbroking said that "on the dry bulk side, things seemed to have eased slightly though not necessarily due to lack of interest. Activity this week mainly revolved around the Panamax and Supramax sizes, with prices now showing further gains as competition amongst buyers heats up further. Sellers are seemingly a bit reluctant to act quick in this market, feeling that better numbers will be seen in the next couple of months and choosing as such to take a "wait and see" strategy for now. Given that there seems to still be positive wind to be felt in the freight market and with the recent rally in rates only just getting started, things should get more busy over the next couple of weeks. On the tanker side, there was some slight improvement in activity to be seen with deals being noted in the VL and Suezmax space as well. Prices are still lingering at relatively low levels, while the lack of confidence that has been spilling over from the freight market has heavily effected sale & purchase activity for some time now", the shipbroker concluded.
A 2017-built Aframax tanker, Seacalm, has joined the managed fleet of Greek shipping company Thenamaris.
The tanker, which was constructed by Japan’s shipbuilder Sumitomo, features a length of 237 meters and a beam of 44 meters.
The tanker’s current market value stands at USD 44.2 million, according to VesselsValue data.
The 112,000 DWT Seacalm became a part of Thenamaris’ 76-vessel strong fleet, which consists of 50 tankers.
The company has six more ships under construction at various yards, scheduled to join the fleet in 2017 and 2018, respectively.
Ship owners are eager to build for the future, as new rules and regulations are bound to make life more difficult in the future and having a vessel which is unsuitable for service can be a major liability. In its latest weekly report, shiproker Allied Shipbroking said that “activity looks to be back in the market now, with August showing the highest level of new contracts having been placed in the year so far for some sectors. There still seems to be significant appetite amongst buyers out there and shipbuilders look to have mobilized their marketing strategies once more in an effort to take full benefit of the current opportunity. The rise in secondhand prices in the dry bulk sector has also helped a fair amount, placing the current newbuilding prices on offer in a more competitive and favorable light. At the same time sentiment seems to be very firm right now amongst dry bulk owners, given the current performance being noted in the freight market, which will surely start to attract more ship owners towards this option. Having said that, there still seems to be considerable problems with regards to arranging for financing of most of these new contracts under talks, while there are rumors that several owners are still facing difficulties in securing letters of guarantee for contracts they have signed”, Allied said.
In a separate weekly note, shipbroker Intermodal said that “if there is one thing that has been completely unaffected by volatility in the freight market in the past months this is newbuilding activity. Additional dry bulk and tanker orders have surfaced last week, evidencing the strong momentum newbuilding contracting still enjoys and while the performance of the dry bulk market explains partly the ordering enthusiasm in the sector, the steady tanker ordering is certainly raising a few eyebrows given the disappointing earnings crude carriers have witnessed so far in 2017. Following the most recent VLCC order by Hyundai merchant Marine, NYK is reported to also have added four VLs to its orderbook. In this case all orders are placed on the back of long term employment, which is always removing a substantial element of risk for the owner, but the market effect is not different and that is a quickly increasing orderbook in a fleet the average age of which is less than fifteen years. In terms of recently reported deals, Japanese owner, NYK, placed an order for three firm VLCCs (300,000 dwt) at JMU, in Japan for a price in the region of $80.0m each and delivery set in 2019”, said Intermodal.
Meanwhile, Clarkson Platou Hellas said that “in Tankers, DSME have announced an order for five firm plus five optional 300,000 DWT VLCCs from Hyundai Merchant Marine. The five firm units are set for delivery within 2019 from Okpo, Korea. JMU and Namura have also won an order for four firm 310,000 DWT VLCCs from an unknown owner. Three vessels will be built by JMU and one vessel will be built by Namura, all for bareboat charter to NYK when delivered throughout 2019 and 2020. Thun Tankers have extended their series of 17,500 DWT Chemical/Product Tankers at AVIC Dingheng by declaring an option for one additional vessel. This would be the 5th unit in the series and will be delivered in 1H 2020. Fujian Mawei have signed a contract with domestic owner Haixin Tanker Corp. for one 15,000 DWT Product Carrier for delivery in 1H 2019. There is one order to report in Dry this week. COSCO Zhoushan have received an order for four firm plus two optional plus two optional 82,000 DWT Kamsamax Bulk Carriers from Clients of Aegean Shipping Management. The four firm vessels are scheduled to be delivered in 2H 2019 from China”, the shipbroker concluded.
The second newbuilding very large gas carrier (VLGC) has joined DryShips’ fleet, the Greek shipowner said.
The VLGC will be employed under a time charter on a fixed rate with five years firm duration to an unnamed oil major.
The charterer has options to extend the firm employment period by up to three years. DryShips expects a total gross backlog from the time charter to reach USD 92.7 million including the optional periods.
In June this year, the company took delivery of its first ultra large gas carrier, the 78,700 cbm Anderida, built by Hyundai Samho Heavy Industries.
The Maltese-flagged LPG carrier was chartered out to an oil major for a firm employment of up to three years with the expected gross backlog from the charter totaling in USD 92.7 million.
Since the beginning of this year, DryShips has taken delivery of 15 vessels and expects to take delivery of two more by the end of the year.
Since November 2016, the company has raised approximately USD 688 million of equity that has been used to acquire 17 vessels with an average age of two years for a total cost of USD 772.4 million, of which USD 606.2 million has been advanced so far.
At the end of August, the Greek shipowner was subpoenaed by the Securities and Exchange Commission (SEC) which requested documents and information regarding the company's share offerings made between June 2016 and July 2017.
"The company is providing the requested information to the SEC," DryShips said, announcing the results for the second quarter of 2017.
Newbuilding orders are bound for a quick pick up of pace over the next few weeks, as buying interest from ship owners is more than active, in a reverse of the trend set over the course of the previous year. In its latest weekly report, shipbroker Allied Shipbroking noted that "there was a fair amount of activity to be reported during the past two weeks, despite being right in the midst of the summer holiday season. We started to see a good flow of interest emerge amongst owners, while this should surely gain momentum over the coming weeks as we enter the Autumn period and prospects start to show a brighter side in terms of trade growth. A big part has also been played by the emergence of new financing structures over the past couple of months, which having been tested now to some degree and worked with some of the bigger names in the market, shipbuilders have started to take on a bigger marketing push which will surely pay its dividends moving forward. In terms of pricing we are still seeing things hold stable, though given that activity has started to show fresh signs of life, there could now be extra room being created for a further upward push in terms of pricing", said the shipbroker.
In a separate newbuilding report, Clarkson Platou Hellas said that there were "a few orders to report since previous week, albeit some just coming to light having been firmed up earlier in the summer. In the dry market, clients of Angelakos are understood to have placed an order for 4 firm plus two optional 82,000dwt bulk carriers at Yangzijiang Shipbuilding – the deal is understood to have been signed in July and the vessels to be delivering from early 2019 onwards. Meanwhile it has been reported that Foremose Maritime have returned to Oshima to order a pair of 85,000dwt bulk carriers, both for delivery in 2020. This looks to be a continuation of their relationship with the yard, having taken delivery of four vessels of this size over the past year. In Tankers, Socatra are understood to have placed an order at Avic Dingheng in China for 2+1 IMO II chemical tankers of 7,950 dwt. Both the firm units are understood to be delivering in 2019. In the container sector, the Pasha Group have announced they have signed a deal for 2+2 x 2,525 TEU Container carriers to be built at Keppel AmFELS in Texas. These Jones act ships will be delivered in 2020 and will be constructed with dual fuel LNG bunkering capacity", the shipbroker said.
Meanwhile, on the S&P market, Allied Shipbroking said that "on the dry bulk side, boosted sentiment over-spilling from the improving freight market seemed to have brought about a strong buying interest, with activity picking up considerably over the past couple of weeks. We witnessed a strong interest for most of the larger size segments while prices have already started to show signs of making strong gains. Overall it seems as though confidence in the potential prospects of the market has once again resumed and we should see things improve further over the coming months. On the tanker side, activity was relatively slow over the past couple of weeks with only a handful of units changing hands over the two week period being reported, while the majority involved tonnage in the smaller size segments of the market. Prices continue to remain under pressure, though there is now hope that things may improve slightly as we enter in to the autumn season which traditionally has shown better activity levels".
In a separate note, ships' valuations expert VesselsValue said that bulker values have remained stable. "Privatlantic (75,100 DWT, Feb 2012, Sasebo) sold for USD 18.5 mil, VV value USD 17.97 mil. There has been an en bloc deal of 4 Ultramax vessels Tiger Tiangin, Zhejiang, Hongkong and Beijing (63,500 DWT, 2015, Chengxi) for USD 80 mil. In mid age tonnage Ocean Leader (56,100 DWT, Jan 2010, Mitsui Ichihara) was sold for USD 14.5 mil, VV value USD 14.26 million", VV concluded.
German container carrier Hapag-Lloyd doesn't plan to make any investments in ordering of new vessels over the next couple of years, the company said during a conference call today.
"In terms of Capexes, we said that we don't anticipate any material Capexes in new vessels in the upcoming couple of years. We will continue to invest in container boxes and our investment level will be around EUR 400 million every year," the company said.
As disclosed, there have been no significant orders in the container shipping sector over the recent period, and Hapag-Lloyd believes that new orders are not necessary as there is sufficient capacity in the market to meet the volume growth.
As a result, it is not expected that a surge in orders would occur.
Regarding the IMO regulations, Hapag said that most of its vessels are in principle suited for various types of fuel and may require some additional investment. Tough, huge investments on a per vessel basis are not expected.
The company added that it would be watching very closely what would happen to the fuel prices after 2020 when the new regulations kick in. The costs are anticipated to go up, but the company said it should be able to pass them on to the customers.
For the first half of 2017, the German container carrier booked a net loss of EUR -46.1 million (USD 55.1 million, slashed from last year's equivalent of EUR 142.1 million.
The company said that the half-year result includes a number of one-off effects related to the United Arab Shipping Company (UASC) merger, resulting in a net impact on EBIT of approximately EUR -19 million.
Hapag-Lloyd's results were announced as the carrier welcomes the fourth of its five Valparaiso Express class 10,500 TEU vessels, the Callao Express.
The ship, built by Hyundai Samho Heavy Industries, has been named in the port of Callao this week. The Callao Express has set sail in the direction of Puerto Anamos and Valparaiso and will return to Europe after sailing the South American west coast, the company said.
It emerged that a total of global shipyard output from January to July, 2017, stood at 1,003 vessels of a combined 68.60m dwt (22.60m cgt). In July only, particularly, 105 vessels of a combined 8.20m dwt reported delivered throughout the world, continuing a steady trend. It is also expected that shipyard deliveries will reach 101.20m dwt in full year 2017, up by 1% from 100.50m dwt posted in 2016.
For the first seven months this year, according to Clarkson Research, 260 vessels of a combined 25.80m dwt were delivered, representing a 39% increase year-on-year (in dwt terms). As for Suezmax sector, in particular, 39 units of a combined 6.10m dwt were delivered, almost four times the volume of tonnage delivered during the same period of 2016.
Global shipyards also delivered 355 bulkers of 30.00m dwt during the same period. This year's bulker deliveries are forecasted to show a 10% decline against a year ago, with 42.40m dwt.
As for containership sector, 87 vessels of 7.20m dwt reported completed, with annual deliveries of vessels less than 3,000 teu, 3,000~7,999 teu and less than 8,000 teu expected to increase by 35%, 290% and 16% y-o-y, respectively.
Regarding the volume of delivery of gas carriers, during the cited period, LNG carrier recorded delivery of 1.60M dwt (22 vessels) and LPG carrier, 1.70m dwt (56 vessels). The annual deliveries are expected to increase by 7% and decrease 30%, respectively, this year.
Meanwhile, by shipbuilding nation, shipyards in China delivered 403 newbuildings, 27.90m dwt, or 8.00m cgt, from January to July in 2017, with total amount of $14.9bn. China was ranked No.1 in dwt, cgt and numerical terms.
Notable is the fact that Chinese yards took the lion's share of the world's newbuilding deliveries with around 41% (in dwt terms), up from a 35.9% share in full year 2016.
During the same period, Korea delivered 199 newbuildings, 22.00m dwt, and 7.30m cgt, making it worth about $19.1bn and ranked No.1 in value terms. This total accounts for 32% (36.3% in full year 2016) of global deliveries in dwt terms.
Japan delivered 248 vessels, 4.60m cgt, or 14.10m dwt, worth about $8.6bn, accounting for about 21% (21.8% in full year 2016) of global deliveries in dwt terms.
In full year 2017, Chinese deliveries are projected to post a 14% increase against a year ago, with Korean, a 16% decline, and Japanese, a 1% decline.
Meanwhile, during the first seven months of this year, 463 vessels of 18.90m dwt (the average age=26.6) were sold for demolition, down by 27% year-on-year (in dwt terms). This year's annual scrapping is expected to reach 33.10m dwt, down by about 25.6% compared to 44.50m dwt seen the previous year.
The fact that the summer is nearing its end has prompted more ship owners into securing more newbuilding orders. In its latest weekly report, shipbroker Intermodal said that “stable newbuilding activity resumed last week as well, while the fact that the list of the latest newbuilding deals had a couple of dry bulk orders but no tanker ones is a first in a long time and of course indicative of the difference in momentum each sector is currently witnessing. The steady and rather unexpected improvement of dry bulk earnings during the traditionally quiet month of August has certainly given additional confidence to those owners who have been contemplating placing a newbuilding order. Indeed, with expectations for a particularly firm last quarter of the year building up quickly, the belief that asset prices will also firm during that time has revived healthy contracting activity in the sector, while oppositely we are seeing less and less tanker orders lately following the disappointing performance that earnings have been witnessing throughout the summer season and the consequent pressure on asset prices in the sector. In terms of recently reported deals, Hong Kong listed owner, SITC lines, placed an order for six firm feedermax containers (1,011 teu) at Dae Sun, in S. Korea for a price in the region of $18.6m each and delivery set in 2019.
In a separate newbuilding report, Clarkson Platou Hellas said that “there is one order to report in Dry this week. It has been reported that China Steel Express have placed an order for two firm 208,000 DWT Newcastlemaxes at CSBC. Set for delivery in 3Q 2019, the duo will be built at CSBC’s Kaohsiung facility. In the Container market, Dae Sun have signed a contract for six 1,011 TEU Container Carriers with SITC. The vessels will be delivered throughout 2018 and 2019 from Busan, Korea”, the shipbroker said.
Moving on to the S&P market, Intermodal said that “with activity in the second-hand market taking a very small break during the second week of August, it now seems that Buyers are back with healthy appetite, while modern dry bulk tonnage is once again gaining most of the interest. On the tanker side we had the sale of the “TORM FOX” (37,025dwt-blt ‘05, S. Korea), which was sold to Indonesian buyer, for a price in the region $10.7m. On the dry bulker side we had the sale of the “FORTUNE CLOVER” (77,430dwt-blt ‘06, Japan), which was sold to Greek buyers, for a price in the region of $11.7 million”.
In a separate note, ships’ valuations expert, VesselsValue noted that tanker values have remained stable this week. “Aframax DS Amba Bhavanee (107,100 DWT, Dec 2003, Koyo Dock) sold at auction for USD 4.5 mil having been laid up 4 years with class expired. The MR Torm Fox (37,000 DWT, May 2005, Hyundai Mipo) was sold for USD 11 mil vs VV USD 11.7 keeping values stable”. In the bulker segment, “it has been a quiet week in the Bulker market. The Panamax BC Harbour Hirose (83,500 DWT, Oct 2011, Sanoyas) sold for USD 19.3 mil vs VV USD 19.25 mil. The Panamax BC Fortune Clover (77,400 DWT, Aug 2006, Oshima) sold for USD 11.9 mil vs VV USD 12.06 million”, VV said. Finally, in the container segment, values firmed slightly this week. According to VV, the Sub Panamax Chief (2,672 TEU, Nov 2001, Stocznia Gdansk) sold for USD 6 mil vs VV USD 5.4 million.
Newbuild contracting fell to a 30 year low in 2016, but when looking at it in estimated investment value terms, the fall was slightly less sharp. This trend has continued, with contracting in 2017 so far up by significantly more in investment value terms than in numerical terms. This month’s Shipbuilding Focus investigates which sectors are attracting investment and which yards are benefitting from it.
Though still depressed in historical terms, the value of newbuild contracting investment, which declined by 59% in 2016, stands at $33.8bn in the year to date, up 58% year-on-year on an annualised basis. This has been driven by investment in high value vessel types such as cruise ships, which experienced record ordering levels last year and accounted for 43% of total investment. Firm cruise ship ordering has continued in 2017 so far, and the 20 cruise ships contracted have an estimated newbuild value of $12.6bn, up 36% year-on-year on an annualised basis and accounting for 37% of year to date investment. Similarly to in 2016, US owners account for the largest share of year to date cruise investment (82%).
Signs Of A Comeback
Most sectors suffered from a depressed contracting environment in 2016, but in 2017 so far some have shown early signs of improvement and estimated investment in tanker and gas carrier units is up by an annualised 133% and 176% respectively year-on-year. Tankers and gas carriers account for 23% and 10% of year to date investment respectively, and the increase in investment has been driven by firmer ordering of larger units such as VLCCs and large LNG carriers. Norwegian owners account for 49% of year to date gas carrier investment, while Greek owners account for 22% of year to date investment in the tanker sector.
Still Seeming Sluggish
Containership contracting has remained muted, with only 20 units of an estimated $0.5bn ordered in 2017 so far, an annualised year-on-year investment decrease of 71%. In contrast, boxships accounted for 22% of 2015 investment, compared to 1% in 2017 so far. Estimated bulkcarrier investment in the year to date is up 15% year-on-year on an annualised basis, but bulkers only account for 7% of estimated 2017 investment compared to 42% in 2010, even if with an improved freight rate environment, ordering could pick up.
Which Builders Benefit?
The benefits of higher investment levels have not necessarily reached all yards. While cruise ordering is booming, this is only benefitting a small number of yards, with European yards accounting for 96% of year to date cruise orders in investment terms. Similarly, in the VLCC sector, only eight yards have won orders in 2017 so far, mostly in China and Korea.
So, investment is up this year, with high value orders even more prominent than in 2016. The cruise sector has continued to boom and in the tanker and gas carrier sectors contracting is improving, but other sectors are still struggling. However, while ordering of high value units can have an impact, a recovery is needed across more of the major sectors for investment to return to healthier levels.