Navig8 Product Tankers Inc has received the Navig8 Grace, a 113,000dwt LR2 tanker from China-based CSSC Offshore & Marine Engineering Company Limited, formerly known as Guangzhou Shipyard International Company.
The Navig8 Grace is the first of eight vessels contracted at CSSC Offshore to be delivered to the company and is the first vessel to be delivered under the sale and leaseback agreements entered into with CSCC (Hong Kong) Shipping Company Limited (CSSC) announced on June 25, 2015.
Following delivery from CSSC Offshore, the Navig8 Grace was delivered to CSSC under the terms of the Sale MOA and then delivered back to the company under bareboat charter.
The Navig8 Grace will be entered into and operated in Navig8 Group's Alpha8 commercial pool.
Thus far the company has taken delivery of eight LR1 and seven LR2 product tanker newbuildings and anticipates that its entire newbuilding fleet will be delivered by the end of 2016.
Navig8 Product Tankers, established in 2013 as a joint venture between the Navig8 Group and DVB Bank, maintains an orderbook of long-range (LR), eco-design product tankers, comprising 15 LR2 and 12 LR1 vessels. The company's fleet is contracted to operate in various product tanker pools managed by the Navig8 Group.
The vessels of the SX157 design are a part of the ALP Future class. Service speed is 13 knots, while their top speed is 19 knots. With a fuel capacity of more than 3,500t, they can tow at full power for 45 days, sufficient for non-stop Trans-Atlantic/Indian, Pacific Ocean towing operations without fuel calls. The vessels are constructed by Niigata Shipbuilding & Repair, Japan.
The vessels were developed especially for this project in close collaboration between ship designer Ulstein Design & Solutions AS and ship owner ALP Maritime Services, the latter a subsidiary of Teekay Offshore Partners L.P.
A vessel of this type typically tow oil rigs, or FPSOs, from the building yards to the installation site at the oil field. Additionally, these vessels are outfitted with DP2 and anchor handling capacity in order to assist during the installation/hook-up phase for the towed objects. The vessels are 88.9 metres long and 21 metres wide.
Chinese domestic container shipping firm Zhonggu Shipping has signed a shipbuilding contract with CSSC-affiliated Shanghai Shipyard for the construction of one 2,500teu container vessel.
The order is Shanghai Shipyard's first ship order in 2016.
Zhonggu Shipping ordered six 2,500teu containerships at Zhoushan Wuzhou Shipbuilding in 2013. However, the shipyard only delivered one of the vessels before it went bankrupt earlier this year. Last month, Zhonggu Shipping turned to Zhoushan Changhong International to order a single 2,500teu containership.
It is essential that new orders are placed within the next three to six months for the yard industry to fill up its orderbooks for 2017, according to Danish Ship Finance.
The orderbook is rapidly approaching the low levels seen at the start of 2013, but 2016 looks to be a reasonable year for shipbuilding based solely on the amount of scheduled orders for the year. However, the prospects for 2017 are not that promising, seeing that 45% of the current orderbook is scheduled to be delivered during the last three quarters of 2016.
As of April 2016, scheduled orders for 2017 are only capable of employing 69% of current active newbuilding capacity, the ship finance institute said in its market review for May 2016, adding that if it is assumed that the usual number of orders are either postponed or cancelled, global yard utilisation could fall below 50% in 2017.
If the orderbook for 2017 is not filled, China will be hit the worst, because 57% of the Chinese orderbook is scheduled to be delivered during the last three quarters of 2016. Orders for 2017 are currently only capable of employing around 52% of Chinese active yard capacity, the review finds.
Bulk, container and offshore orders currently constitute 51% of the total orderbook. Due to the current market conditions in these segments, more orders could continue to be postponed and the orderbook for 2017 could be "filled up" solely by postponed orders.
In 2015, 95% of the orders that were postponed for later delivery were pushed into 2016.
"Hence, in a scenario where we assume that the same percentage of orders will be postponed from 2016 to 2017, the orderbook for 2017 could actually increase by 17 million cgt to just above 50 million cgt. Moreover, if we adjust for the new orders that will most likely be placed during 2016 for delivery in 2017, scheduled orders for delivery in 2017 could end up at a similar level as in 2015 and 2016, which would support yard utilisation," said the institute.
However, the problem is that if the orderbook is filled up with postponed orders, the shipyards do not receive any new capital or liquidity, as final payments are solely delayed. Therefore, there is a reasonable risk that orders will continue to be postponed, and consequently the already financially troubled yards will remain under pressure, the institute adds.
"Currently, there are around 340 yards that have less than one year of order cover. After having entered into the second quarter of 2016, three-quarters of these yards have already emptied their orderbooks and we expect them to close in 2016," DSF says.
By the end of 2016, Danish Ship Finance expects that the number of active yards could drop to around 530 – and that is only counting those that are currently running out of orders.
Based on the institute's estimates, around ten first-tier yards will close down in 2016 and 190 second-tier yards. Some of the first-tier yards that are exposed to close down are primarily occupied with repairs and therefore will probably not close down entirely but will put their newbuilding operations on hold. If yards also start to close as a result of financial problems, the amount of yard capacity could go even lower.
"We see no easy solution for the shipbuilding industry. The coming years will be extremely difficult and a lot of yards will have to close down. However, in some ways the demise of the shipbuilding industry is a necessary evil in order for shipping to return to a more normalised state," the institute concludes, adding that the industry needs to adjust active yard capacity for lower future demand in order to balance the declining orderbook, increase newbuilding prices and avert the growing liquidity crisis.
Sinotrans&CSC Jinling Shipyard under China's state-owned enterprise Sinotrans&CSC Holdings Co., Ltd. launched a 9,900dwt cement carrier for its UK-based shipowner on May 17, according to a domestic shipping news report.
The vessel measures 124.7m in length overall, 20m in breadth moulded, and 10.80m in depth moulded, the report added.
Greece's Super-Eco Tankers has placed an order for two firm 40,000dwt IMO-II product tankers at South Korea's Hyundai Mipo Dockyard.
The two newbuildings are scheduled to be delivered in 2017 and 2018 from Ulsan. No price has been revealed.
Super-Eco Tankers fleet currently includes 11 ships trading and an additional two 37,500dwt tankers under construction.
Chinese shipyard Zhejiang Zengzhou Shipbuilding Co., Ltd. successfully delivered a 39,000dwt bulk carrier "INTERLINK AFFINITY" to a US-based shipowner in May 9, according to a domestic shipping news report.
Newbuilding orders of tanker ships have seen a sharp reduction, but the slowing trend needs to be sustained for the longer-term health of the market, according to the latest edition of the Tanker Forecaster, published by global shipping consultancy Drewry.
After numerous orders in recent years, newbuilding activity in the tanker market declined sharply in the first quarter of 2016 as only 34 vessels (2.6 million dwt) were ordered during the period, far below the hefty 368 vessels (45 million dwt) ordered in 2015.
Challenging conditions in capital markets and tight credit availability from banks have subdued new ordering. Although this will not arrest the strong fleet growth and corresponding decline in freight rates over the next two years, as many vessels are scheduled to be delivered in 2016-17, it bodes well for the future, especially if this is a reflection of cautious ordering by owners.
However, if the current decline is just a breather after the hefty ordering in 2015, when owners increased orders to avoid stringent Tier III regulations for the vessels ordered from Jan. 1, 2016, any increase in ordering in the coming months will hurt the longer-term outlook for the tanker market.
Despite the slowdown in ordering in the first quarter of the year, the total orderbook remains high at 63.7 million dwt, 18.6% of the crude tanker fleet. About 80% of the vessels in the orderbook are scheduled to be delivered in the next two years, and we expect more than 200 crude tankers to be delivered by the end of 2017.
"Newbulding prices declined during the quarter on account of the slowdown in tanker ordering, which coincided with weakness in newbuilding activity in other sectors as well, keeping prices under pressure. If ordering remains weak in the coming quarters, newbuilding prices could soften further," said Rajesh Verma, Drewry's lead analyst for tanker shipping.
"The tanker market is expected to be oversupplied in the next two years due to hefty deliveries and relatively slow growth in the crude oil trade. If the slowdown in ordering continues further it will keep fleet growth in check in the later years, which in turn will support tonnage utilisation in the tanker market", Verma added.
Shipping Corporation of India (SCI) should purchase new fuel efficient vessels to replace the old ones, the company was told by India's standing parliamentary committee on transport.
The recommendation comes in the aftermath of SCI's recovery from its loss making phase since 2011-12, bouncing back to a net profit of Rs.384.41 crore during 2015-16.
Since posting losses for three consecutive fiscal years, from 2011 to 2014, SCI abstained from ordering new tonnage and has not acquired any vessel during 2015-16, and the company has no vessels on order, according to the committee.
SCI had registered losses at a time where the shipping industry was struggling to come out of its unprecedented long recession and the outlook for shipping industry was progressively deteriorating. In order to make up for the sustained losses and to turn itself around, cost reduction measures were undertaken, including fleet reduction steps in the company's liner vessels, dry bulk carriers, tanker and passenger vessels.
Future plans include focus on coastal & near-coastal trade, expansion of break-bulk & project cargo business, optimization of equipment inventory, along with reduction in Opex costs through various initiatives, added the committee.
"The committee understands that some of the ships owned by the SCI are aged and needed to be phased out. The committee recommends that if the international market situations are viable, they may go for purchasing new fuel efficient vessels in place of the old ones," the committee said in a report.
Impairment chargers related to Odfjell's LPG carrier newbuildings have led the Oslo-listed owner to consider selling off four 17,000cbm vessels it has on order.
The Norwegian group posted a US$2.75m impairment charge in its Q1 2016 financial results, caused by delays to construction of the eight LPG/ethylene carriers it has on order at Nantong Sinopacific, China.
Four of the vessels are 17,000 cbm in cargo capacity, all due to arrive this year. Four 22,000cbm gas carriers were originally slated for delivery this year but have been delayed until 2017.
If Odfjell decides to go ahead with the terminations, the first vessel would be cancelled this month and delivery of the three remaining vessels would be cancelled every three months thereafter.
All installments paid on the newbuildings have been secured by refund guarantees from "reputable financing institutions", Odfjell said.
The first 22,000cbm gas carrier's contractual delivery was scheduled for September, but delays have pushed back delivery until April 2017.
Odfjell said that activity in LPG shipping markets has been "flat" over the past quarter, with active export markets to Asia from both the US and Europe during the first months of the year. Trading is expected to ramp up again after inventory building in the US has been completed, now winter is over in the northern hemisphere.