As of the start of the year, the global outstanding orderbook for dry bulk vessels stood at 2,375 ships, with a potential carrying capacity of approximately 200 million dwt tons.
According to the latest weekly report from shipbroker Intermodal, out of the alarmingly large total of these orders, 1,677 ships of 139 million dwt were scheduled to be delivered during 2012, accouting for around 70%.
According to Intermodal’s John Cotzias, “the active bulker fleet stands at 8,477 ships and 645mil tons of carrying capacity. During 2012 the active bulker fleet has grown by 6% in ships and 8% in total dwt. VLOC’s in 2012 have grown by 17%, Capesize 4%, Post Panamax 14%, Panamax 6%, Supramax 12%, Handymax reduced by 5% while Handysize increased by only 2%."
At the same time, there were 1,677 ships deliveries originally scheduled for 2012, so we could assume with slippage rate, there would be 1,390 ships delivered in 2012. However we may expect that the total dry bulker deliveries for 2012 will reach a record high number of around 1,250 ships and abt. 108mil tons of extra dwt carrying capacity. Slippage therefore is estimated to reach around 23-25% for the current year.
According to Intermodal, “looking into deliveries of specific bulker size segments in 2012, we have recorded 49 VLOC’s, 91 Capes, 73 Post Panamax, 168 Panamax, 226 Supramax, 13 Handymax and 189 Handysize being delivered."
Scrapping has aided the bulker sector tremendously, as more than 21mil tons of dwt, abt 340 ships have been removed from the active fleet, this gives us around 1.6 dry bulker ships scrapped per day.
In July of 2012, 75 vessels of a cumulative 3.29m dwt were newly contracted in the world, plummeted by 66% year-on-year but slightly increased by 6.5% month-on-month.
Clarkson reported that overall new order invested during the first seven months stood at 25.3m dwt, plunged by 54.8% y-o-y.
During last month, 0.52m-dwt (seven vessels) bulkers have been newly invested, down by 74% from 2.01m dwt (26) year-on-year. Tanker segment saw a decrease to 0.28m dwt (six) from 0.6m dwt (16) on the same month of last year, while boxship increased to 1.41m dwt, comparing with 0.37m dwt.
Korea, China and Japan, during the same month, penned 1.69m dwt, 0.49m dwt and 0.12m dwt, all down by 32% from 2.48m dwt, 71% from 1.71m dwt and 78% from 0.55m dwt year-on-year, each.
Global newbuilding order, from July 30 to August 3, has dropped.
According to China's mysteel.com, during the period, a total of 25 newbuildings were contracted, down by 24 vessels on previous week.
Among them, Chinese shipyards only bagged two newbuildings - one cruiseship and one tugboat ordered by compatriot owners - which had been down by two vessels from the earlier week.
Korean shipbuilders overcame depression from the previous week and inked the largest orders of 19 newbuildings, followed by European shipyards.
Japan still seems to go through a difficult time.
Chinese shipyards are more likely to offer lower newbuilding prices, amid a stagnant marine thick-plate market and plummeted newbuilding order.
Most shipyards in the East are on the process of their weeklong summer holidays, while some shipping companies in the West are also slowing down their operation and postponing their decisions until the end of month. As a result, it shouldn't be a surprise that the newbuilding market was relatively quiet this past week. According to the latest weekly report from Clarksons Hellas, "pricing continues to remain under pressure and with many of the European Owners now taking a step back to enjoy their traditional August summer holidays, thus further limiting demand, expect this will remain the case for the coming months. With all these various holidays, a flurry of activity in the market should not be expected over the coming weeks and expect it will not be until September that the market begins to pick up again and we can see how pricing evolves will evolve moving forward. With the typically busier period in the dry markets towards the end of Q3 and the Yards still developing new designs this will no doubt help the Yards to win further business too.
Although much has been made of the fuel efficient designs and the potential cost savings for owners in ordering these, it is important to remember that these new design will also help owners to meet the new regulation changes, due to come into force in the near future - specifically in regards to NOX/Sox reductions and EEDI ratings. The combination of the short term savings and added benefit of meeting upcoming regulations, should no doubt see the Yards winning further business in the future – albeit, as long as we see some let up in the financial turmoil we are still seeing here in Europe and the tumultuous debt markets" concluded Clarksons Hellas.
In a separate newbuilding report, Piraeus-based shipbroker Golden Destiny said that in the newbuilding market, there was "firm business for MR tanker vessels has kept a steady pace of fresh orders worldwide at an average 20 units per week, while the offshore segment does not show buoyant volume of new orders. No fresh activity has been reported in the bulk carrier segment, while containership new orders in the sub-panamax segment came to light from Greek owners.
Overall, the week closed with 15 fresh orders reported worldwide at a total deadweight of 452,000 tons, posting a 38% week-onweek decline, with a 100% and 78% decline in bulk carrier and offshore newbuilding business, while tankers grasped the lion share, 53% of this week’s newbuilding business. At similar week closing in 2011, the newbuilding business was up by 73%, when 56 fresh orders had been reported with bulk carriers and tankers grasping 50% share of the total ordering activity. In terms of invested capital, the total amount of money invested is estimated at region $384 mil with 26% of the total number of orders being reported at an undisclosed contract price. The tanker segment appears to be the most overweight by holding 42% of this week’s total invested capital through the placement of eight new MR product tankers" said Golden Destiny.
It added that "in the tanker segment, Odfjell, the Bergen chemical carrier and tank terminals group, said it has placed an order with South Korean builder Hyundai Mipo Dockyard for four 46,000dwt chemical carriers valued at about $160M en bloc. According to an Odfjell statement, the contract includes options for a further four ships. Each of the vessels will have 22 coated cargo tanks. The ships will have lower fuel consumption than conventional vessels. Deliveries would be from January to July 2014. “The newbuildings will replace a number of old vessels the company has recycled during recent years,” Odfjell said in the statement. In addition, Korean shipbuilder Dae Sun has won an order for two MR tankers of 50,000dwt from Greek shipowner Aegean Shipping Management. The 50,000dwt ships are due for delivery in 1Q 2014 and will be built to Lloyd's Register class. Norwegian shipowner Stolt Nielsen is preparing to build four to six 38,000dwt stainless steel chemical tanker newbuildings and is in contact with South Korean and Chinese yards to bargain the newbuilding price. Singapore owner Wilmar International has ordered two 52,000dwt product tankers, plus two options, for delivery in 2015. The contract price has not been revealed but it is believed to be in the region of $30mil each" the report noted.
It also stated that "in the gas tanker segment, Chinese shipyard Nantong Mingde Heavy Industries signed an agreement with Cambridge Energy Group, a newly formed company focusing on US LNG exports to small-mid sized generation markets, to build five 140,000 cbm LNG carriers, plus for options, and 10-12 LNG carriers of 20,000-40,000 cbm. The agreement marks Nantong Mingde Heavy Industries as the second Chinese yard entering in the construction of LNG carriers following Hudong Zhonghua Shipbuilding. Furthermore, Colar LNG is considering the construction of up to six more 160,000cbm LNG units, but the deal has not yet finalized as the owner is negotiating with the yards to achieve the best low newbuilding price.
In the LPG segment, South Korean chemical and LPG shipping specialist KSS Line has ordered an 84,000m³ VLGC at compatriot yard Hyundai HI for delivery in January 2014 at a price of 83.29Bn won ($73.9M). Belgian gas owner Exmar has secured a two month extension for declaring an option of four more 38,000 cbm units from its initial order in March at a price of $50mil each" Golden Destiny said.
Finally,"in the container segment, Greek owners have shown their presence with Cape Shipping concluding a deal for two 2,200 TEU boxship units for construction in Guangzhou Wenchong Shipyard at $26mil each to be delivered in 2014. In addition, Eastern Mediterranean has ordered two 2,200 TEU boxship units, with an option for two more, at an undisclosed contract price for delivery in 2014" the report concluded.
Spending on newly-developed fuel-efficient vessels has begun from last year and demand for ECO newbuildings stands still firm even amid a depressed shipping market, due to shipowners' competition, fleet replacement, IMO's environmental regulations etc.
Park Mu-Hyun, analyst at E*Trade Securities in Korea, said on August 6, "Leading shipowners and shipping companies with fleet competitiveness have usually made an investment in the doldrums and increased market domination."
He emphasized that it would be necessary to pay attention to newbuilding demand for ECO-designed vessel.
Park said Hyundai Heavy Industries was able to become the global top shipbuilder in 1983, having contracted 66 vessels of a cumulative 2.075m gt, accounting for 10.6% of global new order, mainly by shipowners' newbuilding investment competition which was lighted by Sanko Steamship of Japan.
He suggested that shipping market and shipbuilding market should be distinguished, saying "Shipping industries are not necessarily investing in newbuildings only in prosperous days."
Park emphasized that there would be a number of reasons to boost new order in a depression and during that period shipowners would be better to invest in newly-developed vessels that could enhance fleet competitiveness.
Lower price would only increase sales and purchase activity in shipping market and newbuilding investment seems to be made mainly by ship capacity, but by the prices.
Park Mu-Hyun, an analyst at E*Trade Securities said, "Newbuilding order for boxship is largely affected by owners' competition for service market share. Therefore, low pricing is not enough to surge newbuilding investment."
And explained, "Also, after global economic depression, second-hand prices fall much bigger than newbuilding prices."
Park said Korean shipyard have been placed orders for mostly fuel-efficient and space-efficient vessels.
He added, "Shipping market is facing a serious tonnage oversupply problem, which seems to continue for the next few years, then newbuilding price will drop further."
And emphasized, "Comparing with current fleet, owners would better invest in newly-developed design."
With the summer break starting off in the end of this month, there were a number of final newbuilding contracts seen, as shipbuilders and shipowners finalized negotiation. But overall ordering activity is still stagnant and it will continue to be during the summer holidays.
According to Clarksons Hellas, orders for bulker and container/ro-ro, etc., were placed in recent weeks, especially orders for those with newly developed fuel efficient designs stood outstanding. Therefore, shipyards barely make a living with orders for green ship, amid troubled market and tightened ship financing.
Hyundai Heavy Industries has been placed to build the world's largest 10 ultra-large 13,800-teu boxships by Enesel of Greece, which are to be long-term chartered to Evergreen.
Also, Hyundai recently penned orders for three 7,300-ceu (constructed at Hyundai Samho HI) and two 7,400-ceu car carriers from Glovis and Eukor Car Carriers, respectively, while Hyundai Mipo Dockyard contracted two plus two 3,500-ceu Ro-Ros with Greek owner Neptune.
On July 12, Samjin Shipbuilding Industries Korea inked an order for 1+1 36,000-dwt newly developed eco-design bulkers from Danish owner Ultrabulk and on 18th, STX Offshore & Shipbuilding contracted four 45,000-dwt Con-Ros with Ignazio Messina & C of Italy.
Meanwhile, in China, CSC Jinling Shipyard has signed for four 64,000-dwt energy-efficient bulkers with Australian Clive Palmer Group's Singapore-based shipping subsidiary.
Sinopacific Shipbuilding Group recently signed a letter of intent for two large SPP 50 platform supply vessels and a newbuilding contract for four SPP35 PSVs with SLOK Nigeria.
Particularly, in early of this month, China's Wison Offshore & Marine won an order to supply a newbuild floating LNG regasification unit (LNG-FRU) from VGS Group of the US, while at the beginning of this June, it was awarded contract for the world's first floating LNG liquefaction, regasification and storage unit (LNG-FLRS) by Exmar of Belgium.
Shipbuilding industries are finding their way through recent new order drought with eco-friendly type, specialized vessel and offshore facility/vessel.
Clarkson said the first half of this year has seen more newbuilding investment in offshore market than shipping sector, for the first time. How will it be during the rest of 2012?
According to South China Morning Post (SCMP), China shipbuilding industry is in the worst conditions of the last ten years. Domestic Shipbrokers reveal that overcapacity, financing pressure as well as the depressed freight rates are all staggering owners’ interests in ordering new vessels.
“The new capacity increased in the last ordering boom has greatly hindered bulker, tanker and containership shipping market and depressed the freight rates” a Hong Kong shipbroker said. Besides, the economic recession in Europe and America also curbed the demand.
According to Clarkson, Chinese shipyards totally won new orders of 182 ships in the first six months. The number stood at 561 vessels and 2036 vessels separately in the same period of 2011 and 2007. In H1 2012, Chinese shipbuilders secured vessels of 3.0m CGT while the tonnage recorded 32.54m CGT in 2007. Statistics show that 46 out of 180 Chinese shipyards delivered “ZERO” vessels in last year.
The main shipbuilding base in China – Jiangsu Province - has also seen great depression. The shipyards in Jiangsu totally secured orders for 72 vessels in the first five months, 61.7% down year-on-year. Rongsheng Heavy Industry, the biggest private shipbuilder in China, has not won any order in the first half of the year. However it is disclosed that Rongsheng was in negotiation for new orders at present.
Some analyst put forward that about 90% of Chinese shipbuilders have got no orders till now this year and 28% have got none since 2009. Many private shipyards are likely to go bankruptcy or convert to ship repairing for ship scraping business under growing budget pressure.
Norwegian shipowners are leading the newbuilding market with $6.6bn invested in new vessels during the first six months of this year.
That is 29.5% ahead of 2011 on an annualised basis, in sharp contrast to global investment in new tonnage, which has slumped by 40.8%.
The latest statistics from Clarkson Research Services (CRS) shows that 75% of Norwegian investment this year has been in offshore units.
It was the same last month, when its owners were again the biggest spenders, at $1.2bn, but it was all focussed on offshore.
In June, owners worldwide ploughed an estimated $7.2bn into newbuilding contracts, lifting the year-to-date total to around $30.3bn.
However, says CRS in its latest World Shipyard Monitor, this is down almost 41% on an annualised basis, as compared to 2011.
Despite the recent reports indicating a decline in newbuilding oderding activity since the start of the year, ship owners appeared determined last week to reverse the trend, seeking to capitalize on lower prices offered by shipyards, in their attempt to boost business. In its latest report, Clarksons Hellas noted that «after last week’s report bemoaning the decline of the orderbook by 19 percent in terms of dwt, it appears that the market has hit back with a series of orders to help bolster the yards, the most significant of which being the 10 x 13800 teu containerships ordered by clients of Enesel at HHI shipyard. So perhaps it is not all doom and gloom for shipyards and there may even be positive signs for some sectors! We may have only seen USD 22 billion invested in new orders so far this year, which is a significant fall when compared to previous years, but in certain sectors such as tankers and in particular the products market, we have seen investment increase over 14% compared to 2011, which in turn equates to around USD 3 billion of investment.
It is probably far too early to say that any type of corner has been turned for the shipyards yet, but at least from their point of view they can continue to see that there are still Buyers in the marketplace that are prepared to invest significant sums in shipping and that there still remains the opportunity for yards to win new orders, if they are prepared to offer a more diverse product range as well as continuing to be price competitive” said Clarksons Hellas.
In a sepatate note though, Golden Destiny noted that «in the newbuilding market, there has been a 67% decline in the volume of new contracts from last week’s activity from 53% slower business in the offshore segment and 71% less contracting activity in the bulk carrier segment. The week ended with 12 fresh orders reported worldwide at a total deadweight of 350,400 tons, with negative volume of business in all main vessel types. This week’s total newbuilding business is down by 64% from similar week’s closing in 2011, when 33 fresh orders had been reported with bulk carriers grasping again the lion share, 47% of the total newbuilding business compared with 17% today’s levels. In terms of invested capital, the total amount of money invested is estimated at region $172,2 mil with 66% of the total number of orders being reported at an undisclosed contract price. The offshore segment is the most overweight by holding 68% of this week’s total amount of money invested, while there has been no fresh contracting activity revealed in the tanker segment for a second consecutive week and only one fresh contract of two kamsarmax units in the dry bulk carrier segment at Chinese yard by Taiwanese owner, Sincere Navigation, at a price in the region of $27,5mil each. At the end of June 2008, a kamsarmax newbuilding order at Chinese yard was costing around $57mil.” said Golden Destiny.
The shipbroker added that “in the container segment, Greek shipowner Enesel, part of the NS Lemos group of companies, is confirmed to have contracted 10 ultra-large container ships for long-term charter to Evergreen Line of Taiwan. The deal was confirmed to Fairplay by Evergreen: "Based on the tonnage demand needed to launch joint services with vessels of similar sizes, Evergreen Line decided to charter the gigantic vessels. “With the delivery of these new ships, Evergreen Line will concurrently return chartered vessels upon their expiration dates," an Evergreen statement said. The 13,800teu ships are due for delivery from 3Q 2013 to 4Q 2014, with the order having been placed with South Korean builder Hyundai HI. Evergreen would not comment on the financing arrangements or the charter rates. Rumours regarding this order were initially reported in Daily Newbuilding News on 16 April, with finance between Evergreen and Korea Infrastructure Investments Asset Management. However, this deal was not finalised as Korea Infrastructure Investments Asset Management was unable secure the necessary fund and parties could not reach consensus on some technical issues within a mutually agreed time limit.
In the gas tanker segment, Mitsui O.S.K. Lines, Ltd. announced the signing of a long-term contract for two new liquefied natural gas (LNG) carriers with Kansai Electric Power Inc. At the same time, MOL concluded contracts to build the ships in Kawasaki Heavy Industries, Ltd. and Mitsubishi Heavy Industries, Ltd. The ships are slated for launching in 2016 and 2017. MOL will manage and operate the vessels, with which transport LNG for Kansai Electric Power. The first vessel is a Moss-type carrier with a 164,700m3 cargo tank capacity, based on a new design from Kawasaki Heavy Industries. It will be the largest ship in its class that can pass through the expanded Panama Canal which is scheduled for completion in 2014, while maintaining a hull size allowing it to call at major LNG terminals around the world. The second vessel has a 155,300m3-class cargo tank capacity, and is one of the Sayaendo series carriers developed by Mitsubishi Heavy Industries, featuring a continuous cover over its four Moss-type spherical tanks. The peapod-shaped continuous cover is integrated with the ship's hull, achieving weight reduction while maintaining overall hull rigidity. This will increase fuel efficiency. Both vessels adopt a new steam turbine engine that reuses steam for heating. This will also reduce fuel consumption. They also feature an advanced heat insulation system that offers the lowest LNG vaporization
rate – 0.08% – of any LNG carrier in the world. Its environment-friendly, economically-advanced design also effectively controls surplus boil-off gas” said the shipbroker.
It added that “in the LPG segment, Frontline confirmed to have contracted the largest LPG carriers ever to be ordered in China. The John Fredriksen-controlled shipowner has initially ordered two 82,000m³ vessels at the CSSC-controlled Jiangnan Changxing HI, with delivery due in June and September 2014. However, the order could ultimately total six ships should all options be taken up. The Lloyd’s Register-classed ships will feature a length overall of 226m, a beam of 36.60m and a hull depth of 22.20m. In the offshore segment, Japan’s’ Universal Shipbuilding confirmed that it secured orders for six platform support vessels from Singapore offshore player Swire Pacific Offshore. The high-specification 3,700dwt PSVs, which come with options for four more vessels, will be built in USC’s Keihin Shipyard and will be delivered “progressively” from the third quarter of 2014” the report concluded.