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GDSA WEEKLY S&P SECONDHAND AND DEMOLITION MARKET ANALYSIS: Week 29
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Source:Golden Destiny

This week closed with the BDI flirting again the 1,000points barrier at 1037 and with 53 transactions in total reported worldwide in the secondhand and demolition market, up by 26% week on week with secondhand activity being in similar levels, an 88% increase of newbuilding activity and 163% increase in the scrapping volume. At similar week in 2011, the total S&P and demolition activity was around 34% lower levels, when 35 transactions had been reported, while the newbuilding activity was almost 22% less active.

SECONDHAND MARKET
Overall, 32 vessels reported to have changed hands at a total invested capital in the region of US$ 95.4 mil & Euro 70.95mil, with
14 deals reported sold on private terms. Although deals were reported in almost all sectors, most active has been the tanker sector.

NEWBUILDING MARKET
The week ended with a 88% recorded increase in the newbuilding market, with 32 orders in total of a total invested capital to be in the region of $ 647 mil, however we should take under consideration that for a 18.75% of the orders the contracted price hasn’t been revealed. The increased activity of the week is a result of the 20 coastal ethanol tankers that have been ordered from Transpetro in Brazil, at Rio Tete shipyard, a shipyard which is scheduled to open in a months’ time. Contrary to previous weeks, in the special project sector it has been recorded limited activity with just one Platform supply vessel to be reported, while the demand in the car carrier sector appears strong with Eukor Car Carriers of Korea to have exercised their options for two more. The original order of Eukor was reported in May for two 6,600vehicles capacity vessels, while these options have been upgraded and will have a carrying capacity of 7400 vehicles.
Additionally, to the reported orders there are investors that are searching their options on where to invest by putting the yards into strong competition or are just in the original stage of LOIS. Hyundai HI has been awarded to build the “world’s largest” spar platform hull in a deal worth usd $ 700mil but for now the shipyard has been awarded the letter of intent. The deal is expected to been firmed up by Statoil SA early September. The construction will be with Technip and the delivery is said to be by 2015. BG Group is in talks to proceed with its LNG newbuilding project and is in discussions with Chinese yards, in order to evaluate the best option. The project refers to two 170,000cbm LNG carriers, and the company is said to be flexible in delivery dates, therefore not in a rush to order. Furthermore, Petrobras might soon proceed with ordering semi-submersibles and drill ships from Keppel and Sembcorp Marine, since Petrobras has approved the construction of six semi-submersibles for its oil rig provider Sete Brasil.
Overall, the shipbuilding market is facing difficult times with many shipyards experiencing a loss in their records. CSSC Jiangnan has reported that its profits are on a freefall, with the expected first half profit is calculated to fall 80%, comparing to the similar period of last year. Their reported profit however is said to be just enough to make the shipyard have a profit. Similarly, COSCO Shipping has reported that despite the difficult market has maintained to perform with profits for the first half of 0.7m yuan ($0.1m). On the other hand, there are yards as Onomichi in Japan that claim to has filled in their orderbook until 2016, taking advantage of its specialisation in product tankers and the mini boom that was recorded in the sector.

DEMOLITION MARKET
With the anticipation of the results for India’s scrapping future, the activity this week was by 163% higher than last week. In total the week ended with 21 vessels reported for demolition, while in terms of deadweight the figure this week is 105.7% more, at 1,440,159tons. Although all demolition countries were active, for 47.6% of the deals that were reported to be heading to the destinations remain undisclosed. At the similar week of last year in total 24vessels were sold for scrap of a total deadweight of 707,646tons.

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