Shipowners pondering on placing more new building orders or adopting “wait-and-see” approach

With the Dry Bulk Index (BDI) losing more than 20% of its value from the start of 2011, it only seems reasonable, that the once bullish stance that many ship owners had for the dry bulk market’s prospects at least from 2012 onwards, seems to be losing faithful supporters. The industry’s benchmark closed yesterday further down by 1.28% to just 1,393 points and is now at the lowest in two years.

Should it have not been for the global financial meltdown of 2008, it would be close to multiyear lows.
As Barry Rogliano Salles noted earlier in the week, the recent fall in freight rates has has created a gap between Buyers and Sellers when it comes to prices, resulting in a very quiet S&P market. “We expect this to last for the next few weeks until maybe after the Chinese New Year. This week's S&P menu is all about ‘age’, as in ‘overaged’, and ‘old age’ etc. Arcelor Mittal have sold their Panamax ‘Kirti’ (68,000 dwt, built 1986 in Japan) to Chinese buyers for about US$10m. We understand that this is a December 2010 sale and that the vessel is due for SS & DD in April 2011, just after delivery to the buyers. Excel Maritime of Greece have sold their Handymax ‘Marybelle’ (43,000 dwt, built 1987 in Japan) to Bangladeshi buyers for a price in the region of US$10.8m, which also seems to be a December 2010 sale. In probably the most active week involving Egyptian interests we note that the National Navigation Co of Egypt have sold their sister Handies ‘Alwadi Al Gadeed’ and ‘Wadi Halfa’ (32,000 dwt, built 1985 in South Korea) for about US$7m each. At the same time Egyptian buyers have reportedly agreed a price in the region of US$6m for the Greek owned ‘Androniki’ (30,000 dwt, built 1984 in Japan) - yielding a nice return for the Seller who purchased the ship back in March 2009 as the ‘Manora Naree’ for US$2.9m from Precious in Thailand” said the Paris-based shipbroker.

In a separate report about the shipbuilding market, Clarksons said that “as we enter the traditionally quiet period between the Western holidays and the Lunar New year there remains a small but steady level of enquiry and a few limited reports of new business. Looking forward, it is within the container sector that we expect to see the level of orders increasing in the coming weeks, especially in the larger sizes. As we move into the New Year, speculation remains as to what 2011 holds in store and following a more successful 2010 than many would have thought possible the market has more reason to be optimistic than that of a year ago. With the global economy continuing to show signs of recovery and greater confidence returning to the financial markets it will be an interesting story to follow here as to how the newbuilding market develops over the next few months.
The past fortnight has seen a number of announcements from some of the major Korean yards as 2011 sales targets have been set. Across the seven largest yards total sales targets have been raised by over 35% against the realised values of 2010 and this could well be construed as a positive sign that demand will be there throughout the course of the year across the sectors. Whilst the Chinese yards will look to maintain their price competitive edge that saw them do so well in 2010, they will have to do so in the face of a potential decline in dry demand against the backdrop of a large orderbook. The Korean yards meanwhile will look to continue the diversification of their production lines and will focus on those high value projects in order to hit these new targets whilst at the same time looking to offer competitive levels across the various other sectors. In terms of reported business; In Wet, Zhejiang Gaoyu Shipping have ordered 3 x 4,900dwt Tankers at Taizhou Hongda Shipbuilding with deliveries scheduled throughout 2012” concluded Clarksons.