Newbuilding ordering activity picks up

Despite a more than fluid political and economical environment in the Eurozone, ship owners seem unable to resist attractive deals in the newbuilding ordering segment. In its latest report, Clarkson Hellas mentioned that "the week has seen continued reports of business being concluded, again across a range of different sectors. The non-conventional sectors have continued to see the bulk of ordering activity, with further orders in PCC and other niche sectors. There have also been further reports of ordering in the Dry Bulk sector, which despite having seen a reduced level of activity over the past 12 months, is now perhaps highlighting buyers increasing willingness to consider placing orders for the newer more efficient designs.
In Japan, the continuing strength of the yen, which has appreciated against the dollar by 5% in the past 2 months and thus erasing many of the gains seen earlier in the year, continues to present an ongoing challenge for the Japanese shipbuilders as they themselves look to win new orders. That being said, the Japanese yards, like much of their Far Eastern competitors have undertaken large amounts of design work, producing increasingly interesting and efficient designs. The hope remains that these re-worked designs will help them regain their competitive edge and begin winning new orders again in spite of what looks to remain a challenging market going forward” said Clarkson Hellas.
In a separate report, shipbroker Golden Destiny mentioned that “newbuilding investments continue to attract investors’ interest although the industry as such is facing its own problems. Many shipbuilding yards are trying to cope with the difficult market and stay alive. China State Shipbuilding Corporation estimates as much as 50% capacity could disappear within 2-3 years, but a 30% is a more conservative figure. South Korea and Japan are also facing similar issues, with finance options as well as bareboat charter options are offered to the prospective investors in order to induce them. This week, the market has shown again a 22% decrease compared to last week, with 21 new orders reported and this week tankers grasping the lion’s share with 12 out of the 21 orders. Orders in the special projects follow representing 23.8% of the total weekly orderbook. The total invested capital is calculated to be in the region of US $ 1.67 billion, with 5 orders contracted on private terms” said Golden Destiny.
It added that “in the bulkcarrier sector, just 2 Ultramaxes have been ordered by Greek owner Laskaridis at Jinhai of China, while London based Ravi Mehrota is in discussions to order six bulkers in China. The discussions are on with four Chinese yards and refer to a pair of panamaxes and four supramaxes. In the tanker sector the MR sector continues to be in the top preference of investors and a Japanese group proceeded to the order of 2 VLCC at compatriot yard IHI Marine at a reported price of $ 100 mil each. The LNG sector, continues to attract interest of big investors with Stena Bulk to have booked two units of 174,000cbm at Daewoo Shipbuilding, with the subjects of the order being lifted at mid-June,while the company is in discussions to finalise long term employment for the units.
In the container sector, it has been rumored that Zodiac is looking to invest in up to ten 5,000teu vessels and is in talks with Korean yards in order to find the most competitive price and rates. It is said that the company is looking to pay only around $ 45 mil per vessel, with the normal breakeven cost would be around $ 50 mil per vessel. At these levels some South Korean yards have refused while others such as Hyundai Mipo, STX & Hanjin seem to be interested. In case such a deal moves forward Chinese yards would have more pressure to compete in order to be attractive. Additionally Bernard Schulte of Germany is also rumored to be in discussions for 8 x 2,400teu vessels in two Chinese yards (Jiangsu Yangzijiang & Jiangnan) for delivery in 2014, although nothing has been confirmed yet” concluded Golden Destiny.
In terms of reported business, Clarkson Hellas mentioned that “in Dry, clients of D’Amico are now reported to have ordered 6 firm units of 39,500dwt Bulk carriers, with options for up to an additional 6 units. Although not disclosed, pricing is understood to lie in the mid USD 22s Mill with deliveries scheduled to begin from 2H 2014 onwards.In Other sectors, HHI are understood to have won an order from Eukor Car Carriers for a pair of 59,000GT Car carriers with deliveries due in 2014. Sungdong meanwhile are understood to be very close to concluding the signing of as many as 10 x livestock carriers with Malaysian company Pembangunan Buka Hijau Holdings. Five of these vessels are understood to be designed to carry up to 7,000 cattle, whilst the remaining five for 11,000 animals. Deliveries due to begin from Mar 2014. No pricing has been disclosed” concluded Clarkson Hellas.
Nikos Roussanoglou, Hellenic Shipping News Worldwide