UCS Shipping Market Report

Shipping
2014 is a great end for tanker sector, where we see VLCC is earning over $50,000/day. Following a recovery Christmas shopping in most of western countries, container sector has shown positive signals. Bulk carrier still is suffering China’s economical stabilization, where demand has not been able to catch up fleet supply growth.

Shipyard
60 white listed of over 1000 shipyards has not been able to protect them from bankruptcy. After China just announced its second version of White listed Shipyards, at least two of major shipyards are in bankruptcy processes. In next few years, there will be huge numbers of Chinese shipyards out of business.

Finance
Cautious with shipping recovery, most of traditional Europe banks are starting to open their finance taps for their long related clients. But in general, Asia banks are main players in the market. To support its own ship building industry, they offered lower price and attractive terms.

Offshore
Oil price has dropped to less than $60 per barrel, which is break-even level for most offshore field. In short term, as USA has become third largest oil and gas producer, the price will be kept in this level for the moment. It has benefited for world economic recovery.

Bulk Carrier
As Chinese iron ore imports are stabilized from its internal finance reform, bulk demand will have limited growth in short term. As fleet still is growing from its heavy order book, plus exiting over supply, dry sector will be under pressure for the time being.

LNG
With positive demand after 2016, there are huge numbers of LNG new buildings being ordered in end of 2014 at $205-215mill per ship for delivery after 2017. South Korea is the biggest winner of these orders and China and Japan are followers.

Tanker
Average VLCC crude tanker spot earnings are high due to north winter seasonal demand. Earnings are now averaging $55,000 per day. It costs an owner around $10,000-$13,000 per day to run a modern VLCC. The current earnings are offering great rewards for owners with ships on the spot market.

Container
Black Friday, Christmas shopping, and new year’s promotion in western countries has driven most of stores to accelerate their re-stock after New Year, it will push the container demand growing. As economic in USA and other Europe countries are showing quick growth, container sector will benefit from this trend.
Source: UK China Shipping