Ιce class tankers enjoyed healthy, yet shorter than usual winter season; Prospects look mixed in the future

In Hellenic Shipping News 31/03/2015

Despite the fact that the ice class season during 2014/2015 in North West Europe is nearly over, ship owners have enjoyed a healthy market during the past few months. According to the latest weekly report from shipbroker Gibson, “Baltic ice conditions are usually most severe in March/April, however this year, mild weather means that the ice has already started to break and restrictions have been eased. A relatively “premature” conclusion of the ice season limited earnings potential, as this period is traditionally the time when owners reap the rewards for the extra investment in ice class specs and higher bunker consumption”, said the shipbroker.

However, according to Gibson, “crude tanker earnings in general both for ice and non-ice class have moved to higher levels since last year. Also, owners of tonnage operating in the Baltic Sea earned a healthy premium in January 2015. During the period average spot tce earnings for Aframaxes trading Baltic-UK Cont were some $27,000/day higher than for Aframaxes trading across the UK Cont, the highest premium in nearly two years”.

Gibson added that “going forward there are indicators both in favour and against ice class tankers. On the downside, perhaps one of the most worrying factors is the recent decline in the FSU crude exports in the West. FSU crude exports in the Baltic averaged just under 1.3 million b/d last year, down by 0.27 million b/d from 2013 levels and down by 0.35 million b/d compared to 2012. This drop has been driven by expanding pipeline infrastructure to the East and growing/upgrading refining capacity in Russia. The declining trend in the Baltic FSU crude exports is likely to continue taking into account plans underway to expand further pipeline links to the East, growing emphasis of the Russian Federation to increase trade ties with Asia Pacific and international sanctions that have the potential to curb Russian crude production in the short to medium term” the London-based shipbroker concluded.

The report added that “on the upside, the rapid growth in the ice class supply seen between 2000 and 2010 has come to a complete halt. At present, there are no orders in the Suezmax, Aframax/LR2 and LR1 sectors and just three Panamaxes on order all due for delivery in 2016. In terms of future scrapping activity of ice class tankers capable of carrying crude (55,000 to 160,000 dwt) the picture is mixed. The near term demolition prospects are limited as there are just a few units over 20 years of age. However, the lack of fresh orders indicates that supply will remain flat in the next few years. Beyond 2016/17, demolition activity is likely to start increasing, as the population of “aging” ice class tankers gets bigger. At present, out of the 167 ice class fleet (55,000 to 160,000 dwt), 16 tankers (10%) are over 15 years of age, most notably in the Suezmax segment. However, what impact this will have on the overall fleet size remains to be seen. A key factor here is future ordering activity, which to great extent is linked to the performance and prospects both for ice and non-ice class tonnage”, Gibson concluded.

Meanwhile, in the crude tanker markets this week, in the Middle East, “VLCC Charterers refused to inject enough April action into the marketplace to re-light any fires, but Owners were equally obstinate in their refusal to allow for any meaningful slippage either. Stalemate then, and the centrepoint ws 50 to the East and ws 26 to the West remained intact with ‘outliers’ concluded on both sides of those marks. Easter looms, and there will be some potential for a busier patch, but supply seems easily adequate to prevent that converting into anything substantial – if it happens. Suezmaxes found little spark, especially later in the week. There was a flurry of shorthaul interest, but that couldn’t budge rates from an average 130,000 by ws 85 East and low ws 40s to the West. Again, little change forecast. Aframaxes failed to realise their hoped for potential emanating from improvements in the short far Eastern scene, but did manage to creep a little higher to 80,000 by ws 115 to Singapore, nonetheless. Consolidation is now on the cards”, Gibson concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Platts to include Malaysia’s Pengerang terminal in Singapore pricing process

In Oil & Companies News 31/03/2015

Oil pricing agency Platts said it will include the Pengerang oil terminal in the southern Malaysian state of Johor in its Singapore price assessment process from May 1.

The move is expected to offer traders more flexibility in loading cargoes and improve market liquidity, traders said.

Apart from landed storage tanks in Singapore, Platts currently recognises loadings from Pasir Gudang, Tanjung Langsat, Tanjung Bin and certain floating storage units in nearby waters for its Singapore price assessment process.

And while Singapore is Asia’s largest oil trading hub, a scarcity of land has hit growth of the business there. This has spurred billions of dollars of investment on the construction of storage facilities in neighbouring Malaysia and Indonesia.

Following positive feedback from the industry to the proposal that Pengerang deliveries be included in the assessments for middle distillates and gasoline, it will go ahead with the move effective May 1, Platts, a unit of McGraw Hill Financial Inc., said in a note to its subscribers.

Platts, which provides Asian benchmark assessments for most oil products traded in the region, is also planning to change the loading points in its pricing assessments for fuel oil, gasoil, jet fuel and gasoline from July 1.

Platts said it will introduce a free-on-board (FOB) Straits benchmark to replace the existing FOB Singapore benchmark. In the new benchmark, traders will not have to specify a loading port at the time of placing a bid or offer and can include cargoes to be loaded from approved terminals in either Singapore or southern Malaysia.

The Pengerang terminal, majority owned by a 51-49 joint venture of Dialog and Dutch oil and chemicals storage company Vopak, started operations last year.

The facility is in the process of being filled but is not yet at full capacity, said a source with Vopak, declining to be named because he wasn’t cleared to speak with the press.

“With the Platts approval, we expect interest to pick up,” he said.

The Pengerang site is able to accommodate very large crude carriers (VLCCs) and will have an initial storage capacity of about 1.3 million cubic meters, according to Vopak’s website.

The terminal is one of several upcoming energy projects in Pengerang, including a refinery and petrochemical integrated development by Malaysia’s Petronas, although some of these may be delayed by the 50 percent slump in oil prices since June of last year.

Source: Reuters (Reporting by Jessica Jaganathan; Editing by Tom Hogue)

India: The outlook for LNG imports

In Freight News 31/03/2015

Liquefied natural gas (LNG) imports to India fell by about 18% in February on a month-on-month basis. According to data from the Petroleum Planning and Analysis cell, LNG imports in February stood at 0.701 million metric tonnes (mmt), or 34.05 million metric standard cu. metre per day (mmscmd). The same measure for January stood at 0.941 mmt, or 41.28 mmscmd.

These figures do not include Reliance Industries Ltd’s LNG imports. In fact, LNG imports are 32% down from the high seen last October. Why is that happening despite lower spot LNG prices? Simply put, demand has been terribly weak. One reason for the weak demand is reduced competitiveness, compared with liquid fuels (such as naphtha), thanks to sharp price declines. Moreover, Nomura Research analysts point out that the inventory levels have been high in the recent past.

Weak LNG demand has meant that Indian gas firms could not reap the benefits of lower LNG prices in the December quarter. Having said that, LNG imports are set to increase in the days to come. For one, LNG sales in the country have improved in February on a month-on-month basis. photo “With lower imports and higher offtakes, the stock levels at LNG import terminals, which had increased sharply in the last few months, should have eased, in our view,” wrote Nomura analysts in a note last week, adding that the lower inventory levels will ease the recent operational challenges, and enable higher imports of cheaper spot LNG.

According to the brokerage, the reasons that could boost LNG demand from the next fiscal year onwards include: re-starting of the Dabhol power plant; return to operations of fertilizer units after their maintenance shutdowns; and higher demand from other sectors and industries such as steel, refining and city gas distribution.

Other than that, the recent government announcement on importing regassified liquified natural gas (R-LNG) for supply to power plants should ease concerns of weak LNG demand in the country. Companies such as GAIL (India) Ltd, Gujarat State Petronet Ltd and Petronet LNG Ltd are expected to benefit from this development. Taking into account the 1.5-2.0 million tonne per annum of spare LNG import capacity available at Dahej (Petronet LNG), Hazira (Shell) and Dabhol (Ratnagiri Gas and Power Pvt. Ltd) terminals each, total gas sector volume can increase 20-25 mmscmd, said a report from JM Financial Institutional Securities Ltd. While the potential is substantial, as this column pointed out last week, more clarity will emerge only when power plants embrace the scheme.

Source: LiveMint

Greece Discloses Expected Proceeds From Planned Piraeus Sale

In Hellenic Shipping News 30/03/2015

Greece has told creditors it expects to raise at least €500 million ($545 million) from the privatization of the Piraeus port, according to Greek officials.

The privatization plan has been controversial, and politicians in Greece’s new leftist-led government have publicly expressed conflicting signals about whether it would go ahead, spooking creditors. Privately, however, senior Greek officials have said it would proceed.

The decision to disclose to creditors the expected proceeds from the planned sale is the latest and clearest sign yet that the government in Athens plans to go ahead.

Greek officials also told creditors they will seek to privatize operating concessions at 14 regional airports, the Greek officials with knowledge of the situation said.

Greece’s previous government has been seeking to sell a 67.7% stake in the Piraeus Port Authority. It would be one of Greece’s biggest divestments, part of an ambitious privatization plan agreed to by the previous government and creditors. Creditors have repeatedly told Athens that the sale of state assets is a must in any new financing deal.

The port, just a few miles south of the Greek capital of Athens, is the de facto home of Greece’s giant shipping industry and is one of the largest ports in the Mediterranean.

The government expects a minimum €500 million from the sale, as well as further investments in ship-repair facilities, rail links, and cruise and ferry docks that could create thousands of jobs, the Greek officials said.

The shortlist of buyers for the stake includes China’s shipping and ports giant China Cosco Holding Co., APM Terminals, owned by Danish shipping major A.P. Møller-Mærsk A/S, Ports America Inc., the biggest U.S. port operator, and Philippines-based port operator International Container Terminal Services Inc.

People with knowledge of the situation have said Cosco is the front-runner given that it already controls two container terminals in Piraeus. The Greek government also believes that China is among only a handful of countries willing to take the risk and invest in the volatile country, these people said.

Greece’s new leftist, Syriza-led coalition government is scrambling to reach a financing deal with international creditors. Since being voted into power in February, the new government has threatened to roll back many of the austerity measures and reforms—such as privatizations—that the country undertook over the past five years to secure billions of euros in aid.

Athens and its creditors—including the European Union, the European Central Bank and the International Monetary Fund—are holding talks in Brussels over the weekend over proposed Greek reforms that will yield more than around €3 billion this year, in an attempt to win Athens a new financing package.

On Monday, the talks will be elevated to a more senior level. If there is an agreement, eurozone finance ministers will then meet to decide on whether or not to release a new finance package for Greece.

Source: Wall Street Journal

“Happy Days” are still the favorite “show” of the tanker market

In Hellenic Shipping News 30/03/2015

The tanker market is still riding on a high. According to the latest weekly report from shipbroker Charles R. Weber, over the course of the past week, “rates in the VLCC market trended modestly higher at the start of the week as charterers’ progression into the April Middle East program was met with a lower number of carryover units from March dates. As the week progressed, however, inquiry levels in the Middle East remained light even as charterers had largely received their April stem confirmations which led to fresh concerns by market participants over the likely extent of the month’s program”.

According to the shipbroker, “statements by Saudi Arabia’s oil minister reinforced earlier reports indicating a recent rise in Saudi’s oil production to around 10 Mb/d, which should imply greater exports. An earlier report by PIRA suggested the same level and indicated an expectation that the additional volumes would be bound for points in Asia and the United States. The disparity observed between a Saudi production hike and Middle East export volumes has widened while the former may have partly tempered the traditional weakening of owners’ resistance which tends to follow periodic demand lulls and thus limited rate losses. Rates on the AG-JPN benchmark route concluded at ws50 last week before rising to ws52.5 early this week and ultimately concluding at ws51.5. To date, 40 April Middle East cargoes have been covered, leaving a further 22 to go through mid-month. Against this, there are 30 units available through the same space of time. Draws on these units to service West Africa stems declined from previous weeks’ highs this week as much of the VLCC-oriented April program there has been covered and with May stems still some weeks away, demand there could be light, implying fewer draws on Middle East positions and less to offset the eventual appearance on Middle East position lists of large commercial managers’ “hidden” positions. Accordingly, the implied Middle East surplus through mid-month of 8 units could rise going forward. Despite this, the supply/demand position of the VLCC market remains supportive of modest rate gains to accompany an expanding of activity levels during the upcoming week”, CR Weber noted.

Meanwhile, in the Middle East markets, “rates to the Far East rose by 0.8 point w/w to an average of ws50.7. Corresponding TCEs rose by 2% to an average of ~$47,494/day. Rates to the USG via the cape were assessed at an average of ws26.5, representing a w/w loss of one point from last week’s observed average. Triangulated Westbound trade earnings dropped 5% w/w ~$60,147/day on fresh losses in the Caribbean market”. Similarly, according to CR Weber, “in the West Africa market, rates on the WAFR-FEAST route lost 2 points w/w to an average of ws49. Corresponding TCEs were off by 5% to an average of ~$43,356/day. A large number of reported fixtures from Rotterdam followed the opening of fuel oil arbitrage opportunities to points in the Far East; many of these fixtures remain on subjects and as with many such plays failing rates tend to exceed those prevalent for VLCCs on normalized trades. Accordingly, should a large number of these fixtures fail they will likely appear on West Africa position lists and potentially lead to downside there out of step with usual correlations with rates in the Middle East market. In the Caribbean market, the rising number of units en route to the USG area continues to apply negative pressure on rates. The CBS?SPORE route lost $300k over the course of the week to a closing assessment of $6.3m. Sources indicate that Venezuelan crude supply could drop sharply during the second half of April due to field maintenance. This has heightened fears of an oversupplied VLCC market and could lead to significant rate downside going forward. At the present assessment, the CBS-SPORE route stands at a record high for this time of year and is 47% above the March average observed during the preceding four years”, CR Weber noted.

Suezmax

In the Suezmax market, it added that “the West Africa Suezmax market tightened early during the week as a fresh influx of cargoes saw demand rise out of step with demand. The demand gains came following two weeks of sluggish demand and the week’s tally of 19 fixtures represented a 134% w/w gain. Rates improved on this basis through the early part of the week, though slowing activity by the close of the week saw some of the gains pared. The WAFR-USAC and WAFR-UKC routes each concluded with a weekly gain of five points to ws85 and ws87.5, respectively. Given the fact that VLCCs are projected to command 51% of the April program, up markedly from 38% during the March program, Suezmax demand appears poised to pare back during the upcoming week. We estimate that just six further Suezmax fixtures will materialize within the second decade of the April program (as charterers have reached further forward recently), which implies a slow pace of activity during the upcoming week, which will likely see rates remain soft. Thereafter, with the spread in the final decade less heavily oriented to VLCCs relative to the first two decades (albeit at a greater share than observed during March’ final decade), rate downside should be limited when charterers move into the final decade, with a modest rebound possible on the corresponding activity gains”, CR Weber concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Mexico expects U.S. oil swap, another crack in crude export ban

In Freight News 26/03/2015

Mexican state oil firm Pemex expects imminent approval from the U.S. Commerce Department to allow it to swap up to 100,000 barrels of heavy crude for a similar amount of lighter U.S. oil, what could be the latest milestone toward loosening the four-decades old ban on exporting U.S. oil.

“Our expectation is that it happens soon,” Jose Manuel Carrera, CEO of Pemex’s commercial arm P.M.I. Comercio Internacional, said in an interview Friday. “I would like to see the approval tomorrow, or I would have liked to see it yesterday, but the truth is that this is a permit that the United States unilaterally approves.”

The Commerce Department’s Bureau of Industry and Security, which oversees the process, on Wednesday declined to comment on the application.

The Mexican company hopes swaps will pave the way for the United States to eventually allow for direct crude oil exports to Mexico, an exemption it allows for Canada. In January, U.S. crude exports to Canada reached an all-time record, according to the U.S. Energy Information Administration.

U.S. law allows swaps of crude on a case-by-case basis with “adjacent countries” based on “convenience and increased efficiency of transportation.”

Pemex announced in January it had asked for permission to import up to 100,000 barrels a day of light crude and condensates to mix with its own heavier crude at domestic refineries in exchange for heavier Mexican crude for processing at U.S. refineries. The swap would be the first since the late 1990s, when the two neighbors conducted an exchange of crude from the U.S. Strategic Petroleum Reserve.

Sources familiar with the process said the approval has taken longer than expected because the BIS has asked for assurances that Pemex has specific U.S. buyers to take the equivalent amount of Mexican crude in return. That requirement would prove that the Mexican oil is part of an additional contract, not crude that is already being imported into the U.S.

Carrera said Pemex does not need to export any new crude to the United States to satisfy the requirements of the swap because “there are many Mexican barrels of crude that arrive at the United States that are not part of a fixed-term contract … that arrive on a spot basis.”

Pemex CEO Emilio Lozoya told Reuters in an interview in Davos in January that Mexico could start importing light crude from the United States within two to three months of eventual approval by U.S. authorities.

For Mexico, allowing swaps is seen as vital to improving hemispheric trade and strengthening Pemex as the country implements new energy reforms.

“Any effort that allows for the further integration of complementary energy markets is a good thing, particularly given the current price environment and Mexico’s desire to reform its own energy sector,” said Antonio Garza, former US Ambassador to Mexico and counsel at White and Case in Mexico City.

The Pemex decision is being closely watched by nearly two dozen U.S. senators, who see permission to allow the swap as an opening to broader reform of the American ban on exports of domestically produced crude oil.

Twenty-one senators, led by Republican Senator Lisa Murkowski of Alaska and Democratic Senator Heidi Heitkamp of North Dakota last month sent a letter to Commerce Secretary Penny Pritzker calling on the BIS to approve the pending swap request.

They also urged the Obama administration to go beyond approving swaps and allow direct exports of crude oil to Mexico as a matter of national interest.

“We encourage the current administration to follow President Reagan’s example by issuing a similar finding that United States oil exports to Mexico – for consumption in Mexico – are in the national interest,” they wrote.

For Murkowski, raising awareness around the issue of swaps and opening up exports to Mexico are part of a longer-term effort to build support for the United States to drop the ban completely, a campaign she began in early 2014.

“Senator Murkowski is steadily building the case and letting the American public get comfortable with the fact that these swaps and exports are beneficial for our national security and economy,” spokesman Robert Dillon said.

Other countries, such as South Korea and European Union members, will also keep an eye on the Mexico decision since they have been keen to buy U.S. crude oil.

The Commerce Department showed its first signs of opening the door to crude exports in 2013 when it started granting permission to some companies to export minimally-processed ultralight crude oil called condensate.

U.S. companies including Enterprise Products Partners , Shell and Pioneer Natural Resources have all gotten confirmation from BIS to export condensate.

Source: Reuters (Additional reporting by Ana Isabel Martinez and Timothy Gardner; Editing by Bruce Wallace and Grant McCool)

Fujairah storage firms to grow by 75% in oil price drop

In Port News 26/03/2015

Storage companies are expanding their facilities in Fujairah with crude and petroleum product capacity set to grow 75 per cent by 2020.

Fujairah, which has a strategic location outside the Strait of Hormuz, is benefiting from the oil price drop, which is encouraging firms to store oil and oil products to exploit any rebound.

The contango market, where spot prices are lower than future prices, is driving investment in the sector.

Fujairah tank storage capacity is expected to touch about 8 million cubic metres by year-end and is forecast to rise to 14 million cubic metres by 2020, according to UAE officials.

This expansion will “increase trade flows and cement the UAE as a major oil storage hub”, said Ali Al Yabhouni, the UAE Opec governor at the Fujairah Bunkering and Fuel Oil Forum.

Fujairah’s location south of the Strait of Hormuz has attracted a slew of investments into its port storage facilities aimed at turning the city into one of the world’s great oil trading ports, such as Singapore. It is also the world’s third-largest bunkering hub after Singapore and Rotterdam.

Fujairah port is also the terminus for Qatari natural gas via Dolphin Energy’s pipeline from Taweelah.

In addition to the storage expansion, there are also plans to build a refinery capable of handling 200,000 barrels per day, plus liquefied natural gas re-gasification facilities.

“In the current environment, it is attractive for people to buy oil at very low prices and then store it in the hope that prices will recover. Therefore the demand for bunkering and storage facilities is very high right now,” said Vince Cook, the chief executive of National Bank of Fujairah.

Fujairah Oil Terminals, a joint venture between Singapore-based Concord Energy, a subsidiary of China’s Sinopec and the Fujairah government, this month launched tank storage facilities with a capacity of a 1.17 million cubic metres.

The tank operator Vopak Horizon Fujairah will add 480,000 cubic metres to Vopak’s current 2.1 million cubic metres capacity by the summer of next year.

Vitol Tank Terminals International Fujairah (VTTI), a joint venture between the oil trader Vitol and the Malaysian shipping company MISC, is planning to add 430,000 cubic metres in the second quarter of next year, which will increase its capacity to 1.7 million cubic metres to meet demand.

“We believe it’s an opportunity for traders to increase their own volume with the lower [oil]price,” said Siavash Alishahpour, managing director of VTTI Fujairah.

GPS Chemoil, a joint venture between the Singapore-listed marine fuel supplier and trader Chemoil Energy and Gulf Petroleum Supplies, may add 200,000 to 300,000 cubic metres to its existing 700,000 cubic metres capacity.

“Fujairah’s location has a huge impact there. You can see up to 2020-25 the demand is shifting toward the Far East and South East, and all the cargo will move towards that side,” said Dhananjoy Mishra, terminal manager of GPS Chemoil.

The Port of Fujairah is keen to increase crude oil storage because it will bring in more revenue.

Fujariah is already the location of a 380-kilometre pipeline connecting oil production at Habshan, which allows Arab Gulf crude exports to bypass the waterway Iran has in the past threatened to close.

“We have a limit on land. The priority for this land will be given to crude oil storage because crude oil produces more throughput which helps the port recover investments,” said Salem Khalil, a technical adviser to the Government of Fujairah.For this end, the port is building a jetty for Very Large Crude Carriers (VLCCs) to cater to rising demand for crude oil storage.

The booming crude and crude oil products storage business has been a boon to National Bank of Fujairah (NBF).

“Regarding NBF’s financing facilities for Fujairah port and related marine activities, I would say certainly it is in excess of Dh1 billion dirhams,” said Mr Cook. “This includes letters of credit for trading, derivatives for hedging oil prices or other commodity prices. There may also be short-term trade and loan finance and long-term lines for construction facilities.”

Source: The National

Productivity needs revolution, not evolution

In Port News 26/03/2015

Drewry says that it will take revolution not evolution when it comes to new container handling technology meeting the demands of carriers for bigger ships.

Maersk Line’s CEO Soren Skou recently asked what the container terminal industry’s equivalent of the Airbus A380’s “double- decker jetway” is with regards to handling bigger ships.

In an article written partly in response, Neil Davidson, senior analyst ports & terminals, Drewry, explained: “To meet carriers’ demand for markedly higher port productivity requires a fundamental change in the way that containers are handled. Innovation is always risky and costly though.”

The trouble is he said is that while overall berth productivity increases with ship size, it doesn’t increase directly in-line with it. Moves per hour per crane remains constant, but the number of cranes deployed per vessel increases for larger vessels. This means that the trolley has to physically travel further per cycle making it harder to maintain the number of crane moves per hour.

There is a general consensus in the industry that 3000 to 3500 moves in 24 hours is realistic. But previously the shipping industry has expected as many as 6,000 moves and no port anywhere in the world is achieving a performance anywhere near that figure.

Mr Davidson said the double-decker jetway concept already exists with ideas such as APM terminals’ FastNet concept, which involves a huge fixed gantry like frame running the length of a berth. But so far none of APMT’s existing or new terminals are deploying the concept.

With such a fundamental change needed to service these larger ships, he said the problem really is down to who is going to pay to design, test, develop and implement this type of technology.

Source: Port Strategy

Bustling Activity In The Boxship Secondhand Market

In International Shipping News 26/03/2015

Secondhand containership sales reached their highest ever level in capacity terms in 2014, at 0.55m TEU. The capacity sold in both the Panamax fleet and the 8,000+ TEU sector was the highest ever on record. As a result of higher sales activity in these larger boxship sectors the average size of containership sold rose substantially year-on-year in 2014.

Secondhand Sales Soar

In 2014, 190 boxships of a record 550,778 TEU were reported sold on the secondhand market, 47% above the previous high of 376,002 TEU that changed 

hands in 2004 (see the Graph of the Month). This peak was driven by record sale and purchase activity in the Panamax sector, with 40 of these vessels totalling 177,228 TEU reportedly sold last year. Secondhand sales activity was also boosted by the sale of a number of very large containerships, with around 100,000 TEU of 8,000+ TEU vessel-capacity reported to have changed hands last year, representing the first secondhand sales in this sector since 2007. However, the total boxship capacity sold as a proportion of the start year containership fleet (3.2%) was below the level during some years in the 2000s, with a high of 5.7% recorded in 2004. This reflects the rapid pace at which the containership fleet has grown in recent years (at a CAGR of 10% in capacity terms between 2005 and 2015).

Panamaxes ‘Upsize’ Sales

The average size of vessel sold on the secondhand market rose 28% y-o-y to 2,899 TEU in 2014, the highest on record. The rise in Panamax sales was the key driver of this upsizing trend. Sales in this sector were supported by the financial situation some existing owners faced, combined with interest from investors once Panamax earnings began improving. Fresh sales of 8,000+ TEU ships also helped drive this upsizing trend. The size of boxships sold on the secondhand market has generally increased over time as the fleet has upsized and larger vessels have matured in age. Many large containership deliveries are connected to long-term charter business which can keep them from the secondhand market in the initial part of their lifespan.

Who’s Been Selling?

German owners dominated sales activity in 2014, reportedly selling 116 vessels (including 31 Panamaxes) of a combined 313,004 TEU, largely as a result of financial pressures following the collapse of the KG finance system. A further 24 boxships were reportedly sold by Japanese owners last year. The nationality of secondhand buyers in 2014 appears more dispersed, although Greek owners performed an active role in the market.

Bigger Sales To Come?

Following the sale of a record level of capacity last year, sales activity has got off to a good start in 2015 with 33 boxships (including some of 8,000+ TEU) of 98,202 TEU reported sold in the first two months of the year. The upsizing of secondhand vessels could continue as an increasing number of larger boxships mature in age and potentially enter the secondhand market. This, combined with a fast-growing fleet, could lead to higher levels of capacity being sold in the future.

Source: Clarksons

Piraeus Port Container Terminal a “jewel” for Cosco Pacific’s Oveseas activities based on 2014 Final Results

In Port News 25/03/2015

The Group’s revenue rose by 8.9% to US$870,091,000 (2013: US$798,626,000).

Revenue from the terminals business rose by 13.6% to US$516,993,000 (2013: US$455,071,000), the increase being mainly attributable to Piraeus Container Terminal S.A. (“Piraeus Terminal”), Guangzhou South China Oceangate Container Terminal Company Limited (“Guangzhou South China Oceangate Terminal”) and Xiamen Ocean Gate Container Terminal Co., Ltd. (“Xiamen Ocean Gate Terminal”).

Revenue from the container leasing, management and sale businesses rose by 2.7% to US$357,075,000 (2013: US$347,747,000). During the year, the fleet size of owned containers and sale-and-leaseback containers and the number of returned containers disposed of increased by 2.6% and 42.4% respectively. However, due to lower lease rates and resale prices of returned containers, the revenue growth was slower than the growth in the number of containers.

The Group’s gross profit rose by 1.8% to US$323,857,000 (2013: US$318,169,000). Gross profit margin dropped by 2.6 percentage points to 37.2% (2013: 39.8%).

The terminals business achieved satisfactory growth in gross profit, mainly supported by improving operations of Xiamen Ocean Gate Terminal. In addition, stable growth in operations was recorded at Guangzhou South China Oceangate Terminal and Piraeus Terminal, driving up the gross profit of the terminals business.

Gross profit from the container leasing, management and sale businesses decreased. Although demand for leasing increased, the leasing rates remained at low level in the competitive container leasing market and some container leases with higher leasing rates fell due, resulting in a lower gross profit for container leasing. Meanwhile, the resale prices of returned containers remained under pressure, whereas the average carrying amount of returned containers disposed of increased year-on-year. This led to a significant drop in both the gross profit and the gross profit margin on the disposal of returned containers.

Excluding the discontinued operationNote, profit attributable to equity holders of the Company increased by 2.3% to US$292,759,000 (2013: US$286,206,000).

The terminals business saw a sustainable growth in container throughput. Total throughput increased by 9.9% to 67,326,122 TEU (2013: 61,284,891 TEU). Equity throughput increased 10.8% to 19,047,214 TEU (2013: 17,196,297 TEU). Profit rose by 18.3% to US$220,978,000 (2013: US$186,767,000).

Profit from the container leasing, management and sale businesses dropped by 23.6% to US$95,757,000 (2013: US$125,259,000). The container fleet size increased by 1.0% to 1,907,778 TEU (2013: 1,888,200 TEU), with an overall average utilisation rate of 95.3% (2013: 94.5%). Although the overall average utilisation rate in 2014 increased, lease rates remained low throughout the year and profit margin from the disposal of returned containers dropped, resulting in lower overall profit from the business.

The proposed final dividend is HK15.4 cents per share (2013: HK15.0 cents), and the dividend will be payable in cash and with a scrip dividend alternative. The full-year dividend amounted to HK31.0 cents (2013: HK77.4 cents) representing a payout ratio of 40.0% (2013: 40.0%).

Note: On 20 May 2013, the Group announced the disposal of its 21.8% equity interest in China International Marine Containers (Group) Co., Ltd. (“CIMC”) for a cash consideration of US$1,219,789,000, which was completed on 27 June 2013, resulting in a net gain of US$393,411,000. The Group’s share of profit from CIMC included the profit for the year 2013 of US$23,059,000.

The board of directors (the “Board”) of COSCO Pacific Limited (the “Company” or “COSCO Pacific”) is pleased to announce the consolidated results of the Company and its subsidiaries (the “Group”) for the year ended 31 December 2014.

Dividend Distribution

The Board has recommended the distribution of final dividend at HK15.4 cents per share, and the dividend will be payable in cash and with a scrip dividend alternative. In addition to the interim dividend of HK15.6 cents per share paid on 27 October 2014, the full-year dividend was HK 31.0 cents, representing a payout ratio of 40.0%.

Operational Review

Terminals

Although the measures implemented by central banks have curbed large scale market turmoil, the global economy continues to face significant uncertainties. Economic activity has remained weak in the context of enduring negative market sentiment, a situation often described as the “new normal”. The International Monetary Fund (“IMF”) estimated the global economy to have grown by 3.3% in 2014, the same as in 2013. The growth of global trade slowed by 0.3 percentage points as compared to 2013 to 3.1% in 2014. Despite this, the growth in global port container throughput improved. According to the forecast made by Drewry in December 2014, the growth in global container handling in 2014 increased by 1.1 percentage points to 5.0% from 3.9% in 2013.

Hindered by the slow recovery of the global economy, China’s foreign trade has entered a period of more modest growth. In 2014, the growth in China’s exports slowed down markedly to 4.9% (2013: +7.9%). Meanwhile, affected by the relatively slow growth of the domestic economy, China’s imports fell by 0.6% (2013: +7.3%). Throughput at Chinese ports was stable in 2014. According to the China Ports and Harbours Association, container throughput at Chinese ports recorded year-on-year growth of about 6.1% in 2014 (2013: +6.7%). Thanks to increased global container traffic, the container throughput growth of major Chinese ports accelerated as compared to 2013.

Optimisation of operational benefitsfromsustainable throughput growth

In 2014, container throughput at the Group’s terminals saw sustained growth. Equity throughput rose by 10.8% to 19,047,214 TEU (2013: 17,196,297 TEU). Profit from the terminals business rose by 18.3% to US$220,978,000 (2013: US$186,767,000) thanks to the optimisation of terminal operations.

Overseas terminals performed satisfactorily during the year. Growth in profit was seen at all four overseas terminal companies, principally thanks to increased throughput. The business of Piraeus Terminal in Greece thrived and its profit rose 25.7% to US$28,980,000 (2013: US$23,051,000). The profit from Suez Canal Container Terminal S.A.E. in Egypt rose 8.0% to US$11,082,000 (2013: US$10,261,000). A turnaround was achieved at Antwerp Terminal in Belgium thanks to the continued rapid growth in throughput during the year. The profit from the terminal was US$4,469,000 (2013: a loss of US$319,000).

Growth in profits was also seen at the vast majority of the Group’s terminal companies in China. Among these, the performance of Qingdao Qianwan Terminal was the most marked. Thanks to the increased number of containers and growth in average revenue per TEU, profit from the terminal rose 32.2% to US$39,034,000 (2013: US$29,521,000). Profits at Shanghai Pudong Terminal and COSCO-HIT Terminals (Hong Kong) Limited (“COSCO-HIT Terminal”) rose by 5.1% to US$20,689,000 (2013: US$19,686,000) and by 1.8% to US$16,487,000 (2013: US$16,203,000) respectively, while profits at Ningbo Yuan Dong Terminal and Guangzhou South China Oceangate Terminal rose by 5.6% to US$10,523,000 (2013: US$9,965,000) and by 8.0% to US$8,948,000 (2013: US$8,282,000) respectively.

Throughput growth exceeded expectation

According to Drewry’s “Global Container Terminal Operators Annual Review and Forecast” published in September 2014, the total container throughput of COSCO Pacific’s terminals accounted for approximately 9.3% of the world total, up 0.3 percentage points year-on-year. Hence, COSCO Pacific’s ranking as No. 4 among the world’s container terminal operators has strengthened.

The total throughput of the Group reached 67,326,122 TEU (2013: 61,284,891 TEU), up 9.9%, surpassing the mid-single-digit growth target set at the beginning of the year by management. This sustained growth is principally attributable to the growth in throughput at Yantian Terminals, Qingdao Qianwan Terminal and the overseas terminals, all of which exceeded expectations, along with the additional throughput brought by the newly acquired Asia Container Terminal. The equity throughput of the Group increased by 10.8% to 19,047,214 TEU (2013: 17,196,297 TEU), with its growth rate rising by 0.8 percentage points.

The Group’s terminal companies in mainland China (excluding Hong Kong and Taiwan) handled 53,787,323 TEU (2013: 50,410,965 TEU) in total, accounting for 79.9% of the Group’s total throughput. The growth was 6.7%, higher than the national average growth rate of approximately 6.1%.

The throughput of the Bohai Rim region reached 25,130,274 TEU (2013: 23,534,240 TEU), an increase of 6.8% and accounting for 37.3% of the Group’s total throughput. The throughput at Qingdao Qianwan Terminal reached 16,108,145 TEU (2013: 14,981,635 TEU), up 7.5%, and was driven by the increased number of vessels loading goods for export berthing at the terminals.

The throughput of the Yangtze River Delta region rose 4.1% to 9,902,712 TEU (2013: 9,513,006 TEU), accounting for 14.7% of the Group’s total throughput. Thanks to the increases in shipping routes, shipping companies’ additional services as well as the number of cargoes from transshipment, the throughput of Shanghai Pudong Terminal rose 5.7% to 2,373,620 TEU (2013: 2,246,026 TEU) during the year. Ningbo Yuan Dong Terminal enjoyed an expansion of shipping routes and organic volume growth in operational routes. Together with an increased volume of cargoes from vessel-to-vessel operations brought about by the success of marketing strategies and newly launched empty container transshipment management services for shipping companies, these developments saw the throughput of Ningbo Yuan Dong Terminal rise 14.5% to 3,214,703 TEU (2013: 2,806,406 TEU).

The combined throughput of the Southeast Coast and others reached 3,767,499 TEU (2013: 3,288,999 TEU), representing an increase of 14.5% and accounting for 5.6% of the Group’s total throughput. Xiamen Ocean Gate Terminal was still in its ramp-up period, but with success in marketing and the optimisation of several shipping routes, its throughput surged 32.3% to 806,183 TEU (2013: 609,393 TEU). Thanks to the increased volume of cargoes from domestic transshipments, the throughput of Quan Zhou Pacific Terminal rose 6.4% to 1,160,480 TEU (2013: 1,090,660 TEU).

The throughput in the Pearl River Delta region reached 19,099,473 TEU (2013: 16,884,699 TEU), representing an increase of 13.1% and accounting for 28.4% of the Group’s total throughput. With increased cargo volumes brought by transshipments and exports to the United States as well as a rise in the volume of empty containers, the throughput of Yantian Terminal rose 8.1% to 11,672,798 TEU (2013: 10,796,113 TEU). Guangzhou South China Oceangate Terminal was committed to enhancing its marketing and upgrading its services, and succeeded in increasing both shipping route callings and cargo volume during the year. The throughput of the terminal rose 4.4% to 4,647,266 TEU (2013: 4,449,311 TEU). Throughput at COSCO-HIT Terminal was maintained at 1,639,995 TEU (2013: 1,639,275 TEU). The profit and throughput of Asia Container Terminal have been included in the Group’s accounts since 14 March 2014. The throughput contributed by the terminal to the Group was 1,139,414 TEU during the year.

The throughput of overseas terminals reached 9,426,164 TEU (2013: 8,063,947 TEU), representing an increase of 16.9% and accounting for 14.0% of the Group’s total throughput. The efforts by Piraeus Terminal to expand market share yielded expected results, with its business continuing to grow and the customer mix further improved. Meanwhile, the terminal has also launched a sea-rail intermodal transport service, designed to expand its hinterland, which will further strengthen its core competence. The throughput of the terminal surged 18.5% to 2,986,904 TEU (2013: 2,519,664 TEU). Suez Canal Terminal in Egypt enjoyed an increase of shipping routes calling, enabling its throughput to reach 3,400,397 TEU (2013: 3,124,828 TEU), up 8.8%. With its operational efficiency optimised, Antwerp Terminal in Belgium effectively absorbed the increasing volumes of cargoes to Antwerp Port which are diverted from ports nearby, leading throughput to surge by 26.0% to 1,727,116 TEU (2013: 1,370,609 TEU). As COSCON increased its frequency of berthing, the volume of cargoes increased and the throughput of COSCO-PSA Terminal surged 25.1% to 1,311,747 TEU (2013: 1,048,846 TEU).

Annual handling capacity increased 4.8% to 65,750,000 TEU

As of 31 December 2014, there were 108 berths (2013: 104 berths) under the Group’s operating container terminals and the design total annual handling capacity was 65,750,000 TEU (2013: 62,750,000 TEU). There were 13 bulk berths (2013: 11 berths) in operation, with a total annual handling capacity of 46,050,000 tons (2013: 17,050,000 tons). Newly-added handling capacity during the year included the two berths of Asia Container Terminal (1,600,000 TEU), two berths of Kao Ming Terminal (1,400,000 TEU) and two berths of Dongjiakou Ore Terminal (29,000,000 tons).

During the year, the Group focused on developing the terminals business to expand handling capacity via terminal asset acquisitions and the expansion of terminals in operation. For terminal asset acquisitions, the Group acquired 40% effective equity interest in Asia Container Terminal at a consideration of HK$1,648,000,000 (equivalent to approximately US$212,335,000) on 13 March 2014. Asia Container Terminal owns and operates Terminal 8 West, Kwai Chung, Hong Kong, which is adjacent to COSCO-HIT Terminal. Following the acquisition, the two terminals form a combined 1,380-metre long contiguous quay length. This has greatly increased the flexibility of berthing for mega container vessels and provides more efficient services for customers through the scientific management and efficient distribution of resources within the two terminals. A continuous focus on management efficiency is planned for 2015 in order to achieve further synergies.

Amendment to the Piraeus Terminal Concession Agreement became effective after being ratified by the Hellenic Parliament

In respect of the expansion of terminals in operation, a significant development was that the amendment agreement of the concession agreement signed by Piraeus Terminal and Piraeus Port Authority S.A. became effective on 20 December 2014 after ratification by the Hellenic Parliament. Piraeus Terminal will enhance the operational capacity of Pier 2 and build the Western Part of Pier 3, involving a total investment of approximately Euro230,000,000. A further 2,500,000 TEU, of which 1,900,000 TEU is from the Western Part of Pier 3, will thereby be added to the annual handling capacity of Piraeus Terminal. Piraeus Terminal held the inauguration ceremony for the construction of the Western Part of Pier 3 on 21 January 2015, with construction and installation of mechanical equipment expected to be completed by 2021, bringing the terminal’s annual handling capacity to 6,200,000 TEU.

The expansion project will further enhance the facilities and operating capacity of the container terminals in Piraeus Port, strengthen the port’s position as an international transshipment hub and enhance the revenue generating capacity of Piraeus Terminal.

Container Leasing, Management and Sale

The increase in demand for containers accelerated during 2014, especially in the second half of the year, which is the traditional industrial peak season. The rebound in demand for new containers continued, while a higher utilisation rate was recorded during the period. However, the leasing rates and the price of new containers remained at low level because of excessive market supply, intense competition in the industry and the expiration of some containers that were leased at higher rates. These factors pressured the container leasing industry’s gross margin.

During the year, both the number of the Group’s containers on hire and the disposal of returned containers recorded growth, leading to an increase in overall revenue. Despite some growth in market demand, competition in the container leasing market was fierce, curbing container leasing rates and resale prices. In addition, the average carrying value of returned containers disposal of was higher than that in 2013. As a result, profit from container leasing, management and sale businesses dropped 23.6% to US$95,757,000 (2013: US$125,259,000).

Long-term leases accounted for 96.2% (2013: 95.5%) of the Group’s total revenue from container leasing in 2014, while revenue from master leases accounted for 3.8% (2013: 4.5%). With a strategic focus on long-term leasing, the Group enjoys a stable income growth. The overall average utilisation rate of the Group’s containers remained stable during the year, at 95.3% (2013: 94.5%), higher than the industry average of approximately 94.0% (2013: approximately 93.9%).

In 2014, revenue from the Group’s container leasing, management and sale businesses reached US$357,075,000 (2013: US$347,747,000), representing an increase of 2.7%. The growth was mainly attributable to the increase in revenue from container leasing and the disposal of returned containers. Revenue from container leasing was US$295,774,000 (2013: US$290,883,000), an increase of 1.7% and accounted for 82.8% (2013: 83.6%) of the total revenue of the container leasing, management and sale businesses. The fleet size of owned containers and sale-and-leaseback containers grew 2.6% to 1,370,324 TEU (2013: 1,335,797 TEU). Although the Group’s overall average utilisation rate increased, the market leasing rates were relatively low, curbing revenue growth.

Revenue from the disposal of returned containers increased by 11.2% to US$47,773,000 (2013: US$42,967,000), accounting for 13.4% (2013: 12.4%) of the total revenue of the container leasing, management and sale businesses. Revenue from the disposal of returned containers recorded year-on-year growth as a result of a larger number of disposed returned containers, although resale prices were lower. The number of disposed returned containers surged 42.4% to 50,860 TEU (2013: 35,714 TEU).

The fleet size of managed containers was down 2.7% in 2014 to 537,454 TEU (2013: 552,403 TEU). As a result, revenue from managed containers decreased by 13.8% to US$6,377,000 (2013: US$7,398,000), accounting for 1.8% (2013: 2.1%) of the total revenue of the container leasing, management and sale businesses.

As of 31 December 2014, the Group’s container fleet had reached 1,907,778 TEU (2013: 1,888,200 TEU), up 1.0%. COSCO Pacific was one of the world’s five largest container leasing companies with a market share of approximately 11.0% (2013: approximately 11.3%). The average age of containers in the fleet was 6.5 years (2013: 6.35 years).

Overall Management and Awards

COSCO Pacific’s efforts in the fields of corporate governance and investor relations have been widely acclaimed externally and in 2014, our high level of corporate transparency and good corporate governance continued to earn market recognition.

• Won “Special Mention in the H-share Companies and Other Mainland Enterprises Category” in the “2014 Best Corporate Governance Disclosure Awards” by Hong Kong Institute of Certified Public Accountants.
• “Gold Award for Financial Performance, Corporate Governance, Environmental Responsibility and Investor Relations” by The Asset magazine;
• “Corporate Governance Asia Recognition Award” for the eighth consecutive year and “Best Investor Relations Company” for the third consecutive year by Corporate Governance Asia magazine; we also won “Asian Company Secretary of the Year Recognition Award” by the magazine for the second consecutive year;
• “Outstanding China Enterprise Award” by Capital magazine for the third consecutive year;
• “Shipping In-House Team of the Year Award” by Asian Legal Business, a well recognised professional magazine, for the second consecutive year;
• “Hong Kong Outstanding Enterprise” by Economist Digest magazine for the tenth consecutive year; and
• The 2013 Annual Report was recognised with “Bronze in the Cover Design” in shipping services category at 2014 ARC Awards.

Investor Relations

The Group pays high attention to its investor relations. Management of the Company introduces the Group’s operation, management, development strategy and prospect to its corporate stakeholders through activities such as press conferences, road shows and individual meetings. During the year, the Company met with a total of 325 investors and related personnel, 64% of which were fund managers, 19% of which were analysts, 4% of which were investment bankers and 13% were media representatives. Besides, the Company conducted four road shows and attended ten investor forums as well as organised one visit to its terminals for investors.

Prospects

According to a forecast by the IMF, the world’s GDP growth will increase 3.5% in 2015, slightly improved from 3.3% in 2014. China, the United States and Europe will exert the most significant influence on the global economy. As the European Central Bank announced quantitative easing in January 2015, which is expected to stimulate local economy. On the other hand, while China is implementing a reform in its economic structure, the country’s economy is stepping into a “new normal” with mid-to-high single digit growth.

On the other hand, according to Drewry’s forecast, global shipping capacity will increase 7.2% in 2015, higher than the estimated 5.3% growth in demand, representing a surplus of capacity in the shipping industry. Nevertheless, with declining bunker costs, container shipping profitability is expected to improve because of lower operating costs, and this will support the bargaining power of terminal industry and a sustainable rebound in the demand for container leasing services.

Looking forward, the Group expects the throughput of the terminals business to maintain its stable organic growth path. The tax incentives for the mainland China terminals, which account for relatively high proportions of the Group’s terminals business profit, have expired during the past two years. Meanwhile, the operations of Xiamen Ocean Gate Terminal have shown continuous improvement, which has narrowed the loss of the terminal. Thus, the Group expects cost upward pressures to be alleviated.

With a strong business built up over the Group’s long history and balanced development driven by its core competence, the Group has shown resilience in its terminal operations throughout the prolonged period of economic turbulence. In facing the “new normal”, the Group will adhere to its development strategies to upgrading the values of terminal assets through improvement of terminal management and service quality, optimisation of terminal operations and enhancement of profitability. Meanwhile, the Group will continue to expand its terminal network around the globe by riding on the opportunities from the initiatives of “One Belt, One Road” and the Yangtze River Economic Belt, seize opportunities for potential new container hubs and keep abreast of the investment opportunities in high-quality terminals with a view to generating higher profits and returns for the terminals business.

In 2015, intense competition is expected to remain a feature of the container leasing industry. Although the demand for new containers has rebounded, leasing rates and container resale prices remain at low levels. Moreover, the strong US dollar is dragging down the prices of steel and other commodities, which constitutes further pressure on containers resale prices. We expect 2015 will still be a challenging year for the Group’s container leasing business, and a sluggish recovery is anticipated.

The Group will continue to pursue its prudent investment strategy and business development model, adjust its plans to purchase new containers promptly and flexibly, and seek the balanced development of its container fleets, thus rigorously managing operational risk. Meanwhile, the Group will maintain its marketing focus on long-term leasing to minimise cyclical risks, with a view to ensuring a stable income stream.

Source: COSCO Pacific Limited

Tanker market’s rally starts to fuel newbuilding orders

In Hellenic Shipping News 25/03/2015

The tanker market’s booming and as such more and more owners are looking to capitalize. After all, banks are much more keen on providing finance for tankers, rather than dry bulkers, not matter how low the price. In its latest weekly report, shipbroker Allied Shipbroking said that “interest for tanker vessels continues to mount for new contracting, with the exceptional performance in the freight market seemingly with no end in sight. Caution needs to be exercised however amongst interested parties, as the fundamentals are not there, at least for the larger crude oil carriers, to support an overwhelming fleet growth over the coming years”.

Allied added that “having said that, it would inevitably be the case that new contracts would mount, especially as there is limited availability for cheap purchasing in the secondhand market, and even if you could find such a unit the price parity with a newbuilding seems to favor the newbuilding route for the time being. This week’s orders were mainly dominated by Greek tanker owners which either exercised options or took on the chance for further contracting. In terms of the dry bulk sector, it has been yet another “dry” week, which could quite possibly be a good thing as the freight market is still suffering heavy losses and there still seems to be an excess of vessels on order and scheduled for delivery over the next two years.

In a separate report, shipbroker Clarkson Hellas said that “in Tankers, BW Pacific are reported to have extended their order at STX by declaring their two optional 73,800 DWT LR1 product tankers for delivery within 1Q 2017. These will be the 5th and 6th vessel in the series and there are still two optional units left at STX’s Jinhae yard for BW. Hyundai Vinashin are reported have won an order for one firm plus one optional 50,000 DWT MR

product tankers for Top Ships with delivery set for 1H 2017 for the firm unit. If declared, the optional unit will be the 6th vessel in the series. Although the option is understood to have been declared in January, it came to light this week that Gefo have declared an option for one 6,400 DWT IMO-II stainless steel chemical tanker at Tersan Shipyard in Turkey. This will be the 4th vessel in the series and due to be delivered in 3Q 2016”.

The shipbroker added that there was “only one order to report this week in the gas market with KSS Line reported to have added one 38,000 CBM midsize LPG/Ammonia carrier by declaring an option at Hyundai Mipo. This additional unit will take this Owners orderbook at the yard to two vessels and will deliver in 1Q 2017. Finally in other sectors, COSCO Shipping (COSCOL) have announced the extension of their order at Hudong Zhonghua by

declaring an option to build two 1,000 TEU MPPs. This order will take the whole series up to 6 in total with price in the region USD 40 Mill per vessel, and will be built at Hudong Zhonghua’s affiliate yard Shanghai Shipyard for delivery throughout 2Q and 3Q in

2018. Auerbach Schiffart GmbH are reported to have declared an option for two 665 TEU MPPs at Jiangzhou Shipyard in China, which will be the 3rd and 4th unit in the series and will be delivered within 4Q 2016”, Clarkson Hellas concluded.

In a separate weekly report, shipbroker Intermodal noted that “the number of newbuilding orders reported in the market last week remained in line with recent activity volumes, with tanker orders still enjoying the lion’s share amongst them and prices pretty much in line with the market as despite the steady flow of tanker orders of late, it seems that it is still hard for yards to make a case for a premium nowadays. At the same time it is no surprise that ordering interest over at the dry bulker side remains sluggish especially when it comes to the larger sizes, while the fact that despite the enormous pressure rates have been under the Capesize newbuilding price is still holding above the average of both 2012 and 2013, is definitely another reason to believe that further price corrections might be on the way. In terms of recently reported deals, Singaporean owner, BW Group, exercised an option for a pair of LR1s (73,800dwt) at STX , in S. Korea, for a price of $ 46.9m and delivery set in March of 2017″, it concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide