Tanker segment attracting newbuilding orders

In Hellenic Shipping News 13/07/2016

Activity in the newbuilding market for tankers has started to pick up over the course of the past week. According to shipbrokers’ reports, low prices are attracting some owners into contracting more vessels. In its latest weekly market report, shipbroker Allied Shipbroking said that “there was a slight pick up in interest this week on the tanker sectors, with a small amount of orders emerging. This is likely driven by the good discounts on offer by most of the shipbuilders which have driven down their price offerings considerably over the past couple of weeks. It does seem however that given the state of the market (even that of tankers who have seen their earnings shrink over the course of the past couple of months) it is still proving to be a difficult sale to any potential buyers. At the same time the huge uncertainty that overhangs the markets with regards to potential prospects over the course of the next two years makes the decision of placing a new order a fairly difficult one to make and as such it will likely take a considerable amount of discounts on top of the current ones seen in order to drive activity further in this market. At the same time the secondhand market still heavily competes in this regard and contending heavily in the minds of owners with a capacity to expand there fleet at this given time frame”.

In a separate newbuilding report, Clarkson Platou Hellas said that “in tankers, Kawasaki Kisen Kaisha Ltd (K-Line) have announced placing an order for two firm 311,360 DWT VLCCs at NACKS and one firm 310,300 DWT VLCC at Namura Shipbuilding. The two vessels from NACKS are set to be delivered throughout 2017 and 2018, and the single vessel from Namura Shipbuilding will be delivered in 2018. K-Line have also ordered two firm 113,000 DWT Aframax Tankers at Sasebo H.I. in Japan. The duo will deliver throughout 2018 and 2019. Jinhai Heavy have received an order for four firm plus four optional 300,000 DWT VLCCs from Hainan Airlines Group for delivery in 2018 for the firm units. In Dry, there is one order to report. Hyundai Mipo Dockyard have signed a contract with compatriot owner Il Shin Shipping for one 50,000 DWT Bulker. This unit will be built to be LNG fuelled and will deliver in the end of 2017 from Ulsan, Korea. Whilst there is no orders to report in the container market, there is one in other sectors, with Honda Zosen K.K reported to have received an order from Mitsui O.S.K. Kimkai for three firm 17,500 DWT MPPs. The three vessels are set for delivery throughout 2017 and 2018 and will be fitted with 2 sets of 75 tonne cranes each”.

Meanwhile, in the market for second hand vessels, Allied said that “on the dry bulk side, there was a good flow of new deals emerging this week, with reported prices still showing a slightly bullish face and supporting the recent up trend noted in prices. There is a sense that the pace of new price hikes will be considerably slower then what was being noted in late May/early June. Certain segments continue to show more keen interest then others, with a prime example being the modern Kamasarmaxes which have shown some of the fastest paced price hikes over the past three months. On the tanker side, there was limited activity being noted, with these most recent deals reflecting a trend of further price drops. It seems as though buyer sentiment has softened considerably, with most in the market now looking to compete only at a gross discount to what they had been seeing earlier in the year”.

Finally, in the demolition market, Allied noted that “minimum scrapping activity being noted this past week, with the Eid holidays taking out of action a number of end buyers and as such with so much lower competition abound prices noted a good drop over the final days of the week. Sellers too have now retracted some of their units feeling that the market is slightly softer, something which may possible help balance things out over the coming days and keep price levels steady from here on. Being at a point were freight rates have improved on the dry bulk market, this may well be vital in keeping the demolition market buoyant in terms of price levels, as interest amongst demo buyers is expected to remain subdued during the course of the remainder of July. There are however fears that if this slowdown in activity keeps up for too long, the balance in the freight market might shift if the fleet grows at an excessive rate, something that could possibly lead to lower freight rates in the 3rd and 4th quarters of the year once more”, the shipbroker concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide