Market insight By George Iliopoulos SnP Broker The first four months of 2015 are now behind us and they make up for a decent amount of me to look back and assess how the year is evolving so far and what could be possible ahead. January kicked off very quietly as far as SnP acvity is concerned especially for dry bulk sale candidates, a big part of which remained for sale for quite some me or was withdrawn altogether from the market. In this environment, second hand prices remained under pressure for quite a while but not as long as some were actually waing for. As a maer of fact, as q1 came to an end we started seeing a rebound in acvity with a number of prominent Greek owners once again inspecng modern Panamax/Kamsarmax/Supramax and it seems that we could now be at a turning point as far as dry bulk asset values are concerned. A representave sale of this recent trend is the “TORM ISLAND” (82kdwt blt 10 Japan), which gathered a lot of interest and was eventually sold at levels in xs of USD 18.0m, which is around 7% higher than what her sister vessel “TORM TRADER” (82kdwt blt 10 Japan) managed to fetch about a month earlier. In addion the “TORM ISLAND” was rumored to be inspected by more than 10 owners, most of which were Greek who were sing on the sidelines during the past couple of years and now seem to have turned their interest in modern tonnage that seems to be on a substanal discount. Looking at the latest sales one could be reservedly opmisc that prices appear to be stabilizing, while the most recent sales are definitely not below the respecve last dones, which is prey much what we were seeing during the past six months. This is without a doubt a posive sign as the free fall of dry bulk asset prices had caused a mini panic all around, and while it is sll uncertain how things will evolve it is currently proving a much needed breather to the market. At the same me we are nocing that as far as mod- ern sale candidates are concerned, compeon between Buyers seems strong, which is resulng in higher prices in the last two Kamsarmax sales that took place. Nonetheless if one compares these prices with Sellers ideas for similar tonnage in spring last year, it is evident why current prices appear aracve. For example a 5-yr old Japanese Kamsarmax was sold at around USD 28.0m in April 2014, which is a heſty 55% higher than the levels for similar tonnage with SS/DD passed today. At the same me it is also interesng to see that the number of up to 10-yr old Supramax up to Panamax Japanese candi- dates on the market is exceponally small which is resulng to even higher compeon for these ships. Saying that, when it comes to Chinese tonnage, the last six sales that took place during the past month were indeed low, with a couple of representave examples being the “HUI AN HAI”(32kdwt blt 10 China) which was sold at USD 6.8m and the “NEW SAILING STAR” (32kdwt blt10 China) which was sold for even less at around USD 6.5m. Given the pressure the freight market remains under, it seems that prices are showing some sort of resistance for now. The million dollar queson remains whether this is the boom or if there is more downside. But if one looks at recent sales together with Buyers’ behavior on the SnP side lately, these are both hinng that market belief is that a boom has been reached or is about to be reached. The sales that will take place next will obviously clear up any doubt. . Chartering (Wet: Stable - / Dry: Soſt - ) The Dry Bulk market operated in an uninspiring environment for yet another week, while holidays all around added to the negave sen- ment. The BDI closed today (05/05/2015) at 580 points, down by 7 points compared to Friday’s levels (01/05/2015) and a decrease of 21 points compared to previous Tuesday’s closing (28/04/2015). Acvity in the Miidle East eased considerable last week, but rates for the crude carriers held off considerably well. The BDTI Friday (01/05/2015) was at 749 points, a decrease of 29 points and the BCTI at 616, an increase of 5 points compared to previous Friday’s (24/04/2015) levels. Sale & Purchase (Wet: Stable+ / Dry: Stable+ ) May kicked off with impressive volumes of SnP acvity across both tank- ers and bulkers, while it was interesng to finally see some Cape sales being reported in the market. On the tanker side, we had the en-bloc sale of the “BLUE AQUAMARINE” (321,000dwt-blt 11, S. Korea) and the “BLUE GARNET” (321,000dwt-blt 11, S. Korea) which were picked up by Greek owner, Maran Tankers, for a price of US$ 80.0m each. On the dry bulker side we had the resale of the “SBI BELICOSO” (180,000dwt-blt 15, China), which went to Greek owner, Diana Shipping, for a price of $ 43.5m. Newbuilding (Wet: Stable- / Dry: Soſt - ) It’s been a while since we last saw more dry bulk than tanker orders being reported in the market and while it is refreshing to see that there are sll market players out there who sll haven’t dismissed the new- building idea, the truth is that the argument in favour of placing a dry bulk newbuilding order remains weak. As evidenced by the very few orders we have seen during the past months, the geared sizes remain way more popular, while non-existent ordering acvity in the Capesize segment in the past months is prey much saying everything there is to say regarding owners’ view of the segment’s prospects. At the same me, newbuilding prices for dry bulkers have evidently not yet complet- ed their downward movement, with further declines being noted across all size segments. These persistent declines are probably also deterring those few contemplang placing an order not to do so, as even more aracve discounts appear to be on the way. In terms of recently re- ported deals, Jindal Steel, has placed an order, for six firm and four op- onal MPPs (8,000dwt) at Western Marine, in Bangladesh, for a price of $ 6.1m each and delivery set between 2017-2018. Demolion (Wet: Soſt - / Dry: Soſt - ) Too good to last? Senment in the demolion market shiſted radically last week, with prices across the Indian subconnent nong substanal discounts. We stressed in our previous report that the large supply of vessels was not allowing demo bids to march forward and it seems that this overwhelming number of demo candidates has finally taken its toll on prices. To add to the recently created negave climate a number of renegoaons was rumored to be taking place last week, as buyers were trying to get out of recently agreed much higher levels that were no longer reflecng the market. Despite all this, acvity sustained its volumes, while Capesize vessels sll made up for the bigger part of the reported acvity. In the speed that Capes are being sent for demolion, we seem bound to reach if not surpass 100 vessels before the end of the year, while the fact that the average age of these vessels remains below 20 years, in itself reflects the urgency to get rid of older Cape tonnage irrespecve of age. Prices this week for wet tonnage were at around 230-410 $/ldt and dry units received about 215-390 $/ldt. Weekly Market Report Issue: Week 18 | Tuesday 5 th May 2015
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Transcript
Market insight
By George Iliopoulos
SnP Broker
The first four months of 2015 are now behind us and they make up for a decent amount of time to look back and assess how the year is evolving so far and what could be possible ahead. January kicked off very quietly as far as SnP activity is concerned especially for dry bulk sale candidates, a big part of which remained for sale for quite some time or was withdrawn altogether from the market. In this environment, second hand prices remained under pressure for quite a while but not as long as some were actually waiting for.
As a matter of fact, as q1 came to an end we started seeing a rebound in activity with a number of prominent Greek owners once again inspecting modern Panamax/Kamsarmax/Supramax and it seems that we could now be at a turning point as far as dry bulk asset values are concerned.
A representative sale of this recent trend is the “TORM ISLAND” (82kdwt blt 10 Japan), which gathered a lot of interest and was eventually sold at levels in xs of USD 18.0m, which is around 7% higher than what her sister vessel “TORM TRADER” (82kdwt blt 10 Japan) managed to fetch about a month earlier. In addition the “TORM ISLAND” was rumored to be inspected by more than 10 owners, most of which were Greek who were sitting on the sidelines during the past couple of years and now seem to have turned their interest in modern tonnage that seems to be on a substantial discount.
Looking at the latest sales one could be reservedly optimistic that prices appear to be stabilizing, while the most recent sales are definitely not below the respective last dones, which is pretty much what we were seeing during the past six months. This is without a doubt a positive sign as the free fall of dry bulk asset prices had caused a mini panic all around, and while it is still uncertain how things will evolve it is currently proving a much needed breather to the market. At the same time we are noticing that as far as mod-ern sale candidates are concerned, competition between Buyers seems strong, which is resulting in higher prices in the last two Kamsarmax sales that took place. Nonetheless if one compares these prices with Sellers ideas for similar tonnage in spring last year, it is evident why current prices appear attractive.
For example a 5-yr old Japanese Kamsarmax was sold at around USD 28.0m in April 2014, which is a hefty 55% higher than the levels for similar tonnage with SS/DD passed today. At the same time it is also interesting to see that the number of up to 10-yr old Supramax up to Panamax Japanese candi-dates on the market is exceptionally small which is resulting to even higher competition for these ships. Saying that, when it comes to Chinese tonnage, the last six sales that took place during the past month were indeed low, with a couple of representative examples being the “HUI AN HAI”(32kdwt blt 10 China) which was sold at USD 6.8m and the “NEW SAILING STAR” (32kdwt blt10 China) which was sold for even less at around USD 6.5m.
Given the pressure the freight market remains under, it seems that prices are showing some sort of resistance for now. The million dollar question remains whether this is the bottom or if there is more downside. But if one looks at recent sales together with Buyers’ behavior on the SnP side lately, these are both hinting that market belief is that a bottom has been reached or is about to be reached. The sales that will take place next will obviously clear up any doubt.
.
Chartering (Wet: Stable - / Dry: Soft - )
The Dry Bulk market operated in an uninspiring environment for yet another week, while holidays all around added to the negative senti-ment. The BDI closed today (05/05/2015) at 580 points, down by 7 points compared to Friday’s levels (01/05/2015) and a decrease of 21 points compared to previous Tuesday’s closing (28/04/2015). Activity in the Miidle East eased considerable last week, but rates for the crude carriers held off considerably well. The BDTI Friday (01/05/2015) was at 749 points, a decrease of 29 points and the BCTI at 616, an increase of 5 points compared to previous Friday’s (24/04/2015) levels.
Sale & Purchase (Wet: Stable+ / Dry: Stable+ )
May kicked off with impressive volumes of SnP activity across both tank-ers and bulkers, while it was interesting to finally see some Cape sales being reported in the market. On the tanker side, we had the en-bloc sale of the “BLUE AQUAMARINE” (321,000dwt-blt 11, S. Korea) and the “BLUE GARNET” (321,000dwt-blt 11, S. Korea) which were picked up by Greek owner, Maran Tankers, for a price of US$ 80.0m each. On the dry bulker side we had the resale of the “SBI BELICOSO” (180,000dwt-blt 15, China), which went to Greek owner, Diana Shipping, for a price of $ 43.5m.
Newbuilding (Wet: Stable- / Dry: Soft - )
It’s been a while since we last saw more dry bulk than tanker orders being reported in the market and while it is refreshing to see that there are still market players out there who still haven’t dismissed the new-building idea, the truth is that the argument in favour of placing a dry bulk newbuilding order remains weak. As evidenced by the very few orders we have seen during the past months, the geared sizes remain way more popular, while non-existent ordering activity in the Capesize segment in the past months is pretty much saying everything there is to say regarding owners’ view of the segment’s prospects. At the same time, newbuilding prices for dry bulkers have evidently not yet complet-ed their downward movement, with further declines being noted across all size segments. These persistent declines are probably also deterring those few contemplating placing an order not to do so, as even more attractive discounts appear to be on the way. In terms of recently re-ported deals, Jindal Steel, has placed an order, for six firm and four op-tional MPPs (8,000dwt) at Western Marine, in Bangladesh, for a price of $ 6.1m each and delivery set between 2017-2018.
Demolition (Wet: Soft - / Dry: Soft - )
Too good to last? Sentiment in the demolition market shifted radically last week, with prices across the Indian subcontinent noting substantial discounts. We stressed in our previous report that the large supply of vessels was not allowing demo bids to march forward and it seems that this overwhelming number of demo candidates has finally taken its toll on prices. To add to the recently created negative climate a number of renegotiations was rumored to be taking place last week, as buyers were trying to get out of recently agreed much higher levels that were no longer reflecting the market. Despite all this, activity sustained its volumes, while Capesize vessels still made up for the bigger part of the reported activity. In the speed that Capes are being sent for demolition, we seem bound to reach if not surpass 100 vessels before the end of the year, while the fact that the average age of these vessels remains below 20 years, in itself reflects the urgency to get rid of older Cape tonnage irrespective of age. Prices this week for wet tonnage were at around 230-410 $/ldt and dry units received about 215-390 $/ldt.
The strong activity that the crude carriers market appeared to be witnessing lately seems to have considerably eased off last week, with thinner business being noted across both the Middle East and W. Africa, while at the same time bunkers remained on an upward trend on the back of the recent posi-tive correction that oil prices have been enjoying. Despite the fact that ac-tivity slowed down considerably though, the market managed to hold off fairly well, with moderate declines noted overall, while the lack of extreme volatility on rates is strong evidence of a healthy market in which positive sentiment still prevails.
The VL market closed off the week on a slightly negative note, on the back of a much quieter WAF region, while just the right amount of ballasters in the Middle East allowed for rates there to hold close to last dones as the week came to a close.
The slow down in W. Africa activity weighed down on Suezmax rates in the region as the market slid into the weekend, despite some stable numbers during the beginning of the week, while the cross-Med market added a few WS points as enquiry in the region slightly improved.
Rates for Aframaxes remained under pressure for a second week in a row, with cross-UKC rates easing before the Bank Holiday and the Caribs Afra shedding more of its April gains despite the improved enquiry in the region.
Sale & Purchase
In the VLCC sector, we had the en-bloc sale of the “BLUE AQUAMA-RINE” (321,000dwt-blt 11, S. Korea) and the “BLUE GARNET” (321,000dwt-blt 11, S. Korea) which were picked up by Greek owner, Maran Tankers, for a price of US$ 80.0m each .
In the LR1 sector we had the sale of the “EMERALD SUMMIT” (74,986dwt-blt 13, S. Korea), which was sold to Greek buyers for a price of $37.5m .
The combination of holidays and a shaky market is always a recipe for addi-
tional pressure on rates and last week was no exception. With Panamaxes
erasing the upside of the week prior and the rest of the market still oper-
ating in an uninspiring environment, the BDI closed off on the red and be-
low 600 points, while the small increase noted by the BCI had no substantial
impact in actual numbers. We expect things in the following days to also
remain quiet, as with the Far East going through holidays this week enquiry
is bound to be limited and rates are most probably going to move a bit low-
er as well.
Capesize rates noted some small positional increases last week, which
nonetheless failed to substantially lift sentiment, while with the Pacific mar-
ket feeling the void of National Holidays in the region this week, activity for
the segment is expected to remain thin. The average rate for the big bulk-
ers is still underperforming the rest of the market, while at the same time
the price of iron ore is still correcting upwards. This is causing additional
worries to emerge in regards to the Capesize trade, as once the Chinese
restocking is over, it is possible that the improved price of the commodity
will no longer be attractive enough to sustain imports at these levels.
The long weekend brought pressure on rates in the Atlantic Panamax mar-
ket, while In the Pacific, very little happened for the segment as things got
too quiet too fast in anticipation of the holidays in the region.
The Atlantic Supramax/Handymax market moved sideways throughout the
week with the Pacific market remaining quiet at the same time, while the
Handysize segment witnessed additional pressure across both basins.
Sale & Purchase
In the Capesize sector, we had the resale of the “SBI BELICOSO” (180,000dwt-blt 15, China), which went to Greek owner, Diana Shipping, for a price of $ 43.5m.
In the Handysize sector we had the sale of the “VERDANT ISLAND” (32,119dwt-blt 06, Japan), which was sold to Swiss based owner, Dabinovic, for $9.1m.
* Please note that last week we erroneously reported the sale of the “SILS” (2,826teu-blt 03, S. Korea) to Turkish owner Arkas.
It’s been a while since we last saw more dry bulk than tanker orders being reported in the market and while it is refreshing to see that there are still market players out there who still haven’t dismissed the newbuilding idea, the truth is that the argument in favour of placing a dry bulk newbuilding order remains weak. As evidenced by the very few orders we have seen dur-ing the past months, the geared sizes remain way more popular, while non-existent ordering activity in the Capesize segment in the past months is pretty much saying everything there is to say regarding owners’ view of the segment’s prospects. At the same time, newbuilding prices for dry bulkers have evidently not yet completed their downward movement, with further declines being noted across all size segments. These persistent declines are probably also deterring those few contemplating placing an order not to do so, as even more attractive discounts appear to be on the way.
In terms of recently reported deals, Jindal Steel, has placed an order, for six firm and four optional MPPs (8,000dwt) at Western Marine, in Bangladesh, for a price of $ 6.1m each and delivery set between 2017-2018.
Newbuilding Market
20
60
100
140
180
mil
lion
$
Tankers Newbuilding Prices (m$)
VLCC Suezmax Aframax LR1 MR
Week
18
Week
17±% 2014 2013 2012
Capesize 180k 51.5 52.0 -1.0% 55.8 49 47
Kamsarmax 82k 28.0 28.5 -1.8% 30.4 27 28
Panamax 77k 27.5 28.0 -1.8% 29.2 26 27
Ultramax 63k 25.5 26.0 -1.9% 27 25 25
Handysize 38k 21.5 22.0 -2.3% 23 21 22
VLCC 300k 96.5 96.5 0.0% 98.6 91 96
Suezmax 160k 65.0 65.0 0.0% 65 56 58
Aframax 115k 53.5 53.5 0.0% 54 48 50
LR1 75k 46.0 46.0 0.0% 45.9 41 42
MR 50k 36.5 36.5 0.0% 36.9 34 34
190.0 190.0 0.0% 186.0 185 186
77.0 77.5 -0.6% 78.4 71 71
68.0 68.0 0.0% 66.9 63 62
46.0 46.0 0.0% 44.3 41 44
LNG 160k cbm
LGC LPG 80k cbm
MGC LPG 55k cbm
SGC LPG 25k cbm
Gas
Bu
lke
rsTa
nke
rs
Vessel
Indicative Newbuilding Prices (million$)
10
30
50
70
90
110
mil
lion
$
Bulk Carriers Newbuilding Prices (m$)
Capesize Panamax Supramax Handysize
Units Type Yard Delivery Buyer Price Comments
1 Tanker 65,000 dwt Shanhaiguan, China 2/2017Chinese (China Shipping
Development Co.)undisclosed option, 3 on order
2 Bulker 38,500 dwtJiangsu Newyangzi,
China2018
Polish (Polska Zegluga
Morska)undisclosed
6 Bulker 38,300 dwtTsuneishi Cebu,
Philippines2017 Japanese undisclosed log fitted
2 Container 10,000 teu Jiangsu New YZJ, China 2017Canadian(Seaspan
Corporation)undisclosed additional units
6+4 MPP 8,000 dwtWestern Marine,
Bangladesh2017-2018 Indian (Jindal Steel) $ 6.1m
2 PCTC 2,100 ceuXiamen Shipbuilding,
China2016-2017 Chinese (Zhongfu Shipping) undisclosed option
Too good to last? Sentiment in the demolition market shifted radically last week, with prices across the Indian subcontinent noting substantial dis-counts. We stressed in our previous report that the large supply of vessels was not allowing demo bids to march forward and it seems that this over-whelming number of demo candidates has finally taken its toll on prices. To add to the recently created negative climate a number of renegotiations was rumored to be taking place last week, as buyers were trying to get out of recently agreed much higher levels that were no longer reflecting the mar-ket. Despite all this, activity sustained its volumes, while Capesize vessels still made up for the bigger part of the reported activity. In the speed that Capes are being sent for demolition, we seem bound to reach if not surpass 100 vessels before the end of the year, while the fact that the average age of these vessels remains below 20 years, in itself reflects the urgency to get rid of older Cape tonnage irrespective of age. Prices this week for wet tonnage were at around 230-410 $/ldt and dry units received about 215-390 $/ldt.
The highest price amongst recently reported deals, was that paid by Indian breakers for the General Cargo vessel “BIRCH 3” (20,427dwt- 6,621ldt-blt 99), which received $402/ldt including 390T ROB.
Demolition Market
Week
18
Week
17±% 2014 2013 2012
Bangladesh 400 410 -2.4% 469 422 441
India 400 420 -4.8% 478 426 445
Pakistan 410 420 -2.4% 471 423 444
China 230 230 0.0% 313 365 384
Bangladesh 390 400 -2.5% 451 402 415
India 390 405 -3.7% 459 405 419
Pakistan 390 400 -2.5% 449 401 416
China 215 215 0.0% 297 350 365
Dry
Indicative Demolition Prices ($/ldt)
Markets
We
t
200
250
300
350
400
450
500
550
$/l
dt
Wet Demolition Prices
Bangladesh India Pakistan China
200
250
300
350
400
450
500
550
$/ld
t
Dry Demolition Prices
Bangladesh India Pakistan China
Name Size Ldt Built Yard Type $/ldt Breakers Comments
The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without mak-ing guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Neptune Orient Lines (NOL) is the surprise best per-forming stock in the year-to-date among the 35 ship-owners covered by Clarkson Platou Securities. Shares in the Singapore government-controlled company are up 35% since the start of the year, according to the Oslo-based bank.
d’Amico International Shipping is the next best per-forming share at 33% closely followed by Ocean Yield on 31%.
Teekay Tankers was the best placed crude tanker stock in fifth place with total returns for the year-to-date of 26% followed by Nordic American Tankers in ninth place with 24%.
Gas shipping, a former market darling, has seen mixed results with BW LPG the best placed gas stock in fourth place.
However, Dorian LPG is other end of the spectrum in thirty-second place with a year-to-date decline in its share price of 30%.
Unsurprisingly, dry bulk stocks dominated the worst performers with George Economou’s DryShips and Baltic Trading the two worst performing stocks.
However, crude tanker stocks offered the best re-turns over the past month, according to the figures compiled by Clarkson Platou Securities.
Frontline and DHT Holdings were two of the three best performers with their total return last month of 18%. They were joined at the top by Costamare also on 18%.” (Dale Wainwright, Trade Winds)