Market insight By Timos Papadimitriou SnP Broker Great expectaons! Back in January the expectaons for Q3 and Q4 were more than great. Talks and claims for a rising BDI and a healthy market were coming from every- where. Almost everyone believed that things were finally starng to look up for a change! Now at the half way mark of the year, it seems that the only reason to look up is to pray for a miracle. The rates are dropping and the order book seems to be rising. “Seems” being a key word here, as we all know that there is a long road between the signing of an LOI and the deliv- ery of a ready ship. On the asset side, parcularly in the panamax sector, buyers are becoming scarce, with less and less superficial inspecons compared to three months ago. It’s starng to feel like 2012 all over again, but we have a long way to go on the price front. Sellers are sll resisng and as long as there are some buyers willing to inspect and offer now that the compeon is minimal, prices will connue to stay buoyant. On the boxships front and in contrast to the bulk carriers, the panamax seg- ment is showing an upward movement despite the super sizing that has been taking place in this sector. With Panamaxes having seen such relavely cheap rates it didn’t take much from the firming West Africa trade, which has been the main charter employment lately for several panamax and wide beam panamax units and in essence has cleared up some of the excess ton- nage that had accumulated in the market. How long will this connue for, is yet to be seen. And since we started with the panamax, let’s move onto a private equity favourite, namely the LR1. The aggressive demand for modern assets (i.e. 10 year-old or younger) that sll trade CPP, have pushed these ships to soar in value, reaching levels in the region of mid USD 20s million. On the other hand, older than 10 year-old ships are valued considerably less. The order book is indeed limited and with the excepon of the Navig8 order, the seg- ment could easily be labelled as “forgoen” in the Newbuilding village. Once more, this is also a case in which the freight market does not support these prices, but leaves hints and hopes for beer days to come for the CPP ves- sels. Looking at the NB prices for each segment, dry bulk Kamsarmax- es experienced an increase close to 15% over the last 14 months. On the container side, there is significant pressure on yards to increase prices due to their increasing operang costs, but at the same me the lack of feedback from owners has kept prices steady for the me being. On the tankers side, a respecve Newbuilding rose from USD 40,5 million back in early 2013 up to over USD 47 million almost a year later. So we have three markets and three “panamaxes” with different character- iscs. The work horse of the dry market, which is close to becoming the old horse being put out to pasture, its containership counterpart that has be- come the new black horse and the forgoen LR1, which is making a come- back for a limited number of players. How are these ships going to hold against the rising orderbooks and the compeon from their smaller and/or larger equivalents, it will be very interesng to see. Chartering (Wet: Stable+ / Dry: Soſter - ) Everything was poinng down in the Dry bulk market on Friday, with all segments closing off the week on the red and Panamax rates dipping further and marking fresh year-lows for yet another week. The BDI closed today (17/06/2014) at 858 points, down by 22 points compared to Monday’s levels (16/06/2014) and a decrease of 146 points com- pared to previous Tuesday’s closing (10/06/2014). Rates for VLs strengthened this past week on the back of acvity ex-MEG firming as Far East demand picked up considerably for a second week in a row. The BDTI Monday (16/06/2014), was at 641 points, an increase of 5 points and the BCTI at 518, a decrease of 10 points compared to previous Mon- day (09/06/2014). Sale & Purchase (Wet: Soſter - / Dry: Soſter - ) SnP acvity increased slightly this past week, with buyers returning in the market most probably enced by the soſtening of second-hand pric- es, while modern units are sll proving to be most popular. On the tank- er side, we had the sale of the “KASSOS WARRIOR” (281,050dwt-blt 00, Japan), which was picked up by Greek buyers under private terms. On the dry bulker side, we had the en-bloc resale of the “TSUNEISHI ZHOUSHAN SS-152” (34,893dwt-blt 15, China) and the “TSUNEISHI ZHOUSHAN SS-153” (34,893dwt-blt 15, China) which were picked up by German buyers, for a price of US$ 25.0m each. Newbuilding (Wet: Stable - / Dry: Stable - ) Acvity on the newbuilding front picked up this past week, with an in- crease number of orders for tankers and bulkers coming through. On the tankers side, all orders reported involved MR vessels, something we hadn't seen for a very long me, as the segment has proved fairly un- popular amongst owners this year so far. Despite this slight pick up of acvity we expect weeks like this one to be the excepon during the summer season and possibly throughout the end of 2014 as well. Even in the case of a stronger second half for the freight market, most owners contemplang placing an order are expected to sit on the sidelines this me round and not rush to the yards, especially as long as the laer keep resisng to offer significant price discounts, which is what we have been witnessing during the past months. In terms of new orders, Hong Kong based owner, Parakou, has placed an order at SPP in S. Korea, for four firm plus eight oponal MR tankers (50,000dwt), for a price of US $ 36.0m each and with delivery set between 2016 and 2017. Demolion (Wet: Soſter - / Dry: Soſter - ) The demolion market has witnessed further pressure this past week, with prices moving down across the Indian sub-Connent and senment waning significantly. Despite the fact that Indian breakers managed to snap the great majority of candidate vessels for another week, this was merely a reflecon of senment in the domesc demolion market. With the Indian Rupee falling to a six-week low against its USD counter- part and local steel prices taking a dip as well, there was only one direc- on prices could go to and that was south. At the same me, the com- peon wasn't fairing any beer either, with Bangladeshi breakers hav- ing to deal with the aſtermath of the recently announced budget, which appears to have had a worse impact on the local market than what was originally esmated. At the same me, things in Pakistan remained qui- et, with some slightly beer volumes of enquiry compared to their neighbors, while we expect acvity in the next few weeks to keep slow- ing down across the Indian sub-Connent as the monsoon season is now underway. Average prices this week for wet tonnage were at around 325-490$/ldt and dry units received about 310-470$/ldt. Weekly Market Report Issue: Week 24| Tuesday 17 th June 2014
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Market insight By Timos Papadimitriou SnP Broker Great expectations!
Back in January the expectations for Q3 and Q4 were more than great. Talks and claims for a rising BDI and a healthy market were coming from every-where. Almost everyone believed that things were finally starting to look up for a change! Now at the half way mark of the year, it seems that the only reason to look up is to pray for a miracle. The rates are dropping and the order book seems to be rising. “Seems” being a key word here, as we all know that there is a long road between the signing of an LOI and the deliv-ery of a ready ship.
On the asset side, particularly in the panamax sector, buyers are becoming scarce, with less and less superficial inspections compared to three months ago. It’s starting to feel like 2012 all over again, but we have a long way to go on the price front. Sellers are still resisting and as long as there are some buyers willing to inspect and offer now that the competition is minimal, prices will continue to stay buoyant.
On the boxships front and in contrast to the bulk carriers, the panamax seg-ment is showing an upward movement despite the super sizing that has been taking place in this sector. With Panamaxes having seen such relatively cheap rates it didn’t take much from the firming West Africa trade, which has been the main charter employment lately for several panamax and wide beam panamax units and in essence has cleared up some of the excess ton-nage that had accumulated in the market. How long will this continue for, is yet to be seen.
And since we started with the panamax, let’s move onto a private equity favourite, namely the LR1. The aggressive demand for modern assets (i.e. 10 year-old or younger) that still trade CPP, have pushed these ships to soar in value, reaching levels in the region of mid USD 20s million. On the other hand, older than 10 year-old ships are valued considerably less. The order book is indeed limited and with the exception of the Navig8 order, the seg-ment could easily be labelled as “forgotten” in the Newbuilding village. Once more, this is also a case in which the freight market does not support these prices, but leaves hints and hopes for better days to come for the CPP ves-sels.
Looking at the NB prices for each segment, dry bulk Kamsarmax-es experienced an increase close to 15% over the last 14 months. On the container side, there is significant pressure on yards to increase prices due to their increasing operating costs, but at the same time the lack of feedback from owners has kept prices steady for the time being. On the tankers side, a respective Newbuilding rose from USD 40,5 million back in early 2013 up to over USD 47 million almost a year later.
So we have three markets and three “panamaxes” with different character-istics. The work horse of the dry market, which is close to becoming the old horse being put out to pasture, its containership counterpart that has be-come the new black horse and the forgotten LR1, which is making a come-back for a limited number of players. How are these ships going to hold against the rising orderbooks and the competition from their smaller and/or larger equivalents, it will be very interesting to see.
Chartering (Wet: Stable+ / Dry: Softer - )
Everything was pointing down in the Dry bulk market on Friday, with all segments closing off the week on the red and Panamax rates dipping further and marking fresh year-lows for yet another week. The BDI closed today (17/06/2014) at 858 points, down by 22 points compared to Monday’s levels (16/06/2014) and a decrease of 146 points com-pared to previous Tuesday’s closing (10/06/2014). Rates for VLs strengthened this past week on the back of activity ex-MEG firming as Far East demand picked up considerably for a second week in a row. The BDTI Monday (16/06/2014), was at 641 points, an increase of 5 points and the BCTI at 518, a decrease of 10 points compared to previous Mon-day (09/06/2014).
Sale & Purchase (Wet: Softer - / Dry: Softer - )
SnP activity increased slightly this past week, with buyers returning in the market most probably enticed by the softening of second-hand pric-es, while modern units are still proving to be most popular. On the tank-er side, we had the sale of the “KASSOS WARRIOR” (281,050dwt-blt 00, Japan), which was picked up by Greek buyers under private terms. On the dry bulker side, we had the en-bloc resale of the “TSUNEISHI ZHOUSHAN SS-152” (34,893dwt-blt 15, China) and the “TSUNEISHI ZHOUSHAN SS-153” (34,893dwt-blt 15, China) which were picked up by German buyers, for a price of US$ 25.0m each.
Newbuilding (Wet: Stable - / Dry: Stable - )
Activity on the newbuilding front picked up this past week, with an in-crease number of orders for tankers and bulkers coming through. On the tankers side, all orders reported involved MR vessels, something we hadn't seen for a very long time, as the segment has proved fairly un-popular amongst owners this year so far. Despite this slight pick up of activity we expect weeks like this one to be the exception during the summer season and possibly throughout the end of 2014 as well. Even in the case of a stronger second half for the freight market, most owners contemplating placing an order are expected to sit on the sidelines this time round and not rush to the yards, especially as long as the latter keep resisting to offer significant price discounts, which is what we have been witnessing during the past months. In terms of new orders, Hong Kong based owner, Parakou, has placed an order at SPP in S. Korea, for four firm plus eight optional MR tankers (50,000dwt), for a price of US $ 36.0m each and with delivery set between 2016 and 2017.
Demolition (Wet: Softer - / Dry: Softer - )
The demolition market has witnessed further pressure this past week, with prices moving down across the Indian sub-Continent and sentiment waning significantly. Despite the fact that Indian breakers managed to snap the great majority of candidate vessels for another week, this was merely a reflection of sentiment in the domestic demolition market. With the Indian Rupee falling to a six-week low against its USD counter-part and local steel prices taking a dip as well, there was only one direc-tion prices could go to and that was south. At the same time, the com-petition wasn't fairing any better either, with Bangladeshi breakers hav-ing to deal with the aftermath of the recently announced budget, which appears to have had a worse impact on the local market than what was originally estimated. At the same time, things in Pakistan remained qui-et, with some slightly better volumes of enquiry compared to their neighbors, while we expect activity in the next few weeks to keep slow-ing down across the Indian sub-Continent as the monsoon season is now underway. Average prices this week for wet tonnage were at around 325-490$/ldt and dry units received about 310-470$/ldt.
Suezmax performance aside, the crude carrier market has taken a deep breath this week as demand ex-MEG picked up. The escalation of tensions in Iraq could possibly give a short-term boost to rates, as supply disruptions or even simply the fear of them always create a sense of panic in the mar-ket or the need to start stocking from different areas and thus increasing tone-miles. Rates for VLs have moved up for both the Eastbound and West-bound voyages, with Far East demand being particularly firm. Despite this week’s performance though, the reality is that there is still a lot of available tonnage in the MEG region and probably a long way before owners start enjoying substantially longer periods of a less volatile market.
The Suezmax market resumed its downward movement for a second week in a row, as lack of fresh cargoes in the key trading routes prevented any rate upside. Activity in the WAF region remained soft, with the number of fixtures declining dramatically compared to the week prior, whilst thin busi-ness for cross-Med voyages has pushed rates to below WS63 in the region.
The North Sea and Caribs Afras both enjoyed more active markets last week and it looks like the rate for the Caribs/USG trip might enjoy some further upside this coming week. At the same time rates in the Med sustained their levels with uninspiring activity prevailing in the region.
Sale & Purchase
In the VLCC sector, we had the sale of the “KASSOS WARRIOR” (281,050dwt-blt 00, Japan), which was picked up by Greek buyers under private terms.
In the Aframax sector we had the sale of the “ARAB” (105,994dwt-blt 98, S. Korea), which was picked up for a price of $ 12.8m for shuttle tanker con-version.
Wet Market
Indicative Period Charters
- 18 mos - 'YASA GOLDEN BOSPHORUS' 2007 115,167dwt
Activity on the newbuilding front picked up this past week, with an increase number of orders for tankers and bulkers coming through. On the tankers side, all orders reported involved MR vessels, something we hadn't seen for a very long time, as the segment has proved fairly unpopular amongst owners this year so far. Despite this slight pick up of activity we expect weeks like this one to be the exception during the summer season and possibly throughout the end of 2014 as well. Even in the case of a stronger second half for the freight market, most owners contemplating placing an order are expected to sit on the sidelines this time round and not rush to the yards, especially as long as the latter keep resisting to offer significant price dis-counts, which is what we have been witnessing during the past months.
In terms of recently reported deals, Hong Kong based owner, Parakou, has placed an order at SPP in S. Korea, for four firm plus eight optional MR tank-ers (50,000dwt), for a price of US $ 36.0m each and with delivery set be-tween 2016 and 2017.
Newbuilding Market
20
60
100
140
180
mil
lion
$
Tankers Newbuilding Prices (m$)
VLCC Suezmax Aframax LR1 MR
Week
24
Week
23±% 2014 2013 2012
Capesize 180k 58.0 58.0 0.0% 56.4 49 47
Kamsarmax 82k 30.8 30.8 0.0% 30.5 27 28
Panamax 77k 29.5 29.5 0.0% 29.2 26 27
Supramax 58k 28.0 28.0 0.0% 27 25 25
Handysize 35k 23.5 23.5 0.0% 23 21 22
VLCC 300k 101.0 101.0 0.0% 98.9 91 96
Suezmax 160k 66.0 66.0 0.0% 64 56 58
Aframax 115k 55.0 55.0 0.0% 54 48 50
LR1 75k 46.0 46.5 -1.1% 45.9 41 42
MR 52k 37.0 37.0 0.0% 36.9 34 34
LNG 150K 186.0 186.0 0.0% 185.6 185 186
LGC LPG 80k 80.0 80.0 0.0% 77.4 71 71
MGC LPG 52k 67.3 67.0 0.4% 65.9 63 62
Vessel
Indicative Newbuilding Prices (million$)
Gas
Bu
lke
rsTa
nke
rs
10
30
50
70
90
110
mil
lion
$Bulk Carriers Newbuilding Prices (m$)
Capesize Panamax Supramax Handysize
Units Type Yard Delivery Buyer Price Comments
4+4+4 Tanker 50,000 dwt SPP, S. Korea 2016-2017 HK based (Parakou) $ 36.0m chemical
3 Tanker 50,000 dwt Guangzhou, China 2016 Chinese (COSCO Dalian) undisclosed
2 Tanker 50,000 dwtAker Philadelphia,
U.S.A.2016-2017
USA based (Philly Tankers
AS)$ 125.0m Jones Act
2 Tanker 3,500 dwt Daesun, China 2016S. Korean (Heung-A
Shipping)undisclosed
3 Bulker 180,000 dwtHyundai Samho, S.
Korea2015-2016 German ( Blumenthal) $ 59.0m
options, 4 ordered in
total
2 Bulker 81,500 dwtTsuneishi Cebu,
Philippines2016-2017 Japanese (Nissen Kaiun) undisclosed
eco, options, 5
ordered in total
1 Bulker 81,500 dwtTsuneishi Cebu,
Philippines11/2016 Japanese (Hisafuku Kisen) undisclosed
2 Bulker 34,000 dwt Namura, Japan 2017 Swedish (Lauritzen Bulkers) undisclosed
10 Container 1,900 teu Hanjin, S. Korea 2016-2017 Belgian (Delphis)region $
30.0mLOI stage
1 Gas 4,500 cbm Murakami Hide, Japan 2015 Japanese (Fuji Iron Works) undisclosed
1 Gas 4,500 cbm Murakami Hide, Japan 2016Japanese (Daytona
The demolition market has witnessed further pressure this past week, with prices moving down across the Indian sub-Continent and sentiment waning significantly. Despite the fact that Indian breakers managed to snap the great majority of candidate vessels for another week, this was merely a reflection of sentiment in the domestic demolition market. With the Indian Rupee fall-ing to a six-week low against its USD counterpart and local steel prices taking a dip as well, there was only one direction prices could go to and that was south. At the same time, the competition wasn't fairing any better either, with Bangladeshi breakers having to deal with the aftermath of the recently announced budget, which appears to have had a worse impact on the local market than what was originally estimated. At the same time, things in Paki-stan remained quiet, with some slightly better volumes of enquiry compared to their neighbors, while we expect activity in the next few weeks to keep slowing down across the Indian sub-Continent as the monsoon season is now underway. Average prices this week for wet tonnage were at around 325-490$/ldt and dry units received about 310-470$/ldt.
The highest prices amongst recently reported deals, was that paid by Indian breakers for the Bulker ‘FISHER D’ (29,003dwt-6,197ldt-blt 81), which re-ceived a firm price of $ 507/ldt.
Demolition Market
Week
24
Week
23±% 2013 2012 2011
Bangladesh 475 480 -1.0% 422 440 523
India 490 500 -2.0% 426 445 511
Pakistan 470 470 0.0% 423 444 504
China 325 325 0.0% 365 384 451
Bangladesh 450 455 -1.1% 402 414 498
India 470 480 -2.1% 405 419 484
Pakistan 450 450 0.0% 401 416 477
China 310 310 0.0% 350 365 432
Dry
Indicative Demolition Prices ($/ldt)
Markets
We
t
250
300
350
400
450
500
550
$/l
dt
Wet Demolition Prices
Bangladesh India Pakistan China
250
300
350
400
450
500
550
$/l
dt
Dry Demolition Prices
Bangladesh India Pakistan China
Name Size Ldt Built Yard Type $/ldt Breakers Comments
MSC HINA 21,370 10,665 1984WARNOWWERFT ,
GermanyCONT $ 490/Ldt Indian failed last week and resold
BALTIC MERCUR 19,036 8,920 1988WARNOWWERFT ,
GermanyGC $ 480/Ldt Indian
SAN TEODORO 29,462 7,134 1985USUKI IRON WORKS,
JapanBULKER $ 493/Ldt Indian
GLORIOUS 40,836 7,017 1986SANOYAS CORP,
JapanBULKER $ 490/Ldt Bangladeshi
BALTIC NOVATOR 10,510 6,752 1984GIESSEN-DE NOORD,
NetherlandsREEFER $ 496/Ldt Indian incl. 72T aluminum
FLORIDA II 28,234 6,485 1980MITSUBISHI
SHIMONOSEKI, JapanBULKER $ 457/Ldt Indian
UNI-BROTHERS 27,650 6,388 1984HITACHI ZOSEN -
INNOSH, JapanBULKER $ 477/Ldt Indian
FISHER D 29,003 6,197 1981HAKODATE DOCK,
JapanBULKER $ 507/Ldt Indian
BENEGAS 6,110 3,443 1981HITACHI ZOSEN -
INNOSH, JapanGAS $ 495/Ldt Indian
NEW FORTUNE 6,831 2,374 1986 NISHI, Japan GC $ 430/Ldt Bangladeshi
Demolition Sales
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.
Compiled by Intermodal Research & Valuations Department | [email protected]
Star Bulk Carriers Corp. said Monday it will merge with Oceanbulk Shipping, owned by Oaktree Capital Management L.P. and the family of Star Bulk's nonex-ecutive chairman Petros Pappas, creating the largest U.S.-listed dry-bulk company.
Starbulk will issue 54.1 million shares of stock, cur-rently valued at about $653 million, to Oaktree and the Pappas family, and in turn Oceanbulk Shipping LLC and Oceanbulk Carriers LLC will become indirect wholly-owned units of Star Bulk. Oaktree will own about 61% of Star Bulk's shares upon the closing of the deal. The Pappas family will hold 12.5% of the company's stock.
Mr. Pappas will become the chief executive of Star-bulk and Spyros Capralos, current president and chief executive of Star Bulk, will become nonexecutive chairman as part of the deal. The merger, which is expected to add to Starbulk's earnings, is seen closing within the next 30 days.
Star Bulk will also agree to certain voting restrictions, standstill obligations and ownership limitations as part of the deal, as well as certain rights for Oaktree Investors to make board nominations and to appoint officers of the company.
Star Bulk will acquire an operating fleet of 15 dry-bulk carrier vessels, including newly built vessels. The combined company will be the largest U.S. listed dry bulk company with a fully delivered fleet of 69 ves-sels, according to Star Bulk.
The company said it plans to pursue additional acqui-sitions that will add to earnings.” (The Wall Street Journal)