Market insight By George Iliopoulos SnP Broker Is the market in a recovery mood? August is typically a me when the shipping industry takes it easy… charter- ers book their requirements early on… shipowners go on holidays and every- thing rolls smoothly. This year’s August proved to be slightly different. The market started to liven up early on and freight rates for Dry Bulkers enjoyed a small increase. The results from this small increase took no me at all to also show its face in the SnP market with acvity there picking up again. If one wonders how could this be, let’s take a moment here to remind ourselves that the BDI was stuck below 1,000 points since early June, while since early April there had been only a handful of mes that the index broke above this level. As such up to now it has mainly been a few tradional shipping houses and some new funds that have been acve in the SnP market during this period. All this seemed to have changed since early August where there was defi- nitely a posive momentum building up. Aſter a period of hibernaon, a number of owners started to display their buying appete once more. Com- peon started to mount with this becoming quite evident in some of the latest reported deals and in some cases causing prices for ships to firm. An example of such a case is the recent sale of the “LOWLANDS NEL- LO” (76,830dwt-blt 04 JPN) which went for USD 17.2m, compared to the sale of the “RONDEAU” (77,031dwt-blt 06 JPN) which didn’t even manage to reach USD 18m in early June despite being a younger vessel. The queson therefore is if this is the end of a difficult period in the market or is whether there is sll a long way to go before we can say that we are seeing beer prospects which can support bigger waves of opmism. During the past couple of weeks, Capes along with some fresh cargoes open- ing up in India and the Far East that have helped pull the whole market out of its hibernaon. What remains to be seen now is how long will this last in order to provide rates with stronger support and at the same me guide the market out of this difficult period which has been denying our industry those long awaited beer days. It is also very interesng to see how asset values will fluctuate in the next few months, especially for those vessels built aſter 2000 which appear to be currently holding the prime buying interest amongst interested pares. Many buyers at this moment believe that prices are at a very aracve level and appear to be willing to offer slightly above market in order to secure the deal, considering that if the freight market starts to recover, prices will rise fairly fast, which is prey much what we witnessed during the 2013 price boom. We could therefore say that currently the shipping industry is prey much stuck in a limbo, with market players being very conservave in respect to their next move, taking into consideraon the recent past where we wit- nessed a market moving towards a recovery only to suddenly see a reversal and an abrupt landing. Unfortunately, condions in this new age of shipping dictate that no one can make easy predicons with regards to even the near term future as there are too many external factors which affect the market’s direcon. Let’s then just leave off on the hope that we will see a beer mar- ket fairly soon. Chartering (Wet: Soſter - / Dry: Firm + ) The Dry Bulk market noted another weekly increase, with rates for Capes and Supras firming the most, while enquiry for the former seems to have eased a bit at the end of the week. The BDI closed today (26/08/2014) at 1,070 points, down by 18 points compared to Friday’s levels (22/08/2014) and an increase of 30 points compared to previous Tuesday’s closing (19/08/2014). The crude carriers market witnessed further soſtening this past week, although charterers in the MEG are expected to make a come back in the next days that should allow for rate improvements as far as VL tonnage is concerned. The BDTI Friday (22/08/2014) was at 759 points, an increase of 12 points and the BCTI at 548, a decrease of 1 point compared to previous Friday (15/08/2014). Sale & Purchase (Wet: Stable + / Dry: Soſter - ) SnP acvity has warmed up a bit during the last week, as despite the cloud of uncertainty that sll hangs over the Dry Bulk market the buying interest is sll there, while Greek owners remain buyers in the case of both tankers and bulkers. On the tanker side, we had the sale of the “ULRIKEN” (309,996dwt-blt 98, S. Korea), which was picked up for a price of US$ 26.0m. On the dry bulker side, we had the sale of the “ZHUSHUI 5” (79,501dwt-blt 12, China) , which was picked up by Greek buyers for a price of $20.9m. Newbuilding (Wet: Stable- / Dry: Stable- ) The newbuilding market has witnessed a bigger volume of orders during the past week and while most deals reported are probably contracts agreed at earlier dates it is sll a notable firming in terms of acvity. At the same me it seems that quotes from yards have soſtened further in the case of dry bulkers, while in those cases where prices on concluded orders are available we are nocing that these are even lower. Before the newbuilding market experiences improved prices, we will have to see some further buying interest in the SnP market or as in the case of newcomer in the industry AMK Securies, the revival of interest from private equity funds that might push prices higher. In terms of recently reported deals, Norwegian owner, Knutsen NYK, has placed an order at Hyundai, in S. Korea, for two firm and two oponal Suezmax shule tankers (160,000dwt), for a price of US $ 125.0m each and with delivery set in 2016. Demolion (Wet: Stable- / Dry: Stable- ) The Indian Sub-Connent demolion market has yet to find a more sta- ble foong, with bids from different breaking countries changing the direcon every week. The performance of local currencies is as expected the major contributor to these movements. The Indian Rupee, which has spent a big chunk of the summer holding its ground against the US Dollar, has been struggling to retain its strength recently and the impact on the demo market has been overwhelming, with Indian prices shed- ding more than $40/ldt in just a few weeks. The good news is that the volality of the Indian currency now seems to be easing off, with the currency seling back to the low 60s against its US counterpart, mainly due to the recent increased flow of foreign funds into the Indian equity and bond markets. This, in combinaon with the fact that the price of local steel plates has made an upward reversal recently, has allowed for the Indian market to make a mini come-back during the past week. At the same me, Bangladeshi breakers have remained overall quiet, while those in Pakistan have recently tasted some currency bierness them- selves, fact which has removed steam off the acvity in the country. Average prices this week for wet tonnage were at around 305-495$/ldt and dry units received about 290-470$/ldt. Weekly Market Report Issue: Week 34 | Tuesday 26 th August 2014
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Market insight
By George Iliopoulos
SnP Broker
Is the market in a recovery mood?
August is typically a time when the shipping industry takes it easy… charter-ers book their requirements early on… shipowners go on holidays and every-thing rolls smoothly.
This year’s August proved to be slightly different. The market started to liven up early on and freight rates for Dry Bulkers enjoyed a small increase. The results from this small increase took no time at all to also show its face in the SnP market with activity there picking up again. If one wonders how could this be, let’s take a moment here to remind ourselves that the BDI was stuck below 1,000 points since early June, while since early April there had been only a handful of times that the index broke above this level. As such up to now it has mainly been a few traditional shipping houses and some new funds that have been active in the SnP market during this period.
All this seemed to have changed since early August where there was defi-nitely a positive momentum building up. After a period of hibernation, a number of owners started to display their buying appetite once more. Com-petition started to mount with this becoming quite evident in some of the latest reported deals and in some cases causing prices for ships to firm.
An example of such a case is the recent sale of the “LOWLANDS NEL-LO” (76,830dwt-blt 04 JPN) which went for USD 17.2m, compared to the sale of the “RONDEAU” (77,031dwt-blt 06 JPN) which didn’t even manage to reach USD 18m in early June despite being a younger vessel. The question therefore is if this is the end of a difficult period in the market or is whether there is still a long way to go before we can say that we are seeing better prospects which can support bigger waves of optimism.
During the past couple of weeks, Capes along with some fresh cargoes open-ing up in India and the Far East that have helped pull the whole market out of its hibernation. What remains to be seen now is how long will this last in order to provide rates with stronger support and at the same time guide the market out of this difficult period which has been denying our industry those long awaited better days.
It is also very interesting to see how asset values will fluctuate in the next few months, especially for those vessels built after 2000 which appear to be currently holding the prime buying interest amongst interested parties. Many buyers at this moment believe that prices are at a very attractive level and appear to be willing to offer slightly above market in order to secure the deal, considering that if the freight market starts to recover, prices will rise fairly fast, which is pretty much what we witnessed during the 2013 price boom.
We could therefore say that currently the shipping industry is pretty much stuck in a limbo, with market players being very conservative in respect to their next move, taking into consideration the recent past where we wit-nessed a market moving towards a recovery only to suddenly see a reversal and an abrupt landing. Unfortunately, conditions in this new age of shipping dictate that no one can make easy predictions with regards to even the near term future as there are too many external factors which affect the market’s direction. Let’s then just leave off on the hope that we will see a better mar-ket fairly soon.
Chartering (Wet: Softer - / Dry: Firm + )
The Dry Bulk market noted another weekly increase, with rates for Capes and Supras firming the most, while enquiry for the former seems to have eased a bit at the end of the week. The BDI closed today (26/08/2014) at 1,070 points, down by 18 points compared to Friday’s levels (22/08/2014) and an increase of 30 points compared to previous Tuesday’s closing (19/08/2014). The crude carriers market witnessed further softening this past week, although charterers in the MEG are expected to make a come back in the next days that should allow for rate improvements as far as VL tonnage is concerned. The BDTI Friday (22/08/2014) was at 759 points, an increase of 12 points and the BCTI at 548, a decrease of 1 point compared to previous Friday (15/08/2014).
Sale & Purchase (Wet: Stable + / Dry: Softer - )
SnP activity has warmed up a bit during the last week, as despite the cloud of uncertainty that still hangs over the Dry Bulk market the buying interest is still there, while Greek owners remain buyers in the case of both tankers and bulkers. On the tanker side, we had the sale of the “ULRIKEN” (309,996dwt-blt 98, S. Korea), which was picked up for a price of US$ 26.0m. On the dry bulker side, we had the sale of the “ZHUSHUI 5” (79,501dwt-blt 12, China) , which was picked up by Greek buyers for a price of $20.9m.
Newbuilding (Wet: Stable- / Dry: Stable- )
The newbuilding market has witnessed a bigger volume of orders during the past week and while most deals reported are probably contracts agreed at earlier dates it is still a notable firming in terms of activity. At the same time it seems that quotes from yards have softened further in the case of dry bulkers, while in those cases where prices on concluded orders are available we are noticing that these are even lower. Before the newbuilding market experiences improved prices, we will have to see some further buying interest in the SnP market or as in the case of newcomer in the industry AMK Securities, the revival of interest from private equity funds that might push prices higher. In terms of recently reported deals, Norwegian owner, Knutsen NYK, has placed an order at Hyundai, in S. Korea, for two firm and two optional Suezmax shuttle tankers (160,000dwt), for a price of US $ 125.0m each and with delivery set in 2016.
Demolition (Wet: Stable- / Dry: Stable- )
The Indian Sub-Continent demolition market has yet to find a more sta-ble footing, with bids from different breaking countries changing the direction every week. The performance of local currencies is as expected the major contributor to these movements. The Indian Rupee, which has spent a big chunk of the summer holding its ground against the US Dollar, has been struggling to retain its strength recently and the impact on the demo market has been overwhelming, with Indian prices shed-ding more than $40/ldt in just a few weeks. The good news is that the volatility of the Indian currency now seems to be easing off, with the currency settling back to the low 60s against its US counterpart, mainly due to the recent increased flow of foreign funds into the Indian equity and bond markets. This, in combination with the fact that the price of local steel plates has made an upward reversal recently, has allowed for the Indian market to make a mini come-back during the past week. At the same time, Bangladeshi breakers have remained overall quiet, while those in Pakistan have recently tasted some currency bitterness them-selves, fact which has removed steam off the activity in the country. Average prices this week for wet tonnage were at around 305-495$/ldt and dry units received about 290-470$/ldt.
For the bigger part of August, the crude carriers market has been under downward pressure and last week was no exception. Limited enquiry seemed to be weighing on the market recently, Despite the performance of the market during the past week, sentiment still remains positive overall as the summer season has allowed for some healthy activity and numbers across all segments. Additionally, we expect to see rates bounce back up in the next few days, as charterers will eventually have to move more aggres-sively into the September program. Rates for VLs shed some additional WS points across the board this past week, but activity ex-MEG should be soon improving, while the supply of tonnage in the region is not expected to deny the market a mini recovery.
The Suezmax market remained under considerable pressure, with rates for cross-Med and Black Sea/Med voyages noting the biggest declines yet again. The WAF Suez was also very quiet during the biggest part of the week, while a glimpse of improvement was seen as the market slid into the weekend.
Rates for Aframaxes presented a mixed picture last week, with numbers for both cross-Med and cross-UKC voyages moving much higher, while the Caribs Afra continued its downward movement on the back of limited fresh business and too many ballasters in the region.
Sale & Purchase
In the VLCC sector, we had the sale of the “ULRIKEN” (309,996dwt-blt 98, S. Korea ), which was picked up for a price of US$ 26.0m.
In the MR sector we had the resale of the “SPP SACHEON S5126” (50,300dwt-blt 14, S. Korea), which was picked up for a price of US$ 37.1m.
The newbuilding market has witnessed a bigger volume of orders during the past week and while most deals reported are probably contracts agreed at earlier dates it is still a notable firming in terms of activity. At the same time it seems that quotes from yards have softened further in the case of dry bulkers, while in those cases where prices on concluded orders are available we are noticing that these are even lower. Before the newbuilding market experiences improved prices, we will have to see some further buying inter-est in the SnP market or as in the case of newcomer in the industry AMK Securities, the revival of interest from private equity funds that might push prices higher.
In terms of recently reported deals, Norwegian owner, Knutsen NYK, has placed an order at Hyundai, in S. Korea, for two firm and two optional Su-ezmax shuttle tankers (160,000dwt), for a price of US $ 125.0m each and with delivery set in 2016.
The Indian Sub-Continent demolition market has yet to find a more stable footing, with bids from different breaking countries changing the direction every week. The performance of local currencies is as expected the major contributor to these movements. The Indian Rupee, which has spent a big chunk of the summer holding its ground against the US Dollar, has been struggling to retain its strength recently and the impact on the demo market has been overwhelming, with Indian prices shedding more than $40/ldt in just a few weeks. The good news is that the volatility of the Indian currency now seems to be easing off, with the currency settling back to the low 60s against its US counterpart, mainly due to the recent increased flow of foreign funds into the Indian equity and bond markets. This, in combination with the fact that the price of local steel plates has made an upward reversal recently, has allowed for the Indian market to make a mini come-back during the past week. At the same time, Bangladeshi breakers have remained overall quiet, while those in Pakistan have recently tasted some currency bitterness them-selves, fact which has removed steam off the activity in the country. Average prices this week for wet tonnage were at around 305-495$/ldt and dry units received about 290-470$/ldt.
The highest price amongst recently reported deals, was that paid for the Bulker ‘PRINCESS VANYA’ (70,329dwt-9,074ldt-blt 89), which received a very firm price of $ 514/ldt as it included full spares.
Demolition Market
Week
34
Week
33±% 2013 2012 2011
Bangladesh 480 485 -1.0% 422 440 523
India 485 480 1.0% 426 445 511
Pakistan 495 495 0.0% 423 444 504
China 305 305 0.0% 365 384 451
Bangladesh 455 460 -1.1% 402 414 498
India 455 450 1.1% 405 419 484
Pakistan 470 470 0.0% 401 416 477
China 290 290 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
JAG PRACHI 28,610 9,680 1991KHERSONSKIY SSZ -
USR, RussiaTANKER $ 484/Ldt Indian
PRINCESS VANYA 70,329 9,074 1989 SANOYAS, Japan BULKER $ 514/Ldt undisclosed incl. full spares
MERATUS SPIRIT 2 13,226 5,422 1989SHANGHAI
SHIPYARD, ChinaGC $ 479/Ldt Bangladeshi
G. INEBOLU 18,466 5,258 1983DENIZCILIK
CAMIALTI, TurkeyBULKER $ 490/Ldt Indian
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]
The plan's approval paves the way for a five-newbuilding acquisition from the New York-listed owner's sponsor and general partner, Evangelos Marinakis-controlled Capital Maritime & Trading. About 51.7% of Capital Products Partners' common unitholders approved the changes to the incentive distribution rights (IDRs) structure, which will have the effect of boosting Capital Maritime's share of distributions, or dividends, beyond its 2% general partner split. It is meant as an incentive for further vessel dropdowns. However, Capital Product said that after the vote, Capital Maritime unilaterally decided to forego IDR payments until common unitholders receive distributions of at least $0.25 per share, up from the planned threshold of nearly $0.243 per share. Of the combined common and preferred shareholders, 59.5% approved the changes. Some 85.8% of common unitholders and 89.7% of com-bined preferred and common shareholders partici-pated in the meeting to approve the plan.
The IDR plan is sweetened for shareholders by below-market prices that Piraeus-based Capital Product is poised to pay for three newbuilding containerships and two products tanker newbuildings from Capital Maritime. The spin-off will pay $81.5m each for three 9,160-teu eco-flex containerships at Daewoo Ship-building & Marine Engineering. The vessels come with 60-month charters to French liner operator CMA CGM. Capital Product will pay $33.5m each for the medium-range products tankers under construction at Samsung Heavy Industries. Those ships come with charters to Capital Maritime for two years at $17,000 per day, plus a 50-50 profit share.” (Trade Winds)