Market insight By Intermodal Shanghai office SnP Team As the end of the fourth quarter is approaching, we are all witness to the second hand market prices soſtening day by day. Any new deal surfacing the market is at significantly lower level compared to the previous last done. In this respect, some Owners are accepng these new discounted levels, ac- cepng the new asset level reality, whereas others prefer to withdraw their ships or chose to wait, hoping to find more eager Buyers who can pay their aiming levels. For the modern dry bulker tonnages, Owners are sll holding back and are insisng on asking prices, which in some cases are more in sync with the levels of the market six months ago. Most of them, however, are trying to fix the ships in small period contracts that will help them sit through the bad market in the next few months, hoping that by the end of the contracts they will face a beer market. Some unrealiscally priced sale candidates, which sll remain in the market, have created a small increase in the supply of tonnage for sale which does not help the more serious Sellers to get a good or at least a decent price for their vessels. Demolion prices are soſtening every week and the period of me where the prices were around 480-500 usd/ldt for bulkers is well behind us. Today, we can see Owners receiving figures at around 420-430 usd/ldt basis deliv- ery in Bangladesh or West coast of India. Many people in this industry are pessimisc and they don’t expect any increase in demo prices in the near future, with some expecng average demo bids to fall below the 400 usd/ldt mark sooner rather than later. The iron ore and steel price remain on a downward slope, while the connuous imports of cheap Chinese scrap steel is sll the main hurdle faced by demo breakers in the Indian subconnent. The soſtening of the demo market, has had a big impact on the selling prices of the early/mid 90s built dry bulk carriers since their value calculaon is usually based on the demo price plus a premium. This is most notable on Panamax and Handymax dry bulk tonnage, which have lost significant value during the past months and all this doesn’t seem to be changing soon, as the vessels on the market are too many and the majority of the Buyers are based in China, who is well accustomed in being paent in order to get something cheap. Chinese Buyers already seem to be aracted by the present lows of the mar- ket and there is definitely some warming up of acvity here. However, as everybody has a feeling that prices will most probably keep dropping, as a result of the connuously soſtening demo prices, most potenal Buyers chose to wait a lile further before they invest in second-hand tonnage. The logic behind this is that instead of acquiring now a low-mid 90’s blt ship, there might be an opportunity in the very near future to purchase, at a simi- lar value, a late 90’s blt tonnage. Hopefully, these bad market condions will come to an end soon. If this situaon persists for long enough though, everybody involved in the indus- try will start facing problems. On the other hand, this hasn’t had a significant effect on Tanker Owners who are trading in a significantly improved freight market, ever since oil prices dropped and demand of oil increased. But whether this perfect storm will connue to favor the tanker market is the million dollar queson here. Chartering (Wet: Firm+ / Dry: Soſt - ) With freight rates for Capes falling as fast as they have been, any aempts for a posive reversal by the Dry Bulk market is desned to keep failing. The BDI closed today (16/12/2014) at 838 points, down by 7 points compared to Monday’s levels (15/12/2014) and a decrease of 95 points compared to previous Tuesday’s closing (09/11/2014). As ex- pected, the crude carriers market rebounded this past week, on the back of strong demand ex-MEG, while further upside is expected in the second half of December and while supply of tonnage in key regions remains balanced. The BDTI Monday (15/12/2014) was at 871 points, an increase of 53 points and the BCTI at 782, an increase of 24 points com- pared to previous Monday’s (08/12/2014) levels. Sale & Purchase (Wet: Stable+ / Dry: Soſt - ) Bring on the Tankers! The firm performance of the tanker market is also inspiring SnP acvity in the sector, the focus of which admiedly re- mains on the segment of Suezmaxes, while MR second-hand tonnage is also maintaining its recently gained popularity amongst Buyers. On the tanker side, we had the en-bloc sale of two (156,000dwt-blt 10, China) and four (156,000dwt-blt 09, China) Suezmaxes, which went to Norwe- gian owner Tanker Investment Ltd, for an en-bloc price of $315.0m. On the dry bulker side, we had the sale of In the Panamax sector we had the sale of the “ANANGEL OMONIA” (73,519dwt-blt 96, S. Korea), which was snapped for of $ 6.6m. Newbuilding (Wet: Soſt - / Dry: Soſt - ) While the increased number of orders that surfaced last week was slightly more encouraging compared to what we have been witnessing lately in terms of newbuilding acvity, senment remains very soſt with the overall price trend poinng persistently down. The performance of the tanker market is sll inspiring ordering interest, with focus remain- ing on Suezmax and LR1 tonnage, and we expect this trend to persist in the next couple of months and while the winter season will be reaching its peak thus supporng freight rates for tankers. Despite the stable ordering acvity in the sector though, prices connue to point down- wards here as well, with the most notable correcon being that in the VL newbuilding price, which has now slipped below $97.0m. In terms of recently reported deals, Oman Shipping, has placed an order, on the back of a 5-year T/C to Shell, for two firm plus two oponal LR1 (74,000dwt) at STX, in S. Korea, for a price of $ 47.0m each and delivery set in 2016. Demolion (Wet: Stable- / Dry: Soſt- ) As we approach the end of the year, hopes of an improvement in the demolion market seem to be quickly vanishing. Demo prices for dry bulker units have moved further south across the board this past week, while as cheap Chinese scrap steel connues to enter the Indian subcon- nent demo markets, cash buyers with unsold inventories, remain very reluctant to commit to new transacons. The small upck in acvity that we witnessed the week prior, seems to have now stalled as demo buy- ers appear overwhelmed by the possibility of significant further down- side in steel prices. On top of that, owners seem to also be holding fire, uninterested to sell at current levels and despite the fact that in the case of dry bulkers, the opon of scrapping instead of holding for further trading is becoming more popular once more as far as vintage tonnage is concerned and under the current freight market environment. Aver- age prices this week for wet tonnage were at around 250-455 $/ldt and dry units received about 225-425 $/ldt. Weekly Market Report Issue: Week 50 | Tuesday 16 th December 2014
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Market insight By Intermodal Shanghai office SnP Team
As the end of the fourth quarter is approaching, we are all witness to the second hand market prices softening day by day. Any new deal surfacing the market is at significantly lower level compared to the previous last done. In this respect, some Owners are accepting these new discounted levels, ac-cepting the new asset level reality, whereas others prefer to withdraw their ships or chose to wait, hoping to find more eager Buyers who can pay their aiming levels.
For the modern dry bulker tonnages, Owners are still holding back and are insisting on asking prices, which in some cases are more in sync with the levels of the market six months ago. Most of them, however, are trying to fix the ships in small period contracts that will help them sit through the bad market in the next few months, hoping that by the end of the contracts they will face a better market. Some unrealistically priced sale candidates, which still remain in the market, have created a small increase in the supply of tonnage for sale which does not help the more serious Sellers to get a good or at least a decent price for their vessels.
Demolition prices are softening every week and the period of time where the prices were around 480-500 usd/ldt for bulkers is well behind us. Today, we can see Owners receiving figures at around 420-430 usd/ldt basis deliv-ery in Bangladesh or West coast of India. Many people in this industry are pessimistic and they don’t expect any increase in demo prices in the near future, with some expecting average demo bids to fall below the 400 usd/ldt mark sooner rather than later. The iron ore and steel price remain on a downward slope, while the continuous imports of cheap Chinese scrap steel is still the main hurdle faced by demo breakers in the Indian subcontinent.
The softening of the demo market, has had a big impact on the selling prices of the early/mid 90s built dry bulk carriers since their value calculation is usually based on the demo price plus a premium. This is most notable on Panamax and Handymax dry bulk tonnage, which have lost significant value during the past months and all this doesn’t seem to be changing soon, as the vessels on the market are too many and the majority of the Buyers are based in China, who is well accustomed in being patient in order to get something cheap.
Chinese Buyers already seem to be attracted by the present lows of the mar-ket and there is definitely some warming up of activity here. However, as everybody has a feeling that prices will most probably keep dropping, as a result of the continuously softening demo prices, most potential Buyers chose to wait a little further before they invest in second-hand tonnage. The logic behind this is that instead of acquiring now a low-mid 90’s blt ship, there might be an opportunity in the very near future to purchase, at a simi-lar value, a late 90’s blt tonnage.
Hopefully, these bad market conditions will come to an end soon. If this situation persists for long enough though, everybody involved in the indus-try will start facing problems. On the other hand, this hasn’t had a significant effect on Tanker Owners who are trading in a significantly improved freight market, ever since oil prices dropped and demand of oil increased. But whether this perfect storm will continue to favor the tanker market is the million dollar question here.
Chartering (Wet: Firm+ / Dry: Soft - )
With freight rates for Capes falling as fast as they have been, any attempts for a positive reversal by the Dry Bulk market is destined to keep failing. The BDI closed today (16/12/2014) at 838 points, down by 7 points compared to Monday’s levels (15/12/2014) and a decrease of 95 points compared to previous Tuesday’s closing (09/11/2014). As ex-pected, the crude carriers market rebounded this past week, on the back of strong demand ex-MEG, while further upside is expected in the second half of December and while supply of tonnage in key regions remains balanced. The BDTI Monday (15/12/2014) was at 871 points, an increase of 53 points and the BCTI at 782, an increase of 24 points com-pared to previous Monday’s (08/12/2014) levels.
Sale & Purchase (Wet: Stable+ / Dry: Soft - )
Bring on the Tankers! The firm performance of the tanker market is also inspiring SnP activity in the sector, the focus of which admittedly re-mains on the segment of Suezmaxes, while MR second-hand tonnage is also maintaining its recently gained popularity amongst Buyers. On the tanker side, we had the en-bloc sale of two (156,000dwt-blt 10, China) and four (156,000dwt-blt 09, China) Suezmaxes, which went to Norwe-gian owner Tanker Investment Ltd, for an en-bloc price of $315.0m. On the dry bulker side, we had the sale of In the Panamax sector we had the sale of the “ANANGEL OMONIA” (73,519dwt-blt 96, S. Korea), which was snapped for of $ 6.6m.
Newbuilding (Wet: Soft - / Dry: Soft - )
While the increased number of orders that surfaced last week was slightly more encouraging compared to what we have been witnessing lately in terms of newbuilding activity, sentiment remains very soft with the overall price trend pointing persistently down. The performance of the tanker market is still inspiring ordering interest, with focus remain-ing on Suezmax and LR1 tonnage, and we expect this trend to persist in the next couple of months and while the winter season will be reaching its peak thus supporting freight rates for tankers. Despite the stable ordering activity in the sector though, prices continue to point down-wards here as well, with the most notable correction being that in the VL newbuilding price, which has now slipped below $97.0m. In terms of recently reported deals, Oman Shipping, has placed an order, on the back of a 5-year T/C to Shell, for two firm plus two optional LR1 (74,000dwt) at STX, in S. Korea, for a price of $ 47.0m each and delivery set in 2016.
Demolition (Wet: Stable- / Dry: Soft- )
As we approach the end of the year, hopes of an improvement in the demolition market seem to be quickly vanishing. Demo prices for dry bulker units have moved further south across the board this past week, while as cheap Chinese scrap steel continues to enter the Indian subcon-tinent demo markets, cash buyers with unsold inventories, remain very reluctant to commit to new transactions. The small uptick in activity that we witnessed the week prior, seems to have now stalled as demo buy-ers appear overwhelmed by the possibility of significant further down-side in steel prices. On top of that, owners seem to also be holding fire, uninterested to sell at current levels and despite the fact that in the case of dry bulkers, the option of scrapping instead of holding for further trading is becoming more popular once more as far as vintage tonnage is concerned and under the current freight market environment. Aver-age prices this week for wet tonnage were at around 250-455 $/ldt and dry units received about 225-425 $/ldt.
After a couple of less active weeks in key trading regions, it seems that in-creased volumes of business has helped the crude carriers market gain back some of the lost ground, with period numbers also moving further north. Even in those cases where further declines were noted, the continuous falling price of oil minimized the downside in the form of even cheaper bunker prices. The recent spike in activity ex-MEG has also fed further hopes that December will close off on a positive note, as the demand and supply relationship is currently clearly in favour of owners. Rates for VLs noted the biggest increases across the board, on the back of increased en-quiry both ex WAF and MEG , while the rate for the Eastbound voyage touched its highest TCE since the summer of 2010 and we expect the posi-tive trend to continue this current week as well.
Further declines were noted in the Suezmax market this past week, as activ-ity in both the Black Sea/Med and WAF regions softened compared to the week prior, although we expect this trend to be reversed as the positive spill-overs from the VL market are expected to support rates for the seg-ment sooner rather than later .
European demand continued to support the Aframax market, with the rate for the cross-Med Afra covering for the losses noted the week prior, while the Caribs Afra continued to soften on the back of slower activity.
Sale & Purchase
In the Suezmax sector, we had the sale of the “SKAMANDROS” (158,000dwt-blt 12, S. Korea), which was picked up by Norwegian owner, ADS Maritime, for a price of US$ 65.0m.
We also had the en-bloc sale of two (156,000dwt-blt 10, China) and four (156,000dwt-blt 09, China) Suezmaxes, which went to Norwegian owner Tanker Investment Ltd., for an en-bloc price of $315.0m.
While the increased number of orders that surfaced last week was slightly more encouraging compared to what we have been witnessing lately in terms of newbuilding activity, sentiment remains very soft with the overall price trend pointing persistently down. The performance of the tanker mar-ket is still inspiring ordering interest, with focus remaining on Suezmax and LR1 tonnage, and we expect this trend to persist in the next couple of months and while the winter season will be reaching its peak thus supporting freight rates for tankers. Despite the stable ordering activity in the sector though, prices continue to point downwards here as well, with the most notable correction being that in the VL newbuilding price, which has now slipped below $97.0m.
In terms of recently reported deals, Oman Shipping, has placed an order, on the back of a 5-year T/C to Shell, for two firm plus two optional LR1 (74,000dwt) at STX, in S. Korea, for a price of $ 47.0m each and delivery set in 2016.
Newbuilding Market
20
60
100
140
180
mil
lion
$
Tankers Newbuilding Prices (m$)
VLCC Suezmax Aframax LR1 MR
Week
50
Week
49±% 2014 2013 2012
Capesize 180k 54.0 54.0 0.0% 55.9 49 47
Kamsarmax 82k 30.0 30.0 0.0% 30.4 27 28
Panamax 77k 29.0 29.0 0.0% 29.2 26 27
Ultramax 63k 27.0 27.0 0.0% 27 25 25
Handysize 38k 23.0 23.0 0.0% 23 21 22
VLCC 300k 96.5 97.5 -1.0% 98.6 91 96
Suezmax 160k 65.0 65.0 0.0% 65 56 58
Aframax 115k 54.0 54.0 0.0% 54 48 50
LR1 75k 46.0 46.0 0.0% 45.9 41 42
MR 50k 36.5 37.0 -1.4% 36.9 34 34
186.0 186.0 0.0% 185.8 185 186
79.0 79.0 0.0% 78.4 71 71
68.5 68.5 0.0% 66.9 63 62
46.0 46.0 0.0% 44.2 41 44
LNG 160k cbm
LGC LPG 80k cbm
MGC LPG 55k cbm
SGC LPG 25k cbm
Gas
Bu
lke
rsTa
nke
rs
Vessel
Indicative Newbuilding Prices (million$)
10
30
50
70
90
110
mil
lion
$Bulk Carriers Newbuilding Prices (m$)
Capesize Panamax Supramax Handysize
Units Type Yard Delivery Buyer Price Comments
2 Tanker 160,000 dwt Daewoo, S. Korea 2017 Angolan (Sonangol) $ 69.0m options
2+2 Tanker 74,000 dwt STX, S. Korea 2016 Oman Shipping $ 47.0m LR1, 5-yr T/C to Shell
1+1 Tanker 16,500 dwtJiangzhou Union,
China2016 German (Sloman Neptun) $ 23.0m chemical, IMO II
2 Tanker 1,800 dwt Natakani, Japan 2016S. Korean (Keo Young
Shipping)undisclosed chemical
4 Bulker 38,000 dwt AVIC Weihai, China 2016-2017German (Reederei H.
Vogemann)$ 22.25m FESDEC design
1 Bulker 37,300 dwt Shimanami, Japan Feb-17Singapore based (Pacific
Carriers)undisclosed
2 Gas 172,000 cbm DSME, S. Korea 2017-2020 Canadian (Teekay LNG) undisclosed LNG options
1 Gas 164,700 cbm Imabari, Japan Dec-16 Japanese (K-Line) undisclosedM oss-type LNG, long term
As we approach the end of the year, hopes of an improvement in the demoli-tion market seem to be quickly vanishing. Demo prices for dry bulker units have moved further south across the board this past week, while as cheap Chinese scrap steel continues to enter the Indian subcontinent demo mar-kets, cash buyers with unsold inventories, remain very reluctant to commit to new transactions. The small uptick in activity that we witnessed the week prior, seems to have now stalled as demo buyers appear overwhelmed by the possibility of significant further downside in steel prices. On top of that, owners seem to also be holding fire, uninterested to sell at current levels and despite the fact that in the case of dry bulkers, the option of scrapping in-stead of holding for further trading is becoming more popular once more as far as vintage tonnage is concerned and under the current freight market environment. Average prices this week for wet tonnage were at around 250-455 $/ldt and dry units received about 225-425 $/ldt.
One of the highest price amongst recently reported deals, was that paid by Indian breakers for the container vessel ‘MSC JENNY” (43,517dwt-14,898ldt-blt 00), which received $461/ldt.
Demolition Market
Week
50
Week
49±% 2013 2012 2011
Bangladesh 450 450 0.0% 422 440 523
India 455 455 0.0% 426 445 511
Pakistan 445 445 0.0% 423 444 504
China 250 250 0.0% 365 384 451
Bangladesh 425 430 -1.2% 402 414 498
India 425 430 -1.2% 405 419 484
Pakistan 420 425 -1.2% 401 416 477
China 225 230 -2.2% 350 365 432
Dry
Indicative Demolition Prices ($/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
$/l
dt
Dry Demolition Prices
Bangladesh India Pakistan China
Name Size Ldt Built Yard Type $/ldt Breakers Comments
KENCONOWUNGU 91,647 16,746 1985 ISHIBRAS, Brazil OFFSH $ 448/Ldt Bangladeshi
MSC JENNY 43,517 14,898 1988HYUNDAI HEAVY
INDS - U, S. KoreaCONT $ 461/Ldt Indian
ZHONG CHANG 88 42,637 7,347 1987MITSUI TAMANO,
JapanBULKER $ 260/Ldt Chinese
MARINOS 23,596 6,734 1993
SCHICHAU
SEEBECKWERFT,
Germany
CONT $ 470/Ldt undisclosed
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.
One of the shipping industry’s top lenders believes the tanker, bulker and containership markets could see more consolidation in the coming year.
In a corporate presentation published late last week DVB argued that, in addition, more owners and char-terers may default on their obligations as well.
The bank acknowledged that the recent decline in newbuilding orders has been beneficial but noted additional contracting could “weigh down” what it described as the “nascent recovery in fleet utilisa-tion”.
“Pressure on ship values, freight and charter rates within the three challenging sectors persists but it seems that we are close to a bottom, at lease for more modern eco-specialised assets,” the lender continued.
DVB also argued that a growing number of banks are unwilling to finance older vessels, a trend that could pose threat to the secondhand sale-and-purchase market in 2015.
DVB is headquartered in Frankfurt. At last check the lender’s maritime shipping division boasted a loan portfolio of EUR 9.7bn ($12bn).
Deals involving tankers, bulkers and containerships accounted for 43.2%, $24% and 16.6% of this total, respectively, as of 30 September ” (Trade Winds)