Newbuilding ordering activity slows down as owners adopt more conservative approach to the market


Wednesday, 14 May 2014 | 00:00

More and more ship owners are looking to capitalize on low pricing of newbuildings, but at the same time, after the "bonanza" of the first few months of the year, some of them are now contemplating their next moves, as the freight markets don't seem to follow pace and move upwards as was widely expected to occur this year. As such, newbuilding activity has slowed down over the past few weeks.
According to the latest report from shipbroker Clarkson Hellas, there were a few orders to report this week in dry, "starting with the American fund Doonbeg Group ordering four firm plus four option 64,000 DWT Ultramax at Zhejiang Yangfan in China for delivery in 2015 and 2016 for the firm vessels. This order is understood to have been signed last month, although it came to light this week. Another order which came to light this week was from Clients of Neda Maritime contracting four firm 82,000 DWT Kamsarmax with Tsuneishi Zhoushan at the end of last year. Delivery of the vessels will be within the 2nd half of 2016. Also, it is understood that clients of Sincere Navigation have declared an option for its 2nd 82,000 DWT Kamsarmax at Jiangsu New YZJ for delivery in the 2nd quarter in 2015. Limited activity in the tanker market, and just one order to report, Lyras Maritime have declared one option for 115,000 DWT LR2 Tanker at Sungdong in Korea, due for delivery in 2016. This option is understood to have been declared earlier in March this year. In the gas market, clients of GasLog have declared two options for their 5th and 6th 174,000 CBM LNG Carrier at Samsung Heavy Industries. Both units will be delivered in 2017 and GasLog will have further two options plus another two options. Another LNG Carrier order to report from Japan, with NYK contracting one 155,300 CBM at compatriot shipyard Mitsubishi Heavy Industries for delivery in 2017. It is understood that this vessel will go on long term charter to TEPCO. Sinopacific Offshore in China have signed a couple of contracts including two firm 27,500 CBM LPG/LEG Carriers with Evergas and three firm 36,000 CBM LPG/LEG Carriers with Ocean Yield. All of the vessels are planned to be delivered in 2016. Finally in general cargo, it came to light that clients of Briese-Schiffahrts have placed an order for two firm 12,500 DWT MPPs at Jiangzhou Shipyard for delivery in 2016. These vessels are understood to be the same type that was ordered by Auberbach-Schiffahrts at the same yard last month", Clarkson Hellas concluded.
Meanwhile, in its latest weekly report, shipbroker Golden Destiny noted that "in the shipbuilding industry, German shipbuilders are expecting to regains strength based on orders for more high tech vessels for oil and gas exploration and for installing and servicing offshore wind farms, and as the global shipping industry emerges from a five-year slump. At present, it looks like this year will be stronger than last year," Reinhard Lueken, managing director of German shipbuilding association VSM, told Reuters in an interview. "There is overall improvement in investment sentiment worldwide," he added. New orders booked at German shipyards such as Meyer Werft and Luerssen amounted to more than 1 billion euros in January and February, more than a third of the 2.6 billion euros of orders for all of last year. At the peak of a boom in 2006, German shipyards' took in $5.2 billion worth of orders for 88 vessels including ferries, passenger vessels, mega yachts and container vessels. In 2009, the level slumped to only 20 orders worth 500 million euros. Lueken said the future of almost all of the eight German container shipbuilders that became insolvent after 2008 was now more secure, although these firms are building different types of vessels. But financing presents a major obstacle for Germany's shipbuilders as they diversify into the high-tech markets, after German banks racked up bad shipping loans in the financial crisis, Lueken said".
Golden Destiny added that "in South Korea, Hyundai HI posted a net loss of KRW91Bn ($88mil) for the first quarter of 2014. The loss reversed the KRW319.7Bn net profit for 1Q13. The world's biggest shipbuilder had an operating loss of KRW188.9Bn from its shipbuilding, offshore and plant businesses. In the shipping finance, European financial institutions maintain their policy for reducing their exposure to shipping. Royal Bank of Scotland has reduced its shipping portfolio by £1.5bn ($2.5bn) during the past 12 months and the size of its book has now reduced to £6.2bn, a fall of 19% from the £7.7bn at the same period of last year, and down 5% from the last quarter. RBS stresses that it intends to optimise its shipping exposure and that it has no intention of following the example of Germany's Commerzbank by withdrawing from the industry altogether. Lloyds Banking Group is reportedly to have found buyers for its final shipping loans sale of $500mil. According to banking sources, Bank of America and US hedge fund Davidson Kempner have been linked to the deal, at about 80% of loan value with the final terms still to be decided. Nikos Roussanoglou, Hellenic Shipping News Worldwide