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Home > News > Company News
Newbuilding orders focused on specialized vessels not found in the S&P Market

Browse:2597

From:ASB

Time:2016-03-17

Things haven’t changed all that much in the newbuilding front over the course of the past week, despite the fact that on face value, it looks as though the newbuilding market was suddenly given new life. According to the latest weekly report from Allied Shipbroking, “the reported activity holds a slight misdirection as to the given position of the market right now. There was a strong order placed in the very large dry bulkers this week, supported by Brazil’s Vale and the Chinese government, both of whom for their separate reasons have made a move in contrary to what the market fundamentals dictate”, said Allied.


Explaining the move, Allied reported that “through the determination to minimize its freight costs and increase its competitiveness, the major Brazilian iron ore producer has found a close ally within the Chinese government how have eagerly taken up this opportunity to prop up their national orderbook and support their shipbuilders. Beyond this order the rest have been for considerably smaller sized orders (both in number of units and the size of the vessels in question), while the focus is still on the more specialized vessels which are harder to be sourced from within the secondhand market. As such it looks as though things are still subdued in terms of real interest in newbuilding orders and government support is still playing a major role in keeping some shipbuilders afloat”.


Meanwhile, in a separate report, shipbroker Intermodal said that “the newbuilding market remains a quiet place where nothing exciting is happening, while softening prices and thin ordering activity continues to pretty much sum up all the action or the lack thereof. When it comes to tanker orders of above 25,000dwt, MR and Handy tankers have proven to be considerably more popular compared to the bigger sizes. MR orders are on top of the list, making up half of the ordering activity over in the tanker sector for 2016 so far. Very low volatility as far as freight rates are concerned together with average earnings that have shown the greatest resistance during the considerable downward correction of the market in the beginning of the year, has extended ordering appetite in the segment. In addition, the fact that during 2014 and the biggest part of 2015 very few orders were placed, has also resulted in MRs having the smaller orderbook over in the tanker sector, which in itself has provided extra encouragement to owners considering placing an order. In terms of recently reported deals, Latvian Shpg. placed an order for two firm MRs (50,000dwt) at Hyundai Vinashin, in Vietnam with delivery set in 2018”.


In the S&P Market, Allied noted that “on the dry bulk side, activity had picked up slightly, though prices have started to show an ability to hold at their current levels, given both the improvement from within the freight market as well as the strong hike in scrap steel prices. Although both of these factors may well be temporary and are still at weaker levels compared to where they were a couple of months back, they might still be the initial stages of a support level that has been growing on behalf of the sellers side and could well prove to cause difficulties in allowing any significant further price drops to be noted over the coming weeks. On the tanker side, activity was fairly subdued, while the drop in prices has been in part the cause for a noticeable withdrawal of sales candidates. Being that the freight market still lacks a clear direction for the long-term, a sort of mismatch gap between sellers and buyers has grown in size, and keeping activity subdued”.


Finally, “the demolition market was struck by a sudden shift in global fundamentals in regards to steel, causing a speculative fever to hit some of the shipbreakers across the Indian Sub-Continent as well. Most of the drive seems to have been building off the spike in iron ore prices that emerged early on Monday, while the fact that some owners of overaged dry bulkers took a “wait and see” stance this past week also kept demo candidates on the wain. For the moment it looks as though the spike in offered demo prices is more based on the optimistic feeling circulating the market for the moment rather then from an actual demand spike. To what extent this may hold will heavily depend on the effectiveness of China’s new 5 year plan and the extent of the cash they will push towards new construction and other investment projects. It is however to early to call and as such these price levels may well wane given that their rise might have been too quick for the market to support just yet”, Allied Shipbroking concluded.


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