Ship Owners Are Turning Their Backs on More S&P Deals
emand for new ships’ acquisitions is diminishing by the day, as ship owners are refraining from more investments. The negative impact of the COVID-19 pandemic on the global economy and world trade, is now expected to trigger the “worst global recession since the 1930” according to IMF World Economy Outlook, issued this week. As a result, it’s only natural that owners are adopting a more cautious approach to their investment strategies.
In its latest weekly report, shipbroker Banchero Costa said that there was “quite low activity in the S&P market, especially in the dry bulk segment: the only sale that took place was the one of the ‘Pacific Legend’ 32,000 dwt built in 2010 at Nanjing Dongze which went to Vietnamese buyers for $6 mln. The price was in line with the 2 years younger ‘Orient Alliance’ 32,000 dwt built in 2012 at Weihai Samjin which was sold for $7 mln. In the wet segment, the VLCC ‘Bunga Kasturi Tiga’ 300,000 dwt built in 2006 by Universal apparently went to Greek buyers for $38 mln. The Suezmax ‘Cap Diamant’ 160,000 dwt built in 2001 by Hyundai Ulsan was acquired by World Carrier for $21 mln. Another Suezmax, the ‘Advantage Sky’ 156,000 dwt built in 2010 at Jiangsu Rongsheng was sold via auction for $18.8 mln: the buyer seemed to be the UK based Hayfin and the vessel will go on 1 year TC to Shell. Still in the wet segment, the MR ‘Mercini Lady’ 47,000 dwt built in 2004 at 3 Maj apparently changed hands for $11.5 mln: it seemed that behind the acquisition there were Singaporean buyers. Subs were lifted on the ‘Cape Durango’ 13,000 dwt built in 2010 by STX which was sold for $6.75 mln apparently to CMC”.
Source: Banchero Costa
In a separate note, Allied Shipbroking added that “on the dry bulk side, a further plunge of activity was witnessed during this pat week, with interest from the buyers being lackluster. The uncertainty that dominates the global economy at the moment and the poor freight market (despite the last few weeks of improvements) are factors that have diminished buying appetite. However, in the case that requested prices start to drop significantly in the following weeks, we may see a slight gear up in action. On the tankers side, things have been more stable, as the freight market continues to fluctuate within a satisfactory range in almost all segments. The COVID-19 situation may have curbed some interest from buyers, but the healthy fundamentals, especially after the ramp up in oil trade noted lately, will have as a result the upkeep of buyers’ appetite. Last week we mainly noted oil product tankers changing hands, but this drift is expected to spread to crude oil tankers in the following weeks”.
Meanwhile, in the newbuilding market, Banchero Costa said that “Chinese yards Qingdao Beihai and Yangzijiang got a large order for 4 x VLOC 325,000 dwt to be built under Tier III and LNG ready configuration for a project with Bocom Leasing who will act as contractor and charter them out to Kmarin in Korea for a long COA with Vale: price reported was $75 mln each, with deliveries towards end 2021 to beginning 2022. A Japanese domestic order came up for 3 x 40,000 dwt Handysize BC to be built at Shikoku and commissioned by Imabari based owner Kisaragi Kisen, with deliveries set to March, June and August 2021 and no price disclosed. In the tanker market 2 x VLCC were ordered at Samsung for a price in excess of $100 mln (about $105 mln) due to the LNG system propulsion: the contractor was AET in Malaysia for a long TC to Total. Delivery was set in Q1 2022. A local client Pan Ocean ordered in Korea at DSME another VLCC for a price of about $90 mln, with delivery in 2021. In the gas sector local clients Iino Kaiun contracted for one option VLGC to be built at Kawasaki for delivery end 2021”.
Source: Allied Shipbroking
Allied added that “the limited buying appetite has once again dominated the newbuilding market with very few new deals being reported this past week. The uncertainty prevailing over the global economy due to the COVID-19 pandemic and the cost of such an investment creates a discouraging environment for new investments in the shipbuilding industry to take place. This situation may continue at least until we see some robust improvement in sentiment and fundamentals in the market. Meanwhile, it is essential to note that we have seen a drop in total activity in the dry bulk market during the first quarter of the year, compared to the respective period of 2019. In particular, this year we witnessed 20 new units being added in the global orderbook of the dry bulk market, whilst last year during the first quarter this number was 30. In the tankers market, a fall was noted as well during the first quarter of 2020, with 34 units being ordered, 6 less than the same time frame in 2019. Another change in trend was that during this 1Q20, the majority of crude tankers being ordered were Suezmaxes, while last year they were VLCCs. Given the current situation, we expect activity during the second quarter to be again lower compared to 2019, despite any improvement in the freight market”, the shipbroker concluded.