Tuesday, 22 February 2011

Despite the positve comeback of dry bulk freight rates, as evidenced by the course of the Baltic Dry Index, Hellenic ship owners have been absent from the new building, as well as the secondhand vessel markets this past week. still, the week ended with 20 sales reported in the secondhand, as well as the demolition market, but this, according to Golden Destiny’s weekly report, suggest a 125% negative weekly change, with the overall market sentiment for bulk and tanker sector being in the doldrums, except for containers. After all, capesize spot rates are still well below break-even levels, as a result of newbuilding deliveries piling the market since the beginning of the year.

According to Golden Destiny’s report, “overall the buying interest has been weakened not only for bulk carriers but also for tankers this week with some sales circulated in the market committed to seller’s subjects. Secondhand asset prices seem to be under pressure but buying activity in the bulk carrier sector has still not resumed at robust pre Chinese New Year levels with investors adopting “wait to see approach” as there are expectations for a further correction downwards in asset prices. The S&P momentum in the bulk carriers sector has been on the low edge the last two weeks with only one vessel reported to have changed hands signalling a weekly drop of 75%” said the Piraeus-based shipbroker.

In the secondhand market, 10 vessels reported to have changed hands this week equalling a total amount of money invested of around $386,300,000, with three transactions reported on private terms. In terms of reported number of transactions, the S&P activity has been marked with an 67% negative w-o-w change, while is up by 67% comparable with previous year’s weekly S&P activity when 31 vessels induced buyers’ interest. In terms of invested capital, the container sector appears to be the most overweight with a notable enbloc resale of two container units of 13,100 TEU for around US$ 310,000,000.

The report also said that in the newbuilding market, offshore business goes from strength to strength with more orders reported every week. A notable offshore order of this week has been placed by the Dutsch heavy lift specialist “Dockwise” to build the world’s largest heavy lift transporter for $240 mil. In the container market, post panamax orders continue their tally with MSC placing four 8,800 TEU units in Hyundai Heavy Industries of South Korea after Bernhard Schulte and Offer Brothers contracted similar sized units last week. It seems that the recovery in container trade has buoyed the sentiment of investors in the industry due to the remarkable rebound of Far East – Europe trade route throughout 2010 year.

“On the other hand, the investment plans in the bulk carrier sector seems to weaken from week to week as only 4 kamsarmax vessels reported on order this week by Mitsubish Corp of Japan and offshore sector seem to be the most overweight in terms of invested capital. The week ended with 15 units reported on order, equaling a total invested capital of around $809 million, 8 transactions reported on private terms, with the ordering activity in the bulk carrier sector posting a 76% decline from previous week’s activity. Overall newbuilding business reminds the activity of two week’s before when only 2 units were contracted in the bulk carrier sector and containers were in the spotlight. Greek investors appear to be still absent from the newbuilding business while at similar week in 2010 were very active in the bulk carrier sector as 72% of the total transactions reported then were placed by Greek owners” reported Golden Destiny.

Meanwhile, in the demolition market, Indian scrap prices have fallen below $500/ldt as too much tonnage seems to have poured in the industry with Pakistan adjusting its rates to the lower scrap levels of its rival. On the other hand, China topped in as an active player after the end of its festivities not only in terms of volume of transactions but also in scrap rates.

However, India still grasps the lion chare of this week’s demolition activity with China to follow and Pakistan still looking for tonnage. Bangladesh is still out of the game but hopes have been raised recently for reopening of the market since government’s decision to place Chittagong’s ship scrapping activities under the supervision of country’s Ministry of Industry. The prolonged period of poor freight market for large size bulkers is been reflected in the demolition activity as again this week a capesize reported to have headed to the scrap yards for $465/ldt in China The week ended with 10 vessels reported to have been headed to the scrap yards of total deadweight 460,379 tons. In terms of reported number of transactions, the demolition activity has been marked with a 29 % negative w-o-w change with bulkcarriers and liners being the most popular scrap candidates. In terms of scrap rates, the highest scrap rate has been achieved this week by India for a MR tanker vessel of 50,860 dwt built 1983 for $492/ldt asis including bunkers remaining on board. At a similar week in 2010, 12 vessels were reported for scrap indicating a negative yearly change 16% in terms of reported number of transactions while scrap rates were ranging $350-$360/ldt for dry and $380-$400/ldt for wet cargo» concluded the report.

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