Prices for Newbuildings On the Rise
Newbuilding prices are on the rise, boosting shipyard prospects, but denting further ordering activity from privately-owned ship owners. In its latest weekly report, shipbroker Allied Shipbroking said that "there seems to be still further strengthening in prices to be seen, while at the same time we have started to see large enbloc ordering taking place in China, with the most recent being the huge ordering bonanza reportedly placed by China’s COSCO Energy Transportation. All this continues to add to the prevailing fears that another new ordering spike in newbuildings will inevitably fuel the next trough in freight markets, especially given the fact that there are still minimal indications on market fundamentals that the future of demand in both the dry bulk and tanker markets will be subject to higher trade growth rates then those being seen today. At the same time and beyond the large order by COSCO, we haven't seen anything extraordinary in terms of activity just yet, though talks and rumors have started to increase substantially".
Meanwhile, in the S&P market, Allied noted that "on the dry bulk side, activity was still relatively soft compared to the average weekly volumes we have been seeing in the year so far, though at the same time things seemed to be slightly better then those seen in the past two weeks. On the tanker side, activity is still slightly firmer then what has been seen in the year so far, while at the same time of note is the major deal struck by Scorpio Tankers this week, whereby they entered into an agreement with Navig8 Product tankers to acquire the 27 operating product tankers. The merger is based on the vessels passing onto Scorpio in exchange for the issuance of 55 million shares of common stock as well as cash transactions for 4 of the vessels prior to the merger, of which the cash will remain with the company and will form as part of the balance sheet of the new merger. Beyond this it seems as though interest is on the rise in the tanker sector and we will likely see further deals being struck over the coming months", the shipbroker concluded.
In a similar note, ship valuations' expert VesselsValue noted that bulker values have remained stable over the course of the past week. "The Panamax Hanjin Paradip (82,200 DWT, Jan 2013, Tsuneishi Zosen) sold to JP Morgan Global Maritime for USD 21.3 mil vs VV 21.62 mil. Nordic Aarhus (52,100 DWT, Jul 2000, Sanoyas) was sold for USD 6.5 mil.The Handy BC Acacia Bulker (32,800 DWT, May 2005, Kanada) was sold by Sincere Industrial for USD 7.3 million", said VV.