The retirement of aging steam turbine liquefied natural gas (LNG) carriers is accelerating as LNG freight rates continue to decline. This year alone, 12 steam turbine LNG carriers have been scrapped and sold for dismantling after failing to secure new charter agreements. industry experts anticipate that dozens more of these vessels may enter the market by early next year. As the transition to next-generation LNG carriers gathers pace. South Korean shipbuilders, renowned for their expertise in LNG carrier construction, are poised to reinforce their global leadership.

According to industry sources, SK Shipping recently sold four LNG carriers, each 24 to 25 years old, for $13.8milion (approximately 19.3 billion won) per vessel. The ships were sold at scrap value after failing to attract new buyers. while the specific shipbreaking facility responsible for dismantling the vessels was not disclosed, the ships sold include the SK Summit, SK Supreme, SK Splendor, and SK Stellar. These vessels, which had been under long-term charter contracts with Korea Gas Corporation-a state-run LNG importer-were sold as-is while anchored in Singapore, ahead of their contracts' scheduled expiration at year-end.

Steam turbine LNG carriers, powered by marine diesel engines running on bunker C oil, represent the first-generation of LNG carriers. They are smaller and less fuel-efficient compared to modern LNG carriers, leaving them increasingly marginalized in the charter market. The steep decline in LNG freight rates has further expedited their phase-out. Rates have dropped sharply due to a surge in LNG carrier orders prompted by the Russia-Ukraine war and a recent mild winter, which reduced global demand.

DAOL Investment & Securities Research Center reported that short-haul LNG freight rates on transatlantic routes fell by 40% last week to $15,000 per day, while long-haul rates dropped by 30% to $21,000 per day, Daily rates for steam turbine LNG carriers plummeted to just $7.000-well below their operating costs.

UK-based maritime data provider Clarkson’s Research estimates there are approximately 230 steam turbinal carriers still in operation worldwide, comprising about 3o% of the global LNG fleet. Choi kwang-sik, an analyst at DAOL investment & Securities, projects that over 3o of these vessels could be put up for sale by the end of the year. He noted that the expiration of long-term charter agreements is likely to push more carriers into the shipbreaking market, with two to three vessels expected to be dismantled each month in 2024.

In South Korea, H-LlNE Shipping and Hyundai LNG shipping operate six and nine steam turbine LNG carriers. Respectively, while Pan Ocean has reportedly divested a number of low-margin LNG carriers. HMM, which exited the LNG sector in 2014 by selling its LNG division, no longer owns any LNG vessels.

A shipping industry official commented, "The phase-out of steam turbine LNG carriers reflects a broader global trend. These older vessels are losing their competitive edge, and amid declining freight rates, they are naturally being replaced by more efficient, modern carriers.

Demand for second hand ships, most notably bulkers, continued throughout the pastweek.   In its latest weekly report, shipbroker Banchero Costa said that "during the weekthe Nord Virgo 82,ooo dwt built 2014 JMU (Ss due 2029 ME Scrubber fitted) was soldat $26.1 mln, which is in line with the last sale, the Martha 82,000 dwt built 2014 Tadotsu at$26 mln a couple of weeks ago.   in the Panamax segment the Glory 76,ooo dwt built 2005Tsuneishi (SS/DD due Mar 2025 BwTS fitted) was reported at $11.1 mln, back in July theNavios Taurus 2005 lmabari built was done at $12 min. in the Supra segment the Leon Oekter s8,ooo dwt built2008 Tsuneishi Cebu (ss due 2028 BwTs fitted) was reported sold at $15.35 mln to Chinese buyers.

Greek buyers were behind the purchase of the Blue Dragon 38.ooo dwt built 2011 lmabari (SS/DD due Jan2025) at $15.2 mln, during the summer the Sea Smile 2012 Watanabe built was done at $17 min, in the tankermarket the PS Genova 108,000 dwt built 2010 Hudong (LR2 / dpp trader) was reported commited in excess of$40 mln to Turkish buyers. Few MRs changed hands during the week with the White Peach 53.000 dwt built2007 Guangzhou (ice class 1A BwTs ) was sold at $22 mln, the Alithini ll 49,ooo dwt built 2008 sTX( ss due2028 BWTS fitted) was done at $27 mln to UAE buvers and the Butterfly 46,ooo dwt built 2004 STX(SS/DDpassed this year) was sold at $18 mln to Hong Kong buyers".

In a separate report, shipbroker Xclusiv added that "on the Capesize sector, the "sG Express"- 18oK/200g Dalianwas sold for UsD 27 mils, while the 4-year-older "Lila Cochin" - 174K/2005 sws was sold for UsD 18 mils toChinese buyers. Moving down the sizes, Greek buyers acquired the Post-Panamax "Lowlands Energy" -96K/2013 lmabari for UsD 23 mils. The Electronic M/E Kamsarmax "Nord Pluto"- 82K/2014 was sold for UsD 24mils to Greek buyers, while the Electronic M/E and Scrubber fitted "Nord Virgo” - 81K/2014 JMU found newowners for USD 26 mills. Moreover, on the same sector, German buyers acquired the "Bulk Portugal” - 82K/2012[suneishi for UsD 22.5 mills basis 5-year BBHP. On the Ultramax sector, the "Theresa Pride” - 63K/2021 Oshimawas sold for 39 mils to Middle eastern buyers. 2x Supramax vessels, the "Lascombes" - 57K/2011 Qingshan andthe "Gruaud Larose" - 57K/2011 Qingshan found new owners for USD 12.8 each. Finally, the lce Class 1CHandysize "Kujawy"- 39K/2005 Tianjin Xingang was sold for a shade below UsD 8 mills".

Meanwhile, "on the VLcc sector, the "Gesi" - 306K/2007 Daewoo was sold for UsD 43.25 mills. On the MR2sector, italian buyers have exercised their purchase option on the "High Navigator" - 5oK/2018 JMU for UsD34.4 mills, while the "Butterly" - 46K/2004 $TX was sold for UsD 18 mills to chinese buyers. Shell linternationalfinalized an agreement with Guangzhou Shipyard for 10 x 5o,ooo dwt MR2 (scrubber fitted). The price wasreported at $48 mln per vessel, with deliveries scheduled between December 2o27 and 2o30. The Chinesegiant Evergreen placed an order for 8 x 16,ooo teu at lmabari. The Japanese yard can offer earlier deliveriescompared to the already congested chinese and Korean yards, deliveries are set between April 2027 and April2028" Xclusiy concluded.

Source: Hellenic Shipping News Worldwide

Prices for second hand bulk carriers have been rising, reflecting the overall positive trend in the dry bulk market, In its latest weekly report.shipbroker Intermodal said that "the dry bulk market has seen a rise in secondhand asset values this year, While average earnings have remained healthy, the ratio between earnings and asset values has deviated from historical trends, with asset prices rising disproportionately relative toaverage earnings. Despite these discrepancies, there has been strong interest in secondhand sales and purchase activity, pushing prices higher. This strong market activity persists even in the face of uncertainties, including fears of a global economic slowdown, the ongoing slump inthe Chinese real estate sector, and geopolitical turmoil in the Middle East, factors that could potentially result in negative momentum for the remainder of the year. In this report, we willexamine the sales and purchase activity in the dry bulk sector throughout 2024"

Beginning with Capesize sale and purchase activity, last month we saw 9 vessels changing hands, bringing the total number of Capesize transactions in 2024 to 82. This marks the highest number ever recorded for the first seven months of a year, surpassing the previous record set in 2023, when 69 Capesize units were traded in the same period, culminating in a record total of 124 sales for the entire year, Regarding Panamax/Kamsarmax sale and purchase activity, six deals were completed last month. The year-to-date volume stands at 83 deals, surpassing the 62 sales recorded in the same period last year but falling short of the 89 sales in 2022 and below the record number of 121 sales recorded during the frst seven months of 2021.

As far as the Supramax/Ultramax sector is concerned, 15 sales occurred last month, bringing the total numberof sales this year to 158. This figure surpasses the transaction volumes of 2023 and 2022, which saw 143 and 156 sales respectively during the first seven months of each year. However, similar to the Panamax/Kamsarmax sector, 2021 holds the record with a total of 2o3 transactions during the same period", said Mr, Yiannis ParganasHead of Research Department with Intermodal.

He added that "the question is whether the looming uncertainty, combined with rising prices, might encourage owners to opt for sales to capitalize on the current momentum in the SnP market. This shift could potentially alter the equililbrium between supply and demand, leading to an increase in supply and consequently causing secondhand vessel prices to trend downward in the coming months", intermodal's analyst concluded.

Source: Hellenic Shipping News Worldwide