Total Shipping Co., Ltd

Scrapping of older vessels the key for easing oversupply of dry bulk vessels says Seanergy Maritime
By total
Published: 2011.09.26

The record levels of scrapping activity seen this year are going to be a catalyst for alleviating the industry’s oversupply problems by balancing supply and demand says Christina Anagnostara, Chief Financial Officer with New York-listed shipowner Seanergy Maritime Holdings. In an interview with Hellenic Shipping News Worldwide, Anagnostara said that “recently an international broker estimated that if all vessels built before 1985 were scrapped before the end of 2013 it would bring net annual fleet growth to 6.3%, compared to gross growth of roughly 12% and an estimated annual rise in demand for dry bulk transportation of about 5.2%. If this materializes, we should see a gradual stabilization of the demand and supply dynamics going forward” she said.

Could you provide us with the latest figures regarding Seanergy’s performance during the first half of the year?

We reported our 2011 six months earnings with an increase in revenues and net income compared to the same period last year. Net Revenues were $53 million, up 30% from last year’s $40.8 million. EBITDA for the first half of the year was $26.5 million as opposed to $20.9 million in the same period of 2010.
For the second quarter of 2011 Net Revenues were $27.8 million as compared to $22.6 million in 2010. EBITDA was $13 million and Net Profit was $650 thousand, as compared to a net loss of $290 thousand in the same period of 2010.
For the first six months of 2011, we owned and operated 20 vessels, achieving fleet utilization of 94.4%. This compares to an average of 13 vessels and a fleet utilization of 95.2%. TCE was equal to $14,991, as compared to $17,729 in the same period in 2010.
In May 2011, we announced the reorganization of our Hong Kong office, as it offers advantages for further growth in the Far East, a region of critical significance for dry bulk shipping.
As of June 30^th, 2011 our cash reserves, inclusive restricted cash, were $45 million and our total assets amounted to $660 million.

How would you evaluate the company’s performance so far in the year and which are your expectations for the remainder of 2011?

Considering the current weak market environment, we were able to improve our revenues due to the increase in the size of our wholly owned fleet. In addition, as per our fleet employment strategy, we are maintaining a portfolio of fixed and floating rate contracts as well as profit sharing agreements that provide us with cash flow stability and protection against the volatile freight rate environment which has hampered the industry in 2011.
We anticipate that the following months will continue to be characterized by volatility, as there are a multitude of factors that can affect the market, which are hard to predict. At the same time, our increased exposure to the less volatile Handysize segment along with our balanced chartering strategy is likely to go a long way towards moderating the negative effects of increased volatility in the shipping market. It is worth noting that all of our vessels are fixed with what we believe to be highly reputable charterers. We would therefore expect the Company’s performance to remain largely in line with what we experienced during the first half of the year.

During the past couple of weeks, the dry bulk market experienced a rally for the first time in months. What developments triggered this rise and do you expect this trend to continue as reports are indicating that scrapping levels of ageing bulkers are increasing?

The rally in the shipping market has mainly taken place in the capesize segment, which took the hardest hit over the first months of 2011. The most important driver of this was high demand for Brazilian iron ore imports into China and increased coal imports into Japan. It is worth noting that over the first months of 2011, iron ore inventories in China were quite high, which had also contributed to lower activity and lower rates paid for capesize tonnage. Furthermore, the fact that many new ships have been delivered in the Pacific since the beginning of the year has caused a relative shortage of tonnage in the Atlantic, which led to higher rates.
Most industry sources point to the fact that fundamentally, supply and demand dynamics have not changed that much and so the spike in rates is likely to be transitory. As a result we expect freight environment to remain soft for the next 18 months.
Going forward, the record levels of scrapping activity seen this year are going to be a catalyst for alleviating the industry’s oversupply problems by balancing supply and demand. Recently an international broker estimated that if all vessels built before 1985 were scrapped before the end of 2013 it would bring net annual fleet growth to 6.3%, compared to gross growth of roughly 12% and an estimated annual rise in demand for dry bulk transportation of about 5.2%. If this materializes, we should see a gradual stabilization of the demand and supply dynamics going forward.

How well positioned is Seanergy Maritime Holdings in order to benefit from a longer term recovery of the dry bulk market to more sustainable levels?

Since 2009 we have managed to increase our fleet from 6 to 20 vessels proving our ability to deal with unfavorable market fundamentals. We have managed to increase our revenues and we are poised to benefit from any future recovery in the dry bulk shipping and continue to grow.
At the same time, the Company’s increased exposure to the Handysize vessel segment means that it has the capacity to withstand a weak market environment, as spot rates for smaller vessels are not expected to come under the same pressure as the larger ones given the market fundamentals.
Furthermore, as asset values decline we will continue to review business opportunities as they become available.
Having secured period employment of 93% for 2011 and 64% for 2012 all with what we believe to be credible and reliable counterparties puts us in a position where we enjoy cash flow visibility for the coming months, while we are able to take advantage of short term spikes in freight rates in order to increase profitability.

How do you see the market behaving until the end of the year?

As already mentioned, the market is likely to remain at low levels for the rest of 2011, yet seasonal factors in worldwide commodities trading and any sudden growth in demand attributable to such factors has the capacity to affect rates positively, as seen in the last weeks. We therefore expect the market to remain volatile, albeit at relatively low levels.

Which are your estimates about freight rates going forward to 2012?

We expect the freight rate environment in 2012 to remain at the same levels as in 2011. The pace of new deliveries, scrapping and slippage will play a key role as increased vessel supply is going to lead to lower rates.

When do you expect oversupply issues to start alleviating?

As things currently stand, the bulk of new vessel deliveries is going to take place in 2011 and 2012, while from 2013 the pace of expected deliveries is likely to subside considerably. Even as we expect some deliveries to be pushed back in time due to financing and other difficulties, it is unlikely that after 2013 the industry is going to be facing the problem of oversupply as intensely as it does so today.
An important assumption to be made here is that orders for new dry bulk vessels are not going to increase significantly, to the extent that they did in the years leading up to 2009 as that may prove detrimental for market fundamentals in the future.

Are you still on the market for more vessel purchases?

We would engage in acquisitions as long as they are expected to be accretive to earnings and in line with our investment criteria. The broad based reduction in asset prices caused by weak market fundamentals makes it likely that investment opportunities with high expected returns may arise.

Do you favor second-hand vessels or newbuilding orders at this stage?

Despite the fact that prices for new-building vessels have generally fallen, high prices for raw materials such as steel makes further decline unlikely. On the other hand, due to adverse and deteriorating market conditions high-quality second-hand vessels and new-building vessels on resale may become attractive investments.
In general, vessel acquisitions are reviewed on a case by case basis.

Which dry bulk sector will prove the more resilient in the long term?

Long term fundamentals seem to be more favorable for Handysize vessels, for two reasons. Firstly and most importantly, demand and supply dynamics are a lot more promising compared to larger vessel segments. The outstanding orderbook for Handysize vessels stands at approximately 27%, with the total fleet having grown at an estimated rate of about 5% year on year according to industry sources. By comparison, for Capesize and Panamax vessels the outstanding orderbook is closer to 50% of the current fleet, while fleet growth year on year is expected to surpass 10%. Furthermore, Handysize vessels represent on average the oldest fleet, as approximately 45% of the world Handysize fleet is over 20 years. This should translate in more intense scrapping activity that can further tilt the supply and demand balance in favor of ship owners.
Secondly, Handysize vessels enjoy unparalleled operational versatility, in terms of the types of cargo that they can carry and the ports they can access. In this respect, it should be noted that demand for transportation of minor bulks, including steel products and fertilizer raw materials is generally more diversified as there is no need to rely on demand for a single type of cargo. Furthermore, areas of increasing importance for dry bulk shipping, such as most countries in the African continent, Indonesia and even India generally lack the infrastructure to accommodate large vessels.
We therefore believe that in the long term Handysize vessels are likely to enjoy the most resilient market fundamentals, leading to reduced volatility in freight rates as compared to larger vessel types.

from: Hellenic Shipping News Worldwide

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Record recycling activity stirs optimism in dry bulk says BIMCO’s analysis
By total
Published: 2011.09.23

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As expected at the start of the year, dry bulk ship owners were expected to flock scrapyards around the world, in order to take advantage of attractive scrap prices and help alleviate tonnage oversupply pressures, already in place since the last months of 2010.With 2011 also looking to be another record-breaking year in terms of new building deliveries, scrapping of older vessels was crucial to the industry’s recovery. Well, after nine months, it seems that these efforts have paid off, with the dry bulk market staging a superb comeback since late summer.
According to BIMCO’s latest analysis, in absolute numbers, 2011 is expected to become the new no1 in terms of dry bulk tonnage leaving the fleet to be recycled. “On On course for more than 20 million DWT to be demolished, with the potential of reaching 25 million if owners continue to be attracted by the relatively high demolition rates and freight rates fail to improve significantly through the remainder of the year.
Chief Shipping analyst at BIMCO, Peter Sand says: “The huge amount of tonnage leaving the fleet for recycling is very positive news for the dry bulk market. As 2011 is going to provide the largest inflow of new ships ever, this counterbalancing effort by ship owners is softening the current imbalance between supply and demand as fleet growth will be tempered”.
The previous demolition record was set in 1986 when 12.9 million DWT was demo-lished. At that time the dry bulk fleet was comprised of just 197.2 million DWT, bringing the annual demolition rate to 6.5%. Should 2011 bring around the same annual demolition rate relatively, 35 million DWT would have to be recycled.
The primary driver behind this development is the fact that earnings have been close to OPEX-levels for most of the year. Combined with a strong inflow of new tonnage this has led to a strong surge in demolitions of older tonnage” said Mr. Sand.
BIMCO’s analysis continues: “The fleet growth rate in the Capesize segment has so far been tempered by 4.4% due to demolition, with the potential of reaching as much as 6.6% for the full year. This offsets the fleet growth to a large extent, since the absence of any demolition activity during 2011 would have resulted in the Capesize fleet growing by astonishing 20%. Massive as this figure may sound, the Capesize fleet grew by 23% last year and 18.5% in 2009. If the full potential of demolition of the Capesize fleet in 2011 should materialize, that would equal another 4.6 million DWT to be demolished. In order words it would require the 28 remaining Capesize vessels that are built in 1985 or before to exit the fleet.
The demolition activity has primarily involved Capesize vessels. 55% of the recycled DWT in 2011 represented Capesize vessels. This compares to the previous 10 years average at just 27% of total dry bulk demolition. As the Capesize segment has already seen inflow of new tonnage in excess of 27 million DWT (153 vessels), the decision to take a vessel out of the commercial service is helping to cushion the impact from significant oversupply which has already left deep scars in terms of very poor earnings. Average spot earnings for a 10 years old Capesize vessel in 2011 have been just USD 8,296 per day. This is the poorest result on record. Last year such a vessel earned USD 30,587 per day on average.
This means that, if you have so far traded your Capesize vessel exclusively in the spot market during 2011, earnings would have covered only daily running costs, regardless of the composition of your Capesize fleet (new/old, debt-free/indebted). This may be one of the most important factors behind the booming demolition activity as massive inflow of new tonnage doesn’t encourage higher demolition activity alone.
Daily running cost on a Capesize vessel today is around USD 8,000 per day excluding capital costs and depreciations. If you include the above mentioned costs in the earnings-equation the picture looks quite different and it really spells out the chal-lenges facing owners. If your new built and externally financed Capesize is bought at top dollar at the peak of the market (USD 95 million) using 80% debt at 5% p.a. you will need just above USD 30,000 per day to break-even with the vessel on a stand-alone basis. At the other end of the scale the same calculation equals a break-even rate at USD 19,000 per day if you invest in a 5 year old second hand vessel today at USD 39 million.
Owners of “V Europe” have just sold the vessel for USD 10 million to be demolished at a Bangladeshi facility. The vessel that was beached on August 30 is amongst the latest in a very steady stream of dry bulkers to be withdrawn from service. The 1982-built, 139,496 DWT vessel is the 58th in the line of Capesize bulk carriers, under-scoring the strong flow of vessels satisfying a very solid demand for scrap metal in the demolition country.
The healthy demand for scrap steel is visible from the high ldt-prices offered. “V Europe” went to the breakers for USD 525 per ldt (Light Displacement Tonnage), building further on the continual rise in prices offered by cash buyers.
There are four major ship recycling markets, namely India, Bangladesh, China and Pakistan. In all terms India is by far the largest ship breaking nation and Alang the leading facility. So far this year, 283 vessels with a cargo capacity of 8.9 million DWT have been scrapped by Indian breakers. Bangladesh comes in second in terms of DWT - 7.4 million and China in terms of numbers – 107 vessels of various kinds. The typical demolished Capesize vessel is 27 years old on average with a cargo capacity of 160,125 DWT and built in Japan (51%) between 1977 and 1991” concluded BIMCO.
“At the current demolition pace, 4.7% of the dry bulk fleet will be demolished during 2011. But as the order book still holds 235 million DWT in prospect for future delivery equal to 40% of current active fleet, – recycling of over-aged tonnage must remain at high volume to bring optimism back and steer this dry bulk segment towards more sustainable freight levels and thus better earnings“, adds Peter Sand.
source：Hellenic Shipping News Worldwide

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Ore-Ship Rents May Fail to Sustain Jump Amid Glut, Clarkson Says
By total
Published: 2011.09.22

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Rents for capesize ships that haul iron ore and coal may fail to sustain a rally because of a glut of vessels, according to Clarkson Research Services Ltd. Average hire costs tripled in seven weeks and last week reached the highest level since Dec. 6,data from the Baltic Exchange in London show. The dry-bulk fleet will expand this year as the equivalent of 1,039 new panamax-sized vessels enter service, 643 more than needed, calculations show in Clarkson’s Dry Bulk Trade Outlook, published yesterday.
“Given the expected continued rapid expansion of the fleet, the sustainability of the current improved rates is therefore questionable,” said Clarkson, a unit of the world’s biggest shipbroker.
Daily capesize hire costs gained 5.4 percent to $24,276 today, increasing for the first session in four and helping to lift the Baltic Dry Index, a broader measure of commodity- shipping rates. Still, the capesize rally is over, said Erik Stavseth, an analyst with Oslo-based investment bank Arctic Securities ASA.
“We see rates declining further and would not be surprised to see capes hit the $15,000-a-day mark,” he said in an e- mailed report. That implies a 38 percent drop from today’s rate, which is already down 16 percent from last week’s high.
Colombia, Brazil
Record iron-ore cargoes shipped from Australia’s Port Hedland led the surge in capesize hire costs, SSY Consultancy & Research Ltd. said in a monthly report e-mailed yesterday. Extra coal cargoes from Colombia and ore from Brazil also contributed, it said.
The index gained 1.8 percent to 1,795, held back by lower rents for panamax vessels, exchange data show. Panamaxes are the largest ships that can navigate the Panama Canal and typically carry about 70,000 metric tons of cargo, about 40 percent as much as a capesize.
Gains in capesize hire costs were led by rents for vessels immediately available to load cargoes from Atlantic Ocean region ports, which climbed 9.4 percent to $26,364.
Daily panamax rents fell 1.7 percent to $13,673, according to the exchange. Hire costs averaged $12,458 last month, this year’s lowest level, while the average capesize rate of $13,142 was the highest in 2011, its data show.
Disrupted shipments of coking coal, used in steelmaking, from Australia and slowing grain exports combined with a ship surplus to cap panamax rates, according to Clarkson.
Rents for supramax ships, about 25 percent smaller than panamaxes, gained 0.4 percent to $15,230 a day. Handysizes, the smallest vessels tracked by the index, advanced 0.1 percent to $10,093.

Source: Michell Wiese Bockmann, Alaric Nightingale, Bloomberg

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Newbuilding ordering activity on the decline, demolition activity increasing
By total
Published: 2011.09.21

The newbuilding markets are reportedly reactivated but at lower levels than in the previous months, while scrapping activity has been substantially higher, thus helping the alleviation of the pressures of tonnage oversupply, which has plagued both the drybulk and the tanker markets, especially when it comes to larger sizes.
According to the latest report from Clarksons, “the newbuilding market has continued to remain relatively quiet this week with only modest levels of enquiry being witnessed. Owners, for the most part, remain cautious in making moves as they wait to see how the pricing story in China develops. That being said however, this week has seen reports of various new orders being placed, although in general are in slightly more niche sectors, but at least does suggest that some are prepared to move.
Whilst supply will always be a driving factor in pricing movements it is not the sole factor. With economic factors continuing to remain relatively bleak, including the ongoing European Debt crisis and a general lack of confidence in the world market, there has been an increased reticence amongst owners to order. This drop off in demand is yet another challenge the yards are having to face as they look to fill their capacity and with some now voicing an inability to continue to take orders at current price levels, it again suggests a period of consolidation may be necessary in the upcoming months” said Clarksons.
In a separate report, Piraeus-based shipbroker Golden Destiny said that the previous week’s high newbuilding momentum seemed be just exceptional due to a large number of orders revealed in Japanese yards in the bulk carrier segment and high levels of activity in the offshore segment. Overall, the week closed with 13 fresh orders reported worldwide at a total deadweight of 499,800 tons, posting an 80% week-on-week decline with activity in the bulk carrier segment being only for two very large ore cape units contracted by undisclosed Norwegian owner in Chinese yard at region $60 mil each. This week’s total newbuilding business is down by 74% from similar week’s closing in 2010, when 50 fresh orders had been reported with bulk carriers and containers being the protagonists by grasping 52% and 20% share respectively of the total ordering activity. In terms of invested capital, the tanker segment seems to be the most overweight due a 6 chemical units order of 19,800 dwt stainless steel tankers placed by UK owner, Zodiac Maritime Agencies Kitanihon Shipbuilding of Japan at an estimated price of $35 mil each, $210 mil in total. In the bulk carrier segment, Japanese yard Oshima Shipbuilding is rumored to have received a ten newbuilding orders for its newly developed energy efficient 77,000dwt and 82,000dwt bulkers, which reduce fuel consumption by 10-15%, for delivery after 2014. The Japanese shipyard has developed the world’s most energy efficient ships, which helped it for winning new bulker orders, according to asiasis. Furthermore, some news came to the light that the Canadian shipowner Fednav is looking in an order for up to four ice class strengthened capesize bulkers, valued nearly at $200mil per unit, to transport iron ore from Accelor Mital’s $5bn Baffinland iron ore project” said Golden Destiny in its weekly analysis.
On the other hand, in the demolition market, the shipbroker said that the last two weeks there has been a sense of stability in the price levels offered in Indian subcontinent region and China with India leading the market in terms of volume of transactions and prices. “In Bangladesh, the deadline of the last extension given in the market approaches and there are slow signs of scrapping activity till country’s ship recycling activities are secured again. India is paying region $505/ldt on the dry side with tankers seeing premiums excess $530/ldt if they contain specific amount of bunkers or stainless steel. However, the market may experience again some firmness in the levels offered in Chittagong as we move near to the review of Bangladesh extension. In the Pakistan, the levels offered are $15-$20/ldt below from their Indian and Bangladeshi counterparts and minimal activity is been recorded. As Ramadan period has now ended and Bangladesh may close again mid October there are hopes for stronger scrapping activity in Gadani.
The week ended with 23 vessels reported to have been headed to the scrap yards of total deadweight 1,063,319 tons. In terms of the reported number of transactions, the demolition activity has been in the same levels from previous week’s high levels, while there has been a 40.6% increase in terms of the total deadweight sent for scrap. In terms of scrap rates, the highest scrap rate has been achieved this week in the bulkcarrier segment for a 82,513dwt vessel built 1983 with a lightweight of region 14,947tons that has been sent for beaching in Bangladesh at $543/ldt. Bulk carriers continue to be the most popular scrap candidates grasping 60.8% and liners follow with a 26% share, whereas scrapping activity in the tanker segment remains limited with only 2 units reported for scrap. India and China are in the frontline by attracting most vessels, while this week they won 26% and 21.7% respectively of the scrapping business. At a similar week in 2010, demolition activity was standing at 69.5% lower levels, in terms of the reported number of transactions, when 7 vessels had been reported for scrap of total deadweight 236,806 tons with tankers holding 43% of the total volume of activity and only one panamax bulk carrier sent for disposal. India and Pakistan were offering $395 -$405/ldt for dry/general cargo and $430-$445/ldt for wet cargo, while Bangladesh market was inactive” concluded Golden Destiny.

from: Hellenic Shipping News Worldwide

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Dry bulk market overshadowed by oversupply
By total
Published: 2011.09.19

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The dry bulk shipping industry will face more pressure in the coming months as owners struggle with a growing glut of vessels and a global economic slowdown, a top ship industry official said on Wednesday.'The situation is very difficult and quite serious,' said Spyros Polemis, chairman of the International Chamber of Shipping (ICS), whose association represents more than 80 per cent of the world's merchant fleet.
'In terms of the oversupply, there are too many ships for fewer cargoes, because obviously the demand has reduced because of the financial crisis, which is quite deep and it is spread all over the world,' he told Reuters in an interview.
In recent days the Baltic Exchange's main sea freight index, which gauges the cost of shipping commodities including iron ore, coal and grain, has rallied to its highest in nearly nine months, helped by firm Chinese iron ore demand and coal imports to Japan.
It has remained erratic, however, and is still over 35 per cent down from the same period last year.
Analysts expect the sheer weight of ships ordered before the 2008 financial turmoil, which have hit the water in significant numbers this year, to push prospects for a recovery to 2012 at the earliest.
'The pressures are tremendous on companies to survive because companies have invested heavily especially in new ships at quite expensive prices,' Mr Polemis said on the sidelines of an ICS shipping conference in London.
'There have been renegotiations, but the load is heavy and there will be problems faced by the companies.'
The tougher climate has hit the sector hard this year, and confidence is at a record low. Korea Line, South Korea's debt-stricken second-largest dry bulk shipping line, is among the casualties. The firm, under court receivership, has filed a restructuring plan to the court.
The developed world's economies have become ensnared in a growth slowdown that threatens to turn into recession, at a time when room for manoeuvre with bold policy responses has narrowed significantly, Reuters polls show.
In recent weeks China Cosco Holdings, China's top maritime conglomerate, angered many in the shipping sector by halting payments for vessels it had chartered so it could renegotiate better terms on lease contracts it had signed during the rate peak in 2008.
While Cosco has resolved lease disputes with some of the vessels, with more to be reached soon, the issue has added to freight market woes.
Dry bulk ship owner Seanergy Maritime Holdings Corp told Reuters earlier this month it would avoid long-term contracts with charterers such as Cosco.
'Cosco is a very large company,' Mr Polemis said. 'That does not bode well for other charterers, who may be under pressure to let ships go from their time charters. It certainly does not give a good signal.'
'It goes back to pressure that companies are under - that includes Cosco.'
Source: Reuters

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Shipbuilding markets maintain “quiet” mode on the back of dry bulk gains
By total
Published: 2011.09.14

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With the current orderbook for most ship types and classes far exceeding demand and most ship owners having already taken advantage of the fall in pricing for new buildings, ordering activity has been quite modest during these past few weeks.According to the latest report from Clarksons, “with everyone now back from their summer holidays, the market has still remained quiet with owners seemingly remaining cautious when it comes to placing any new orders, even when faced with some attractive opportunities from the Chinese yards, who as mentioned in previous reports are keen to fill their remaining 2013 capacity. It will be interesting to watch how this story develops, especially if there is any truth to the rumours currently doing the rounds vis a vis potential ordering of VLCCs at Chinese yards, as this in turn will guide yards pricing ideas going into the latter stages of the year.
With the conventional markets looking set for some choppy times ahead, yards are looking at other sectors to take up the spare capacity left by the lack of dry and wet ordering. With the continuing high oil price, focus has naturally turned towards the Offshore market as perhaps being able to play this white knight role until the other sectors start to see some recovery, however although values for offshore assets are high, it is unlikely that the number of orders will get close to filling the yards capacity requirements in the upcoming months and they may find themselves competing over relatively few orders between themselves!” said Clarksons in its weekly bulletin.
Meanwhile, in a separate report, Piraeus-based shipbroker Golden Destiny said that “after silent newbuilding activity of the last three weeks, we witness again a boost of business by Chinese and Korean yards with high activity in the offshore segment and a burst of activity in the bulk carrier segment, up 190 %w-o-w with contracting business in all vessel sizes. Japanese yards performance is still weak as the strength of the yen against the US dollar damages Japanese newbuilding business even for domestic orders. Overall, the week closed with 66 fresh orders reported worldwide at a total deadweight of 2,425,199 tons, posting a 200% week-on-week increase. This week’s total newbuilding business is up by 113.% from similar week’s closing in 2010, when 31 fresh orders had been reported with bulk carriers and containers being the protagonists by grasping 32% and 38% share respectively of the total ordering activity. In terms of invested capital, the offshore segment appears to be the most overweight due a hefty investment by Noble Corporation of Switzerland by exercising its final option for the construction of a fourth ultra deepwater drill ship in South Korean Shipyard Hyundai HI for delivery in 2h 2014 at a price believed to be $630 mil. In terms of volume of transactions, bulk carriers and offshore hold this week’s lion share of activity by grasping 44% and 30% respectively of the total newbuilding business.
In the bulk carrier segment, Chinese yards have made their presence strong with firm contracting activity for handysize and larger size units. The week closed with 29 bulk carriers reported worldwide with China grasping 58.6% share of the activity. However, some Japanese owners honored their domestic yards this week by contracting 10 units in total for panamax, supramax, handysize vessels and even some activity was recorded in the capesize segment” said Golden Destiny.
It also said that “in the tanker segment, eager activity has been witnessed in the MR segment amid oversupply issues and distressed freight market conditions. Notable order of this week is the 10units contract for vessels of 52,000dwt placed in South Korean yard, SPP Shipbuilding, for delivery in 2013 and 2014.
In the gas tanker segment, BW is said to be in talks with Hyundai Heavy Industries for its first LNG newbuilding order of two units after several years, while Greek shipowner Thenamaris has extended its LNG order placed in July for two 160,000 cu.m units in Samsung H.I. by adding one more unit for delivery in 2014.
In the container market, the post panamax ordering spree has eased off from August as uncertainty shadows the outlook of the market from European and U.S. sovereign debt. This week some business has been witnessed in the handy-small segment by SITC International Holdings of China that exercised an option to build two containerships of 1,100 TEU each with China’s Yangfan yard for delivery in August 2012 valued at a total of $36,2 mil. In addition, French line CMA CGM Group is said to be in discussions with South Korean Hyundai’s Mipo Dockyard for three more container-roro units with nominal capacity of 1,700 TEU extending its series order to nine units with delivery in 2014 at an undisclosed contract price. In the post panamax segment there are some rumors circulating that a Chinese yard, Penglai Zhongbai Jinglu Ship Industry, is in close negotiations with a European owner for the order of five 10,000 TEU units. Moreover, Greek owner Eurobulk is said to be in discussions with a South Korean yard, Ulsan based Hyundai, for five 5,000 TEUs units for delivery in 2013, at a total estimated price of $300 mil”.
Finally, Golden Destiny said that “in the offshore segment, the activity is 150% up from last week’s levels with 20new units reported worldwide. AHTS, platform supply vessels and drilliships are on the frontline as popular newbuilding investments with positive prospects for more intense activity for the rest of the year. Notable order of the segment has been the placement of three platform supply vessels by GulfMark Offshore of the U.S. in Poland’s yard Remontowa Shipbuilding at the contract price $112mil enbloc. Chief executive officer of the company said that they are excited about the initiation of their new construction program as recent oil/gas finds in the North Sea, a drilling focus on frontier areas and the announcement of more than 60 new offshore drilling rigs give them the confidence to initiate the construction of newbuilding vessels designated for this developing market. In addition, Noble Corporation of Switzerland exercised its option in Hyundai Heavy Industries for the construction of its fourth ultra deepwater drill ship at a price of $630 mil.
Chief executive officer of Noble stated that they continue to see an increase in deepwater demand, both near and longer term. This view is bolstered not only by geological successes in the traditional regions offshore the U.S. Gulf of Mexico and Brazil, but also by emerging regions offshore West Africa, Indonesia, Black Sea, India and Eastern Africa” concluded the shipbroker in its weekly analysis.
from: Hellenic Shipping News Worldwide

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Scrapping growth could be good news
By total
Published: 2011.09.08

Braemar Seascope’s demolition brokers are working extra hard this year, which may be good news for everyone.Dry cargo demand growth is running at strong levels due to the twin processes of industrialisation and urbanisation in emergingmarkets. Annual average demand growth between 2011 and 2015 is likely to match and may even exceed the annual 5.2% growth witnessed between 2004 and 2008 – the years of the superboom in dry cargo vessel earnings.
However, the massive amount of vessel ordering during and after the boom has led to the currently depressed freight market for dry bulk carriers. Bulker fleet gross growth (i.e. counting new deliveries but not scrapping) is likely to be in the order of 12% a year until 2013 as we add more than 3,000 newbuildings to the circa 8,100 ships that existed at the end of 2010.
But scrapping can make a difference in these markets. In order to bring net fleet growth (i.e. deliveries minus deletions) into line with demand growth expectations, every bulk carrier built before 1985 - nearly 1,500 ships – would have to be scrapped by the end of 2013. This would bring fleet growth down to an average 6.3% a year.
In other words, to return supply and demand growth to balance, the industry must scrap 12 bulk carriers every week for the next two years and four months without ordering any further bulkers for delivery before 2014.
The good news is that demolition at these levels is less outlandish than it may seem. According to the Braemar Seascope Demometer, 409 bulk carriers totalling almost 20 million dwt were sold for demolition in 2011 up to the end of August, at a rate of over 11 a week.
This amount of scrapping far exceeds previous records of 11.8m dwt in 1999 and 11.2m dwt in 2009. If scrapping continues at this rate for the balance of 2011, some 29m or 30m dwt will be removed from the bulk carrier fleet, offsetting the 85m dwt Braemar Seascope expects to be delivered in 2011.
Braemar Seascope Research Manager Mark Williams, says: “There’s a good chance that bulk carrier fleet growth can be kept down to 9% this year if these levels of scrapping keep up. We just have to hope that the global economy pulls out of the doldrums and that demand keeps up with expectations.”

Source: Braemar Seascope

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This Week’s News: A snapshot on the economic and shipping environment
By total
Published: 2011.09.05

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The astonished U.S. debt downgrade seems to have been left behind and the economy has started to show some evidence of strength. The Hurricane Irene failed to shut the financial markets and the week begun with a positive note in the U.S. stocks market.

The S&P 500 index experienced the biggest increase in almost two months following Federal Reserve Chairman Ben S. Bernanke positive announcements that the economy isn’t weak enough to warrant immediate stimulus via a third round of quantitative easing. Furthermore, the U.S. consumer spending has shown its biggest growth in the last five months climbing in July by 0.8% with the U.S. savings rate falling to a four month low of 5%, according to figures from the Commerce Department in Washington. The rebound of U.S. consumer spending in July alters the weak outlook of the U.S. GDP growth for the second half of the year since the consumer spending accounts almost 70% of the economic activity.
The sentiment changed also in Greece with the benchmark General Index of the Athens Stock
Exchange ending 14.4% higher from the strategic announcement between the country’s second and third largest lenders, Eurobank and Alpha Bank to merge and create the Greece’s biggest bank and eurozone’s 25th biggest bank with assets of EUR 150bn and EUR 80bn of deposits. Finance Minister Evangelos Venizelos welcomed the movement stating that the decision by the two banks to proceed with a merger is a positive development and demonstrates that today's crisis could serve as a corrective opportunity and provide a boost in the financial sector as well as in the real economy. The deal includes a capital injection of EUR 500mil convertible bonds by the Qatar Investment Authority, which already holds 5% stake in Alpha Bank since 2008. The terms of the merger agreement include an exchange ratio of 5 new Alpha Bank ordinary shares for every 7 Eurobank EFG ordinary shares.
Even the positive outlook created in financial markets this week, the International Monetary Fund cut its growth forecasts for U.S. and eurozone. The Fund slashed its U.S. growth forecast for 2011 to 1.6% from 2.5% two months ago and for the eurozone to 1.9% from 2%, stating that the Federal Reserve and the European Central Bank must be ready to easy policy. The fund warned that with growth faltering and inflation risks diminishing in the eurozone, the European Central Bank should avoid raising interest rates and have room to ease monetary policy if downside growth risks persist. Furthermore, business and consumer optimism in the eurozone fell in August reinforcing fears for a weak growth in the forthcoming months as political leaders struggle to smooth the government debt crisis.
The overall weak environment in US and eurozone and the high inflation in both countries have also influenced the pace of growth of the world’s two largest emerging countries, China and India. The faltering growth of China’s top three trading partners, United States, European Union and Japan, has made the U.S. investment bank JP Morgan to revise its growth forecast for China below 9% with prediction for further reduction to 8.5% in 2012, after enjoying a double digit growth for more than a decade. On the other hand, India’s economy grew by 7.7% in the second quarter, the slowest growth for 18 months compared with an 8.8% growth in the same period a year ago. The higher interest rates applied by Indian Central Bank to battle near double digit inflation have hit the expansion of one of the world’s fastest growing economies after China.
SHIPPING MARKET
It is worth highlighting that the announced merger agreement between Greek’s largest banks, Alpha Bank and EFG Eurobank, creates new opportunities for the Greek ship financing industry and enhance its competitiveness in the shipping finance industry. Experts of the sector commented that the shipping portfolios of the two banks are likely to be omplimentary, with the two banks generally having a different clientele from each other and the combined portfolio would currently surpassed only by Royal Bank of Scotland, Deutsche Schiffsbank and Credit Suisse in terms of lending to Greek owners.
In the dry market, a high level of iron ore fixtures from Brazil and West Australia contributes to the recent rally of the market with the BDI jumping in mid-week at levels above 1,600 points mark and surpassing even the 1,700 points level, posting a 38%growth since the end of July. Capesize earnings have been in a positive trend due to firm amount of iron ore Chinese demand, but there is still hesitation about the solidness of the market as China’s port stockpiles are still high, despite signs of decrease the last weeks. According to Commodore Research, approximately 92.2 million tons of iron ore are currently stockpiled at Chinese ports, 500,000 tons (-0.5%) less than a week ago, but the amount remains close to the all time record of 94,4mt that was stockpiled at the beginning of August.
Spot and period chartering activity has shown signs of strength with earnings for all vessel sizes floating at levels above operating expenses. According to Commodore Research, a weekly average of 26 iron ore fixtures came to the market in August, 9 more than July’s average of 17 iron ore fixtures. Capesizes are expected to be the most beneficiaries as Indian iron ore exports will be far below the 2010 levels due to ongoing mining bans in the states of Karnataka and Goa and India’s government goal to boost its domestic steel production. This implies that more iron ore will be exported from Australia and Brazil, primarily carried in capesize vessels with panamaxes and supramaxes loosing ground. It worth mentioning that last week’s iron ore prices hit a three month high above $180/tonne due to strong Chinese demand and supply outages, according to Platts data.
Despite the recent rally of the market and stronger signs on the demand side in terms of Chinese thermal coal and iron ore imports, there is still a pessimistic outlook on the market due to the dry bulk fleet growth. The second half of the year, particularly the third quarter, is usually the peak season but the industry is being prepared for a renewed pressure on the market. According to a recent BIMCO Report, the active dry bulk fleet has grown by 7.4% so far in 2011 with a delivery of 52.5mdwt vessels and predicts that another 450 newbuilding dry bulk vessels with an average size of 84,000 dwt will enter the fleet during the remaining part of the year.
The BDI closed today at 1,740 points, which is the highest level that the market has experienced since the beginning of the year. The index is up by 13% from last week’s closing and down by 39.5 % from a similar week closing in 2010 when it was 2,876 points. The highest rate increase has been in the capesize segment, BCI up 27%w-o-w, BPI down 1.3% w-o-w, BSI down 0.6% w-o-w, BHSI up 0.4% wo-w Capesizes are currently earning $23,899/day, an increase of $7,183/day from a week ago, while panamaxes are earning $13,061/day, an increase of $153/day. At similar week in 2010, capesizes were earning more than $39,000/day, while panamaxes were earning more than $25,000/day. Supramaxes are trading at lower levels than capesizes by earning $14,415/day, down by $93/day from last week’s closing, but are still 10.4% higher than panamax earnings. At similar week in 2010, supramaxes were getting region $20,800/day, hovering at discounted levels from capesize and panamax earnings.
Handysizes are trading at $ 9,945/day, up by $75/day from last week, when at similar week in 2010 were earning $15,702/day.
In the wet market, the outlook remains pessimistic with crude freight rates hovering below operating expenses and asset values being squeezed at lower levels. The geopolitical events have influenced dramatically the tanker environment in conjunction with oversupply issues and the hopes for an early recovery of the industry are limited even now that the Libya’s civil war has ended. Libya’s oil industry will need at least $25 billion in investment to increase its oil production to two million barrels per day, said the chairman of drilling rig operator Challenger Ltd, since the Libyan oil industry needs a lot of revamping after the civil war. The armed conflict in Libya has reduced the nation’s output to 100,000 barrels/day in July from the 1,6 million barrels/day before the uprising started in February.
The current environment pushes tanker owners for more lay-ups and scrapping to ease the ample available list of tonnage. Furthermore, owners have to be very selective in choosing voyages so as to increase wait time between cargo voyages and push the charter rates upwards. According to market sources, there has been a large increase of VLCCs layups enquiries in Southeast Asia as owners consider putting their large tankers on ice in Asian lay up anchorages. Most of the enquiries are coming from independent tanker owners rather than oil majors. Returns from shipping Middle East crude oil to Asia, the world’s busiest route for supertankers fall to the lowest level in seven days this week with daily rental income for VLCCs on the benchmark Saudi Arabia-Japan voyage falling to minus $207, according to the Baltic Exchange in London. According to a median estimate in a Bloombergs News Survey there are 14% more very large crude carriers to hire over the next 30 days than there are likely cargoes.
A major operator, Frontline has already reported second quarter net losses of $35,2mil in 2q 2011that were worse than expected, compared to net profits of $85,6 mil in the same period last year. Revenues fell to $219.4M from $356.1M over the same period. The company announced that that will aim to optimize its fleet utilization in the current weak market through super-slow steaming.
In the gas market, prospects seem very positive in terms of demand as the LNG demand recorded a 8.5% year on year in the first half of 2011 and is expected to grow by 12% for the whole year, driven by incremental demand from Japan, the United Kingdom and India, and continued growth from traditional buyer South Korea, according to Bernstein Research. Japanese LNG demand rose strongly in the second quarter of 2011 due to the lost nuclear power from the March 11th earthquake and tsunami.
Japan’s LNG import were up 8% year on year in H1 2011, or equivalent to 2,64 million mt/year of additional demand compared with the first half of 2010. Korea also recorded a 8% year on year increase in imports for the same period, or equivalent to 1.33 million mt/year of additional demand compared with H2 2010. Asian LNG demand growth, averaging 9% year on year in H1 2011, was the strongest in India and China, where LNG imports were up 26% and 10% year on year, respectively, the analysts said.
Europe saw a 15% increase in LNG imports in H1 2011 compared with the corresponding period of 2010, with the UK, in particular, posting a 76% rise, which was equivalent to 4.73 million mt/year of incremental demand. The UK, Japan, Korea, India, China and emerging markets in Latin America such as Brazil and Chile would support the near-term demand outlook, the Bernstein report said. On the longer term, it is expected that the global LNG demand will grow from 218 million mt/year in 2010 to 310 million mt/year by 2015 and 410 million mt/year by 2020 In the container market, the secondhand ship purchasing activity is significantly subdued as it seems that there is big gap between sellers and buyers price expectations. The Shanghai Container Freight Index remained flat last week with the European route posting 0.8% week-on-week change. Europe normally imports more goods during the end of the third quarter, September, as shops begin stockpiling for the December holidays. However, the ongoing European sovereign debt is going to curb the amount of imports as consumer spending has been hurt also by a high rate of unemployment. Container trade on the Asia-Europe route, one of the busiest container routes, will expand by an average of 4%-6% this year, compared with a 15% growth in fleet capacity, according to Morgan Stanley.
In the shipbuilding industry, Chinese shipbuilding industry faces reduced ordering activity for the period January-July 2011 comparing with a similar period in 2010. Despite the low newbuilding prices offered by Chinese yards, the demand for newbuilding vessels in the main vessel segments, bulk carriers and tankers, has dropped significantly due to pessimistic outlook that the industry holds for both sectors given the overflow of newbuilding deliveries through 2013. South Korean yards have dropped their interest to more sophisticated newbuilding vessels, offshore units, LNG carriers, mega size containerships creating fuel efficiency technology for the shipowners to reduce operational costs and being more competitive in the industry under the current market fundamentals. According to the China
Association of National Shipbuilding Industry's recent statistical data, newbuilding orders decreased 29.2% to 23.58m dwt during the seven month period, with many yards reporting not a single order thus far in 2011. Statistics data from IHS suggest that South Korean shipyards have won 231 ships (17,9 mil gt), in the January-June period, up 37% from the same period last year, taking the biggest share of large containership and LNG carrier orders.
In the shipping finance, even China’s active participation in the industry from the 2008 financial crisis, its share of global ship finance deals is only about 5%, according to Ulrich Zhou, Deputy General Manager and Shipping Finance boss at the Bank of China in a Shipping Finance China Summit. He also added that even though Chinese banks hold a strong position among other global banks; their main focus is still the domestic business. He emphasized that this year is not a good year for foreign enterprises seeking Chinese money, because of the high cost involved from the appreciation of the Yuan and the dream of Chinese funding for shipping has to be put on ice.
Source: Golden Destiny S.A Research Department

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Capesize demand lifts dry bulk market once again
By total
Published: 2011.09.02

In what proves to be the best week of the year for Capesize owners, strong demand has helped propel the dry bulk market to new highs yesterday. The BDI (Baltic Dry Index) was up by 3.89% to 1,682 points, with Capesizes boosting the market again.Yesterday, the Baltic Capesize Index was up by 8.04% and more than 25% since the beginning of the week, to 2,807 points. By contrast, all other ship types and segments were down, with Panamaxes losing 0.25% to 1,624 points (Baltic Panamax Index).
Meanwhile, in the ever so increasingly important for a further recovery of freight rates demolition market, shipbroker Golden Destiny noted that “the uncertainty of global financial markets has a direct impact on the shiprecycling industry. Since the U.S. economy downgrade the volume of activity and scrap prices have eased off significantly with scrap buyers remaining skeptical to commit to new units unless they see the new direction in prices. Scrap prices have fallen by around $30/ldt for the last month in the Indian subcontinent region and owners are struggling to beach their vessels at levels excess $500/ldt. India is now paying less than $500/ldt for dry/general cargo and about $520/ldt for wet cargo. The Ramadan period does not alleviate the current status and there are hopes for a rebound from the end of August.
In Bangladesh, the threat of closure remains, even the official extension of the market till early October, and some owners put off their decision for beaching their vessels in Chittagong. In China, scrap prices have not slipped below $450/ldt and now the price gap with the Indian subcontinent region has narrowed with hopes for more intense activity in the future.

The week ended with 18 vessels reported to have been headed to the scrap yards of total deadweight 740,996 tons. In terms of the reported number of transactions, the demolition activity has been marked with a remarkable 157% rise from previous week’s activity, while there has been a 281% increase of the total deadweight sent for scrap. In terms of scrap rates, the highest scrap rate has been achieved this week for a handysize vessel M/V “EMI S” of 34,913dwt built 1983 with 7,830tons of lightweight at $525/ldt in Bangladesh. Bulk carriers are the most popular scrap candidates recording a 400% weekly increase of scrapping activity. At a similar week in 2010, demolition activity was standing at similar levels, in terms of the reported number of transactions, 18 vessels had been reported for scrap of total deadweight 356,048 tons with tankers, reefers and Ro-Ro carriers being on the frontline comparable with nowadays concentrated interest in the bulk carrier segment . India was offering the best levels by paying $400/ldt for dry/general cargo and $435/ldt for wet cargo” concluded the Piraeus-based shipbroker.
In terms of the second hand market, it has already experienced signs of of significant falls especially for larger size vessels, in the bulk carrier and tanker segment, but it is too early to determine the new benchmark values unless the new transactions are confirmed and others at similar levels follow said the report. “The last week’s rumor for a capesize Imabari resale of 180,000dwt built 2011 to be under negotiations at region mid $40 mil was not finalized as sellers did not lift the subjects. The owner seemed not willing to accept the low sale price since the vessel is said to have been ordered at much higher levels. The week closed again with silent secondhand ship purchasing activity in the bulk carrier segment and stronger buying activity for smaller tankers.
Overall, 18 vessels reported to have changed hands this week at a total invested capital in the region of US$ 139 million, 9 transactions reported at an undisclosed sale price. In terms of the reported number of transactions, the S&P activity is up by 157% from last week’s activity, mainly due to a sharp rise in the tanker buying momentum and up by 63% comparable with previous year’s weekly S&P activity when 11 vessels induced buyers’ interest with tankers and bulk carriers grasping 63% share of the total volume of S&P activity. In terms of invested capital, the tanker segment seems to be the most overweight due to the large volume of transactions concluded. Notable deal of the week in the tanker segment for an aframax auction vessel sale of 115,583dwt built 2005 Japan at region $34,8 million” concluded Golden Destiny.
In terms of the presence from Hellenic ship owners, they appear to be active with a movement reported in the capesize segment for a vessel of 168,968dwt built 1998 South Korea at region $19 mil. In the newbuilding market, Greek owners have still plans for the placement of new units. In the previous week, Transmed is said to have signed a letter of intent (LOI) with STX Offshore Shipbuilding for five MR units plus option for five more at an undisclosed contract price with delivery late 2013. In the LNG segment, Gaslog is said to have extended its order placed earlier in the year by two more LNG 155,000cbm units at Samsung Heavy Industries for delivery in 2013. In addition, in the bulk carrier segment Chartword is said to be in discussions with Chinese yard Shanghai Waigaoqiao Shipbuilding for a bargain deal of two kamsarmax units with option for four more at a price less than $30 mil. According to newbuilding sources the deal is at dangerously low levels with the yard hardly making any profit on the deal.
from: Hellenic Shipping News Worldwide

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Dry bulk market takes great leap forward
By total
Published: 2011.09.01

In what turned out to be a rather hopeful ending of the month, the last day of August saw the dry bulk market’s benchmark, the BDI (Baltic Dry Index) jump to 1,619 points, or a mssive 5.34% on the day. As a result, the index which covers major commodities routesmanaged to post a significant gain during the second half of August, ending a more than two-month overall slump to almost 1,200 points.
This latest rise was attributed to a surge in interest for the larger Capesize vessels, while all other ship types were stuck in the red yesterday. Capesizes were higher by an impressive 11.36% on the day, with the relative Baltic Capesize Index inching forward to 2,598 points. On the downside, Panamaxes were down by 0.49% on the day, with the BPI (Baltic Panamax Index) ending the day down to 1,628 points.
Referring on the Capesize market, the latest weekly report from shipbroker Fearnley’s said that “the sun is shining again, after a short dip from interesting levels. Increased spot cargo volumes across the board resulting in a dramatic 15% improvement in average earnings in one day, bringing market back to levels not seen since early winter. All routes expected to rise further, as strong support is also seen from derivatives. Period activity about to catch up, exemplified by 176000 dwt/blt2010 delivering China mid Sept for 11-13 months at usd 14k, also 171000 dwt/blt 2003 fetching usd 14k with China delivery early September” said Fearnley’s.On the Panamax front it said that “from the market upswing last week, the Panamax market took a breather with holidays both Monday and Tuesday this week. Especially the Pacific market rallied last week with a good number of Indonesian coal cargoes. It seemed like many charterers entered the market at the same time to cover before their holidays this week. The softening experienced this week is not dramatic, but it is slowly sliding downwards in both hemispheres. Some good rates are still achieved with TA´s being fixed in region of usd 14-15k and the fronthauls getting fixed in the low 20´s. In the Pacific the rounds are now being fixed at around USD 11-11,500 daily. Some activity in the short period market is in the 13k range, and there are takers for longer periods like 1 or 2 years” concluded the shipbroker.
Accroding to a recent report from BIMCO’s shipping analyst Peter Sand, the active dry bulk fleet has grown by 7.4% so far in 2011, caused by delivery of 52.5 million DWT, offset by as much as 14.8 million DWT being demolished. As the new building delivery pace stays strong with demolition trying to keep up the fleet is estimated to grow a tad slower at 12.9%. The inflow of new orders during first half of 2011 is down 67% as compared to same period last year. This has influenced the orderbook to fleet ratio positively alongside the massive deliveries. It currently stands at 42% – down from 79% – but still a very high overall figure with 241 million DWT in the pipeline. 79% was recorded in October 2008. “There is still extensive slippage in the orderbook going forward. BIMCO estimates that one out of every three vessels is postponed for a variety of reasons. The demolition pace continues to stay strong – never before has so much tonnage been demolished. The average size of a vessel going for demolition is 72,647 DWT, meaning that the big ships are now leaving were scrapping smaller ships with an average size of just 38,640 DWT. In 2011, 49% of the demolishing vessels are the large Panamax and Capesize bulk carriers as compared to 15% in 2009” said Sand.
BIMCO predicts that another 450 newbuild dry bulk vessels with an average size of 84,000 DWT will enter the fleet during the remaining part of the year. While some 76 vessels with an average size of 72,500 DWT will be demolished. Commenting on the market’s outlook, BIMCO’s senior shipping analyst said that “on the basis of that supply outlook in a combination with a slower than previously expected demand outlook, BIMCO expects that the market balance will continue to be strongly in favour of charterers, with low freight rates across the board. As the global economy is still walking in the shadows of the financial crisis, demand growth remains on a short leash. Together with the massive inflow of new tonnage, the freight market will spoil charterers for choice for at least another couple of years. BIMCO will focus specially on the opportunities provided by the demolition market in a soon to be released analysis. You have to be able to endure lots of pain if you are amongst those who are about taking delivery of a newbuild Capesize vessel. Regardless of whether you paid USD 105 million for her back in July 2008 or USD 55 million last January, you have the option of chartering her out for half a year at USD 12,500 per day for 5 years at USD 16,000 per day or to try your luck on the spot market. Either way, you’re facing a poor return on your investment in the coming years unless cargo volumes increase dramatically. 213 Capes entered the fleet in 2010, another 250 is going to be added this year.BIMCO expects to see a depressed freight market in the coming months. Summer has been slow, so freight rates are likely to bottom out now but only a little upside is visible for owners. The Capesize Time Charter Average is likely to stay around USD 12,000-16,000 per day, Panamax and Supramax rates are likely to stay firm in the USD 13,000-17,000 per day. Handysize rates are expected in the USD 9,000-13,000 per day interval” he concluded.

from: Hellenic Shipping News Worldwide

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