Demand for newbuilding continues strong despite freight rate volatility

Ship owners are eager to build for the future, as new rules and regulations are bound to make life more difficult in the future and having a vessel which is unsuitable for service can be a major liability. In its latest weekly report, shiproker Allied Shipbroking said that “activity looks to be back in the market now, with August showing the highest level of new contracts having been placed in the year so far for some sectors. There still seems to be significant appetite amongst buyers out there and shipbuilders look to have mobilized their marketing strategies once more in an effort to take full benefit of the current opportunity. The rise in secondhand prices in the dry bulk sector has also helped a fair amount, placing the current newbuilding prices on offer in a more competitive and favorable light. At the same time sentiment seems to be very firm right now amongst dry bulk owners, given the current performance being noted in the freight market, which will surely start to attract more ship owners towards this option. Having said that, there still seems to be considerable problems with regards to arranging for financing of most of these new contracts under talks, while there are rumors that several owners are still facing difficulties in securing letters of guarantee for contracts they have signed”, Allied said.

In a separate weekly note, shipbroker Intermodal said that “if there is one thing that has been completely unaffected by volatility in the freight market in the past months this is newbuilding activity. Additional dry bulk and tanker orders have surfaced last week, evidencing the strong momentum newbuilding contracting still enjoys and while the performance of the dry bulk market explains partly the ordering enthusiasm in the sector, the steady tanker ordering is certainly raising a few eyebrows given the disappointing earnings crude carriers have witnessed so far in 2017. Following the most recent VLCC order by Hyundai merchant Marine, NYK is reported to also have added four VLs to its orderbook. In this case all orders are placed on the back of long term employment, which is always removing a substantial element of risk for the owner, but the market effect is not different and that is a quickly increasing orderbook in a fleet the average age of which is less than fifteen years. In terms of recently reported deals, Japanese owner, NYK, placed an order for three firm VLCCs (300,000 dwt) at JMU, in Japan for a price in the region of $80.0m each and delivery set in 2019”, said Intermodal.

Meanwhile, Clarkson Platou Hellas said that “in Tankers, DSME have announced an order for five firm plus five optional 300,000 DWT VLCCs from Hyundai Merchant Marine. The five firm units are set for delivery within 2019 from Okpo, Korea. JMU and Namura have also won an order for four firm 310,000 DWT VLCCs from an unknown owner. Three vessels will be built by JMU and one vessel will be built by Namura, all for bareboat charter to NYK when delivered throughout 2019 and 2020. Thun Tankers have extended their series of 17,500 DWT Chemical/Product Tankers at AVIC Dingheng by declaring an option for one additional vessel. This would be the 5th unit in the series and will be delivered in 1H 2020. Fujian Mawei have signed a contract with domestic owner Haixin Tanker Corp. for one 15,000 DWT Product Carrier for delivery in 1H 2019. There is one order to report in Dry this week. COSCO Zhoushan have received an order for four firm plus two optional plus two optional 82,000 DWT Kamsamax Bulk Carriers from Clients of Aegean Shipping Management. The four firm vessels are scheduled to be delivered in 2H 2019 from China”, the shipbroker concluded.