Despite the fact that August is traditionally a slow month in terms of ships investment activity, ship owners have grasped this year the opportunity to close some deals, on the back of attractive pricing. According to the latest monthly report from shipbroker Golden Destiny, August 2013 ended with an upward momentum in secondhand and newbuilding investors’ appetite, while demolition activity followed a downward incline from previous year with lower vessel removals for bulkers and tankers and almost stable volume of disposals in the container segment.
According to the shipbroker's figures, in the second hand vessel market, there were 123 vessels traded for an invested capital of more than $1.9 billion, while an additional 33 deals were reported at an undisclosed sale price. By comparison, the similar figure of last year's August was 91 vessels. Similarly, in the newbuilding ordering business, there were 179 vessels reportedly on order this year for a total of over $9.2 billion, while 51 agreements were done at an undisclosed sum. During the August of 2012 there were 96 new orders. Finally, in terms of demolition activity a total of 48 vessels were sold for scrap, amounting to about 2.4 million dwt. The number is about half of last year, when a total of 102 vessels were scrapped.
The shipbroker noted that "the newbuilding activity is 41% up from the number of vessels changed hands during August as the appealing bottom low newbuilding prices and the new eco designs trigger investors’ desire for newbuilt vessels. The threat of oversupply seems to be ignored by shipping players that hold optimistic expectations for a full upturn of the market after the end of 2014", Golden Destiny said.
It also mentioned that "the declining trend in scrapping activity combined with the accelerated newbuilding business during 2013 create additional negative pressure in the current vessel supply-demand imbalance and narrows hopes for a full early recovery. Demolition activity stood at 73% lower levels than the strong placement of newbuilding orders during August, with bulk carriers, tankers and containers experiencing higher volume of newbuilding activity than last year’s levels", the report noted.
It added that "compared with August 2012 levels, S&P and Newbuilding activity recorded 35% and 86% yearly increases respectively, for all vessel types, while demolition activity showed 53% year-on-year decrease. Bulk carriers and tankers remain in the main focus for investors either for buying secondhand vessels or ordering newbuilt vessels. In the bulk carrier segment, the S&P activity for secondhand vessels is lower than investors’ appetite for ordering due to strong placement of new orders for handy, ultramax and capesize vessel sizes. In the tanker segment, strong secondhand purchasing activity for small vessel sizes of less than 10,000dwt and MR products sustained a firm pace of investments and led the number of vessel purchases for secondhand tankers to surpass the number of new orders – 56 vessel purchases / 49 new orders. Despite oversupply issues, demand for the placement of new orders for large vessel sizes either in the bulk carrier or tanker segment represent excessive volume for August 2012 levels.
In the bulk carrier segment, 9 new orders reported in the capesize sector from only 1 new order in August 2012. In the tanker segment, 9 new orders reported in the VLCC segment from 2 in August 2012 and 10 for aframax vessels from zero reported business at similar month last year. In the container segment, the secondhand buying activity seems to follow the low pace of last year, while the repeated preference for the construction of post panamax containers led to new highs in the placement of new orders for containers (8 new orders reported for boxships of more than 10,000TEU from zero reported newbuilding business at similar month last year)", the shipbroker concluded.
Source: carbon positive. 19 September 2013http://www.carbonpositive.net/media-centre/industry-updates/1706-ship-owners-invest-more-than-9-2-billion-on-newbuilding-vessels-during-august.html