A week before Thanksgiving in the US, and with many reasons to give ‘thanks’ for shipping’s performance in the last few months, the week was dominated by news that banks have been selling shipping loans. The Lloyd’s Banking Group sold about $500 mil in shipping loans, which sale seems to be part of their overall, systemic strategy of divesting their shipping portfolio. However, two other transactions for the sale of shipping loans made the headlines, with the Royal Bank of Scotland (RBS) selling their total exposure of about $720 million loans on publicly traded Eagle Bulk (EGLE), and DNB selling also their total exposure of about $750 million loans on publicly traded Genco Shipping and Trading (GNK); the news is really about the pricing of the loans at about 90% of their face value, more or less, perfect pricing in our opinion that would presuppose full market recovery for the buyers of the loans to see impeccable and worry-free performance from the borrowers. Probably there are special factors for such strong pricing, but definitely more banks will have now to ‘sound’ the market for their own portfolios and likely would be more sellers if such strong pricing can be sustained.
In the greater sale & purchase market, there has been strong activity in the VLCC market in addition to last week’s fairly heightened activity. Just as the capesize market popped in September at $40,000 pd, this week VLCC rates reached the same magic number on the back of seasonality, in our opinion, rather than any improvements in fundamentals. However, on the expectations that the worst is behind us, even in the VLCC market, Navios Maritime Acquisition Corp. (NNA) has confirmed the acquisition of three charter-free VLCC tankers for $163 million; the vessels are believed to be HOSCO‘s MT „GRAND CHINA”, MT „PEACE CHINA” (298,000 dwt, Dalian, 2010/2011 respectively) and MT „GREAT CHINA” (298,000 dwt, CSSC Jiangnan, 2009); breakdown in pricing was not provided, but it seems that the vessels collectively obtain several million dollar premium over ‘broker report’ pricing (in full disclosure, getting an en bloc deal of modern, comparable vessels done requires usually a premium over ‘last done’.) It’s also understood that NNA has sold their 1996-built VLCC MT „SHINYO NAVIGATOR” (300,000 dwt, Hyundai HI, 1996) at $20 mil for conversion; ss a reminder, back in August, NNA had acquired the VLCC MT „NAVE CELESTE” (299,000 dwt, Daewoo, 2003) at $35.4 million to substitute for the MT „SHINYO NAVIGATOR” with their Chinese charterers. Despite the conversion subject, the pricing for MT „SHINYO NAVIGATOR” has not been much above scrap levels at $20 mil, but definitely more favorable that the Fredriksen ‘twin sale’ from last week of MT „FRONT CHAMPION” (300,000 dwt, Hyundai Heavy I., 1998) and MT „GOLDEN VICTORY” (300,000 dwt, Hitachi Zosen, 1999), which although much younger fetched $32 mil en bloc for scrap sale; in any event, these three vessels will be leaving the leaving the world VLCC fleet for good, providing a miniscule improvement to tonnage supply-demand dynamics. Also, one more and much newer VLCC vessel is supposed to leave the world fleet for conversion, namely MT „BLUE JADE” (320,000 dwt, Daewoo, 2012) was sold to BW Offshore at $88 million (with seven month long subject) while the MT „BLUE OPAL” (320,000 dwt, Daewoo, 2012) was sold outright at $83 million (some reports have NNA as the buyer.) Both of these ‘Blue’ vessels are of the TMT (TODAY-MEANS-TOMORROW) and the ‘Elephant fame’ when they were built under MT „G ELEPHANT” and MT „H ELEPHANT’, respectively. Again, as a reminder, year-to-date, VLCCs have averaged $12,500 pd, vs $18,500 pd in calendar 2012; often it pays to think and act counter-cyclically, especially when product tankers right now are the flavor of the season and crude tankers are out, but it’s tough to really get excited at $83 million for a two-year old VLCC in this market.
The product tanker market also has been busy with the sale of the Croatian-built MT „OKHOTSK SEA” (47,000 dwt, Brod. Trogir, 1999) obtaining a very robust $10.5 million from Indonesia buyers on behalf of Sovcomflot, while the shallow draft and good survey position MT „MILLEURA” (40,250 dwt, Hyundai Mipo, IMO II, 2003) got a competitive price at just above $15 million from Italian sellers (Morfini) to Greek buyers (Ancora). The pumproom design MT „MADONNA” (30,500 dwt, Shin Kurushina, 1999) brought a very respectable $8 million by Indonesian buyers. In the stainless steel market, MT „GLOBAL PEACE” and MT „GLOBAL CHALLENGE” (20,000 dwt, Usuki Zosenho, 2009) were sold en bloc at $53 million to Norwegian buyers (Arne Blystad) from Cido Shipping.
The dry bulk market has also been busy but with no firework transactions to report. The activity has been focused on smaller deals, mostly of vessels at 5-15 old and with private, independent buyers behind most transactions. A couple of representative sales has been the change of ownership for MV „AMORITA” (46,750 dwt, Mitsui SB, 4x30T, 1999) at $12 million to Greek buyers, and the sale of similar MV „NESRIN AKSOY” (46,750 dwt, Sanoyas, 4x30T, 1997) at $9.4 million to Danish buyers by Akmar Shipping and Trading based in Turkey.
In the newbuilding market, there are just too many new orders to report, and we would prefer to save the depression and the news for when the vessels get delivered; just briefly, it has been rumored that the Tsakos Group has ordered five (5) aframax tankers in South Korea at about $52 million each against five year charters with Norway’s Statoil at about $22,000 pd. JO Tankers has placed an order for eight (8) 33,000 dwt chemical tankers at New Times SB, while US-based Seabulk International has exercised an option to place an additional order to Gen. Dynamics at NASSCO for a Jones Act product tanker with December 2016 delivery and $125 million expected price.
Who ever said that shipping is a boring industry?
© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co. All Rights Reserved.
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