In a shortened week due to the Thanksgiving Holiday in the USA (there were definitely thanks to give this year in shipping compared to the last couple of years), most indices continued their upward trajectory. Incoming Federal Bank Chairwoman Janet Yellen is perceived more dovish than outgoing Chairman Bernanke, thus, the ‘risk on’ theme continues. There have been concerns that the underlying economic conditions do not ‘support’ such valuations, but again, private equity funds and institutional investors hold US$ 789 billion in ‘dry powder’, thus, it seems there are no many asset classes or projects that cannot be afforded generous pricing when there are more money than deals.
In the past week, for the first time in a month, there have been no transactions in the VLCC market to report, whether newbuildings, second-hand or demolition. The VLCC freight market has softened for the week, but nothing major to report. Following the sale of the Suezmax tanker MT „TENERIFE SPIRIT” (150,000 dwt, Daewoo, 2000) three weeks ago to Greek buyers (Eurotankers) at $16.3 million, the Suezmax tanker MT „RIO GENOA” (160,000 dwt, Universal, 2007) has been committed from MPC Steamship in Germany to financial buyers in the US at about $35.5 million subject to charter by Koch at about $13,500 pd. The price seems in line with the ‘market’ to slightly above market, which is OK given the level of the freight markets, and of course one has to look up for the cost basis of such tanker (would be value significantly above $50 million three years ago). The LR1 tanker MT „ASHLEY SEA” (74,000 dwt, New Century, 2007) was sold to Greek buyers at $25 million, but we understand the creditors had involvement with the transaction and pricing, and the price looks significantly below market. Staying with bank-related transactions, a bank from the lending syndicate to Denmark’s Torm exercised the option to sell four of their MR tankers to Oaktree Capital Management; the vessels were placed back under Torm’s management; the vessels were MT „TORM ALEXANDRA” (50,000 dwt, GSI, 2010), MT „TORM AGNETTE” (50,000 dwt, GSI, 2010), MT „TORM ARAWA” (53,000 dwt, GSI, 2012) and MT „TORM ANABEL” (2012); pricing is sketchy as this is not really an open market transaction, but it seems that the vessels had $162 million cost basis but sold at $107 mil, the outstanding loans, which loans seem slightly above vessels’ present fair market price.
The dry bulk market has been more active than the tanker market, and the transaction of the week has been the sale of the panamax bulker MV „CAROL” (75,600 dwt, Mitsui, 1999) at the very strong price of $14.2 million. The vessel was conveniently inspectable at a central port (Hamburg) where we understand there was a line of inspectors waiting for their turn. As a matter of comparison, we recently reported the sale of a very comparable vessel but two years newer, MV „BOTAFOGO” (76,500 dwt, Imabari, 2001) at $14.6 million, almost same price, and the sale MV „MULBERRY PARIS” (76,500 dwt, Tsuneishi, 2004) at $19.5 million. The older Japanese panamax bulker MV „BEL EAST” (68,500 dwt, Sasebo, 1995) which was sold at $8.5 million. The also 1995-built post-panamax bulker MV „HOKURIKU MARU” (94,500 dwt, Mitsubishi Nagasaki, 1995) was sold to Chinese buyers at $9 mil. In the supramax market, it is understood that Geden Line of Turkey was motivated to sell four (or two according to other sources) vessels to Olympic Shipping at either $100 mil for four (or $50 mil for two); vessels were sisterships MV „SOUTH”, MV „EAST”, MV „WEST” and MV „METROPOL” (55,400 dwt, Hyundai Vinashin, 2012, C4x35t). The good supramax MV „MAPLE CREEK” (53,500 dwt, Imabari SB, 2005, C4x30t) was sold at $19.5 million on the back of strong buying interest. Handysize market has been active as well on firm overall pricing: MV „FRAGA” (28,700 dwt, Shin Kochi HI, 2003, C4x30t) was sold at $13 million (noting that the vessel is special survey / dry dock due), the MV „IVS KWAITO” (32,000 dwt, Kanda, 2005) was committed at excess $15 million. MV „TIMOTHY R” (32,500 dwt, Jinse, 2009) was sold at $18.5 million.
For a change, the newbuilding market has been subdued during the past week. The demolition market has also been quiet: fairly decent freight rates with no many determined sales demolition candidates. All along, the major buying markets for demolition vessels are working on their on ‘stabilization’ issues, whether it’s about stabilization of exchange for the Indian Rupee (INR), the recent weakness of the Pakistani Rupee (PKR), and the political unrest and declaration of elections in January 2014 in Bangladesh.
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