S&P, Newbuilding and Demolition Update (January 18th, 2014) – Dry Bulk Focus

Posted on January 18, 2014 by Karatzas Marine Advisors & Co.

By the end of the week, the notable decline of the BDI and dry bulk freight rates since late last year came to a stop with a marginal improvement on Thursday and Friday, mostly on relatively stronger recovery in the cape market; still, it was a down week for the index, with about 0.75% decline. Crude tankers have been the star of the week, with freight rates improving impressively on certain routes; some improvement is due to seasonality – still, winter season in the northern hemisphere, due to bad weather affecting vessel routing – heavy delays due to fogging in the Bosporus affecting Suezmax tonnage trading Black Sea, and due to lower tonnage availability in the AG – owners have been ballasting en masse VLCCs from AG to WAF for better prospects (probably an interesting point for further analysis, ballasting vessels around the Cape and incurring millions of dollars in bunker expenses in the hope of better prospects in another geography; ‘herd mentality’ possibly, but for now, AG tonnage faithful tonnage got the best of it, and their prospects look good for February, too.) The best markets have been Caribs – USG and cross-Med trading for aframaxes, where in the latter market have benefited by association due to Bosporus delays but mostly have benefited from Libya’s crude exports coming to the market again (as a reminder, just last week, rebel forces had threatened to open fire at tankers approaching terminals for loading, but the economics got the better of the threats, since oil exports translate to hard currency in a desperate country.) One of the highest fixtures has been ExxonMobil’s fixture of Thenamaris’ MT „SEAOATH” at 260 WS, well in excess of $100,000 TCE for cross-Med voyage.

Activity in the sale & purchase market continues robustly, as hopes for a market recovery seem to be getting stronger hold. Late last week, it was reported athat Marmaras Navigation of Greece has acquired Hull No J0021 for 176,000 dwt capesize vessel with 2014 delivery at Jinhai Heavy Industries at approximately $47 million, and also Greek independent owner Transmed has acquired Qingdao Beihai BC180-26 and BC180-30 hulls (MV „CENTRANS RYTHM” and MV „CENTRANS ETERNAL”) for 180,000 dwt capesize vessels with 2014 delivery at about $48 million, each. These transactions stand out for a couple of reasons: despite the overall pessimism in the capesize market, still, these are acquisitions by ‘real’ independent, operating shipowners who put a lot of their own equity at risk (as opposed to ‘OPM’ investments) which indicates real conviction in the market; further to it, the pricing seems extremely competitive as compared to recent ‘OPM’, highly advertised acquisitions of comparable tonnage, and also compared to standard shipbroker tables with ‘Cape Resales’ markedly in the $50+ million territory.

Pretty lady named MV GRAND DIVA! (image source: http://www.shipspotting.com)

The Kamsarmax vessel MV „MINERAL PEARL” (81,500 DWT, 2013, Guangzhou Longxue) has achieved $27 million, while almost comparable vessel MV „PRETTY MASTER” (82,000 DWT, 2013, Zhejiang Judger S.B.) was sold at the relatively weak $24 million. Possibly the confused identity name of the vessel may explain the price differential? Panamax bulker MV „TRAVE” (75,300 DWT, 2001, Hyundai Samho) was sold to Kassian Maritime in Greece at the rather strong $16.1 million, while MV „GRAND DIVA” (75,600 DWT, 2007, Imabari SB) was sold at $21.5 million to Italian buyers (Augustea.) Older panamax MV „GLOBAL TRIUMPH” (73,000 DWT, 1996, CSBC Kaohsiung) sold to a scrap related $8 million to Chinese buyers (Shandong Shagang.)

MV DIETRICH OLDENDORFF (image source: Oldendorff Carriers)

Ultramax vessels have been in high demand recently, and Greek buyers have acquired four SDARI 64 vessels under construction at Jinling Shipyard (Hull Nos: JLZ9120408-11) ordered by Asia Pacific Enterprises; all vessels are due to deliver in 2014 and price consideration has been at about $30.5 million per vessel. We understand also the Oldendorff Carriers has sold a Crown 63 deign ultramax vessel MV „DIETRICH OLDENDORFF” (63,500 DWT, 2013, C4x35T, Dayang S.B.) to Greek buyers at $31 million, with a market-indexed charter back to the sellers.

Supramax tonnage has also been active, with the MV „FAR EASTERN VENUS” (53,500 DWT, 2006, C4x30T, Imabari S.B.) fetching $21 million, while also Japanese built MV „IKAN SERONG” (56,000 DWT, 2006, C4x35T, Mitsui Ichihara) achieved excess $ 22 million. Chinese built and with survey due shortly MV „ORIENT RISE” (56,500 DWT, 2010, C4x30T, Qinghan Shipyard) achieved a rather weak $21.5 million from German buyers. Handymax vessels have also been active with sistership vessels MV „PACIFIC CHAMP” and MV „PACIFIC ROYAL” (43,000 DWT, 1996, C4x25T, H.H.I.) achieving $9 million each, while slightly older but comparable Japanese-built vessel MV „AZURE SKY” (45,750 DWT, 1995, C4x30T, Imabari S.B.) achieved a shade below $9 million. Slightly newer and larger, still Japanese built MV „EILHARD SCHULTE” (49,500 DWT, 1999, C4x25T, IHI) achieved $12.75 million from Greek buyers, while slightly older and smaller Japanese-built MV „TINA A” (42,500 DWT, 1999, C4x30T, I.H.I) achieved $10.5 million by Danish buyers.

In the pure handysize market, MV „DANIELA BOLTEN” (23,750, 2007, C4x30T, Shin Kochi H.I.) was sold at just below $15 million, while MV „CS SOLARIS” (28,500 DWT, 2001, C4x30T, Imabari S.B.) was sold at a shade less $13 million. Large handy MV „CARL OLDENDORFF” (31,500 DWT, 2002, C4x30, Saiki) was sold to undisclosed interests at $14.1 million.

Definitely lots of activity to report, and this is only in the dry bulk market. We understand that most of these sales, primarily of ‘older’ tonnage, are individual sales (as compared to en bloc ‘corporate’ sales reported in our previous report) by independent owners, signifying still strong activity in the market and expectations for a recovery. And, as not to be any doubts about the strong market recovery expected – sometime, somehow – about eighty-five (85) were ordered so far in 2014, about four (4) vessels per diem, which, surprisingly, is well below 2013 activity when on average, seven (7) vessels were getting ordered each and every single day of the year, Saturdays, Sundays and holidays included.

Long live the market recovery!

IMPORTANT DISCLAIMER: Access to this blog signifies the reader’s irrevocable acceptance of this disclaimer. No part of this blog can be reproduced by any means and under any circumstances, whatsoever, in whole or in part, without proper attribution or the consent of the copyright and trademark holders of this website. Whilst every effort has been made to ensure that information herewithin has been received from sources believed to be reliable and such information is believed to be accurate at the time of publishing, no warranties or assurances whatsoever are made in reference to accuracy or completeness of said information, and no liability whatsoever will be accepted for taking or failing to take any action upon any information contained in any part of this website. Thank you for the consideration.

S&P, Newbuilding and Demolition Update (December 15th, 2013)

Posted on December 15, 2013 by Karatzas Marine Advisors & Co.

Since our last market review two weeks ago, Nelson Mandela, a great human being and a great leader passed away in South Africa, but ‘selfie pictures’ by dignitaries attending the memorial service got as much attention as the man himself. In North Korea, a 67-year old ossified mummy was summarily executed on charges (among others) of ‘alcohol abuse’ and ‘womanizing’ (no wonder N Korea is not a shipping hub), while on reflection of a bull market in equities, MasterCard International (ticker: MA) has announced a 10-for-1 stock split. Despite the bull market in equities (and commodities, and …), many companies are still hesitant to initiate stock splits – possibly reflecting on the QE-propelled bull market rather than consumption and confidence driven earnings, and thus, MasterCard’s split of about $800-share got attention; for shipping equities, reverse-stock-splits in order to meet the regulatory $1/share threshold are still more common than normal stock splits.

However, shipping’s proxy index, the Baltic Dry Index (BDI), has been having an exceptional time and closing at 2,330 on Friday, up approximately 28% in December, and 230% up year-to-date (BDI stood at 698 at the close of 2012.) The proverbial cat is out of the bag now, and more analysts are calling for a market recovery, basically on the main thesis that things are not as bad as they seem and the outstanding world orderbook has been declining over the last year as a percentage of the existing world fleet. That may be the case, but institutional investors keep ordering (or supporting companies to order) more newbuildings; and the Chinese have announced these week some meaningful subsidies for still more newbuildings for Chinese-flagged tonnage. Despite any doubting, we should be as festive as the season we are heading to, and note that presently, crude tanker spot freight rates – for ALL asset classes are higher than $30,000 pd, capesize vessels are making more than $40,000 pd, and in general most vessels – outside smaller containerships – trade on a cash positive basis; no a small achievement, especially having all markets moving higher on sync.

MV „CAPE PROVENCE” in laden condition (Image source: www.shipspotting.com)

MV „CAPE PROVENCE” in laden condition (Image source: http://www.shipspotting.com)

Cargill International has sold three capesize newbuilding contracts to the Scorpio Group (180,000 dwt, 2015, SWS) at a robust $57 million each, while simultaneously acquiring slightly older but much more competitively priced comparable tonnage: MV „SCOPE” (174,000 dwt, 2006, SWS) at $33 million, MV „PROUD” (178,000 dwt, 2009, SWS) at $42.5 million, and MV „CAPE PROVENCE” (177,000 dwt, 2005, Namura Shipbuilding) at $34 million, basically saving them $3 million per vessel per annum in depreciation. We understand that the vessels acquired have short-term charter attached at below present market levels. The modern capesize MV „HOUHENG 3” (180,000 dwt, 2012, HHIC-Phil) was sold at about $50 million to Chinese interests, a rather soft price (compared to Cargill’s vessels), but the shipbuilder for the MV „HOUHENG 3” is not on the preferred list of many buyers. The older and out-of-class MV „GLORY ADVANCE” (171,000 dwt, IHI, 1996) was sold at auction at a scrap related price of $10 million to Chinese buyers, while the smaller and slightly older MV „PACIFIC CHALLENGER” (149,000 dwt, Dalian, 1995) managed a better pricing at $12 million with six-month forward delivery to her buyers, Winning Shipping in China.

MV „DYNA CRANE” (Image source: www.shipspotting)

MV „DYNA CRANE” (Image source: http://www.shipspotting)

On the panamax dry bulk front, the vessel MV „MARINE PROSPERITY” (73,500 dwt, Sumitomo, 2001) achieved a very respectable $16.5 million from buyers of Swiss Marine, while the NYK-controlled, gearless MV „SHIRANE” (77,500 dwt, Mitsui SB, 2000) obtained a solid $15.5 million from Indonesian interests. [This is the second dry bulk vessel disposed by NYK of late, as we recently reported the sale of MV „HOKURIKU MARU” (94,250 dwt, Mitsubishi HI, 1995) at $8.9 million to Chinese buyers]. As a general comment, panamax bulkers are not behaving greatly as an asset class in the last year, as their market seems to get cannibalized from bigger vessels (kamsarmax, post-panamax, etc) and smaller vessels (ultramax, etc) and there is the general belief that once the expanded Panama Canal opens, ‘panamaxes’ will be one of the worst hit asset classes. The Supramax market has been more active in general, with MV „DYNA CRANE” (55,750 dwt, Mitsui SB, 2006) achieving a solid price of $21.5 million to Olympic Shipping, which sale compares well with the sale in last month of MV „MEDI SHANGHAI” (56,000 dwt, Mitsui SB, C4x30T, 2005) at $19.5 million. The slightly older MV „ACS DIAMOND” (53,250 dwt, New Century, C4x35T, 2005) achieved a lowly $15 million. Lauritzen Bulkers has also disposed of MV „TOUCAN BULKER” and sistership vessel MV „THUNDERBIRD BULKER” (58,000 dwt, Tsuneishi Cebu, C4x30T, 2011) at about $30 million each to Swiss Atlantique.

MV „TOUCAN BULKER” (Image source: www.shipspotting.com)

MV „TOUCAN BULKER” (Image source: http://www.shipspotting.com)

The handysize / ‘handymax’ markets have also been busy, with MV „NEW RAINBOW” (42,740 dwt, IHI, C4x30T, 1998) achieving about $11.25 million, while MV „AZURE SKY” (45,750 dwt, Hashihama, 1995) a comparable price of about $8.5 million. In the handysize proper market, MV „TUNA 7” (32,250 dwt, Saiki HI, C4x30T, 1999) obtained a very respectable price in excess of $11 million, while same-builder but smaller vessel MV „TAO TRIUMPH” (23,750 dwt, Saiki HI, C4x30T, 1997) obtained $7 million. It was a better deal for the buyers of MV „SUPER ADVENTURE” (28,750 dwt, Tsuneishi Zosen, C4x30T, 1996) at $8.2 million, while the Turkish controlled MV „HANJI INSTANBUL” (27,500 dwt, Hanjin HI, C4x30T, 1997) obtained $9 million. MV „RABEE” (28,750, C4x30T, 1998) was sold to Russian buyers at slightly less than $10 million. Wisdom Marine has allegedly flipping two handysize newbuilding contracts (34,000 dwt, Namura, C4x30T, 2016) at $25 million each to unidentified buyers, while two prompt resales from Jiangmen Nanyang (39,000 dwt, Jiangmen Nanyang, C4x30T) to European buyers fetched $23 million each. One can tell right away that this market appreciates quality, which is reflected in pricing.

The tanker market overall has been fairly calm on the sale & purchase front, as people are still looking at charter rates in disbelief: while VLCC rates have been improving for more than a month now, since our last weekly update Suezmax and Aframax rates jumped from less than $10,000 per diem (which has been more or less the year average) to above $30,000 per diem. Oh, the miracles of the season! Ridgbury Tankers in the US have confirmed the acquisition of MV „RIO GENOA” (160,000 dwt, Universal SB, 2005) at $35.5 million, and Indonesian owners disposed of MT „GAS BALI” (5,000 cbm, Shitanoe Zosen, Pressurized/Butane, 2007) to clients of Epic Gas at $13.5 million.

The demolition market has been rather subdued (inversely correlated to freight rates,) however, recently announced subsidies in China this past week may have greater implication for the market overall than so far noted. You can read our commentary on the announcement by following this link!

The markets definitely have been busy, no doubt, for freight and sale & purchase; one has to make hay while the sun shines as they say, or ‘hoist one’s sails when the wind is fair’ as we people in shipping ought to say. Market activity is good and always welcome, but one also has to take into consideration that in about a week, the market will be ‘closed’ for a month; thus, charterers and everyone else are trying to clear their desks before go on leave, and some of this activity may very well end up being just seasonal.

S&P, Newbuilding and Demolition Update (December 2nd, 2013)

Posted on December 2, 2013 by Karatzas Marine Advisors & Co.

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.

Panamax Bulker MV „CAROL” (Image source: Halifax Shipping News)

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.

S&P, Newbuilding and Demolition Update (November 25th, 2013)

Posted on November 25, 2013 by Karatzas Marine Advisors & Co.

A short while ago when shipping was in a real vertigo (let’s say about a year ago when no many asset classes in shipping were making more than $10,000 pd on the spot market), it was euphemistically said that we were living in ‘interesting times’. We just never thought how ‘interesting’ the times could get!

Beauty …

In the past week, on the back of a recent strong improvement in VLCC rates, it has been reported that entities affiliated with the Marinakis Group in Greece have acquired the 2014-scheduled-delivery VLCC MT „SHANGHAI SPIRIT” (320,000 dwt, SWS, 2014) at just below $90 million. It was reported that several strong buyers had shown serious interest in the Wah Kwong vessel, and thus the strong price. It has been also reported that interests associated with the Scorpio Group have or are about to contract four VLCCs at S Korea’s DSME at prices above $90 million each, with the earliest vessel delivering in Q1 2015. Also, it has been reported that DHT Tankers (DHT has filed on Monday to raise $110 mil from the public markets without specifying yet the use of the proceeds) and Navig8 have or about to have contracted ten VLCCs between them. And, there has been some clarification that the previously conversion-driven sale of the MT „SHINYO NAVIGATOR” (300,000 dwt, Hyundai HI, 1996, 42,448 ldt) was actually a demolition sale at the strong price of $440/ldt ($18.7 mil), just because the market cannot tolerate seventeen-year old VLCCs and their drydock of a few million dollars is not a risk-reward favorable investment. And, if it’s ‘embarrassing’ for seventeen-year-old VLCC heading for the scrap heap, let’s not forget that just two weeks ago the Fredriksen group sold two younger VLCCs for scrap, actually one of them built in 1999 (MT „GOLDEN VICTORY” 300,000 dwt, Hitachi Zosen, 1999.) It’s an interesting market indeed when year-to-date VLCC rates have averaged below $15,000 pd, despite the recent improvement to $50,000 pd, when 15-year-old VLCCs are too old to pass their special survey but there is solid appetite for newbuildings at the $90 million level, implying that with 100% utilization and zero leverage, the vessel has to earn $27,000 pd on average just to recoup the investment.

In the product tanker market, it has been reported that the Greek-controlled LR2 tanker MT „MAKO” (105,000 dwt, Samsung Heavy, 1998) has been sold to Chinese buyers at the in-line-with-the market price of $10.5 million. The two sistership LR1 ice-class 1A tankers MT „PERSEVERANCE” and MT „AFFINITY” (73,800 dwt, STX, 2005) have been committed at a market related $24.7 million, each to Greek buyers.

In the dry bulk market, there has also been strong buying interest from private owners, notably from Greek private owners and also Asian interests. The Japanese built and evocatively named MV „GRAND DIVA” (76,500 dwt, Imabari, 2007) was sold to Greek buyers at a very respectable $21.5 million, while the comparable vessel MV „MULBERRY PARIS” (76,500 dwt, Tsuneishi, 2004) was acquired at $19.5 million from buyers believed to be from Greece, again. The Japanese-built handysize bulker MV „VENUS OCEAN” (33,500 dwt, Shin Kochi HI, 2013) was sold at a very respectable $22.5 million to private Greek buyers. Overall, the pace for transactions in the dry bulk market has softened recently, which is primarily due to lack of high-quality modern sale candidates, where most of the emphasis has been placed by operating shipowners when there is little relief in debt financing from the banks, at least not yet.

The newbuilding market remains very robust, where besides the VLCC orders mentioned earlier, there have been orders of at least six VLOCs/Newcastlemaxes by Kara Shipping at Beihai Shipyard and Foremost Maritime and Winning Shipping at Nantong Cosco KHI. Of course there have been a few more orders for smaller dry bulk vessels and also containerships, but who bothers with the little stuff when the big-ticket items draw all the attention?

… over age? (Image source: AFP PHOTO/Farjana Khan GODHULY)

In the demolition market, pricing seems to be improving solidly; first, the decent / strong freight markets have made several owners to postpone the inevitable, while the offer of sale of modern, high value vessels like the MT „SHINYO NAVIGATOR” (Pakistan sale) has pushed the market upwards. In the last month, demolition prices in the sub-continent have improved by about 10% as now tankers command about $430/ldt while bulkers range at about the $400/ldt mark. To the extent that the Reserve Bank of India (RBI) and its recently elected governor Prof Raghuram Rajan manage to stabilize the currency (INR) at 65/US$ or below, there is legitimate hope that the demolition market could move higher, at least in the near term.

Again, who ever said that shipping is not an interesting industry?

S&P, Newbuilding and Demolition Update (November 17th, 2013)

Posted on November 17, 2013 by Karatzas Marine Advisors & Co.

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.

MT „SHINYO NAVIGATOR” (1996, HHI, 300K DWT VLCC); Image source: shipspotting.com

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.

MT „OKHOTSK SEA” (Image source: shipspotting.com)

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?

MT „G ELEPHANT” (2012-built at Daewoo VLCC)

Karatzas Shipbrokers Register

The Shipping Sale and Purchase (S&P) Worldwide Report

Category Archives: S&P Update