‘Shipshape 10’ News for Week Ending May 28th, 2017

‘Shipshape 10 List’, a list of news and articles published in the current week that a senior executive in shipping, shipping finance, commodities, energy, supply chain and infrastructure should had noticed; news and articles that are shaping the agenda and the course of the maritime industry.

Sometimes seemingly tangential, periodically humorous, occasionally sarcastic, sporadically artistic, inferentially erotic, but always insightful and topical.

And, this week’s ‘Shipshape 10’:

While lots of shipping hope has been laid at the feet of a Chinese recovery, China’s sovereign debt has been downgraded mostly on concerns of slowing growth:
1. China’s sovereign debt downgraded by Moody’s (Financial Times)

2. China Moves to Stabilize Currency, Despite Promise to Loosen Control (The New York Times)

A seemingly major investor for shipping, but not clear whether there are string attached; in any event, the funding gap in shipping could suck up Dubai’s billion fund in seconds:
2. Dubai looking into forming $1 billion shipping investment fund (Reuters)

Shipping is a commodity b2b business. Od, isn’t it?
Quoting Basil M Karatzas, at Splash 24/7
3. Has Shipping Become Commoditised? (Splash 24/4)

In a weak overall market, mergers in the commodities trading world, and other news:
4a. Sowing Glencore’s Waves of Grain (Bloomberg)

4b. Huntsman and Clariant unveil $20bn tie-up (Financial Times)

4c. Noble Group, a big Asian commodities trader, is teetering

4d. War on Sugar Turns Years of Growth Into Market Tipping Point (Bloomberg)

OPEC had once promised to do ‘whatever it takes’ to drive oil prices higher. This week’s developments from Vienna show that OPEC may not be in charge of the oil markets as it used to be:                                                                                         5a. OPEC Should Watch Glencore’s Bunge Jump (Bloomberg)

5b. OPEC’s Weakest Link Is Not Who You Think It Is (Bloomberg)

5c. Opec: more of the same (Petroleum Economist)

5d. BP and Glencore warned over bullish fossil fuel forecasts (Financial Times)

5e. Oil market awaits ‘whatever it takes’ details as Opec gathers (Financial Times)

And the reason for OPEC’s dwindling chances controlling the oil markets:
6. New era beckons as Euronav VLCC is first to load US oil (Lloyd’s List)

Soft tanker asset prices have been conducive for M&A activity, with Scorpio Tankers acquiring the Navig8 Products Tankers fleet, creating the biggest player in the sector:                                                                                                                     7a. Scorpio Tankers fleet worth $3 bn after Navig8 Product Tankers takeover (Seatrade Maritime)

7b. Scorpio Announces Merger With Navig8 Product Tankers (The Maritime Executive)

While the world of ‘commodity shipping’ is struggling to recover, the cruiseship market has been strong, and China’s prospects in the sector cannot be ignored: 8a. China Tops Two Million Cruise Passengers (The Maritime Executive)

8b. Princess Tells “Chinese Story” Along Silk Road Route (The Maritime Executive)

8c. Greece To Bolster Cruise Capabilities (The Maritime Executive)

The current issue of the Economist is running a series of articles the oceans:
9a. How to improve the health of the ocean (The Economist)

9b. Getting serious about overfishing (The Economist)

9c. Megaprojects threaten Hong Kong’s iconic dolphins (The Economist)

“I will greatly bless you, and I will greatly multiply your seed as the stars of the heavens and as the sand which is on the seashore.” Genesis 22:15-18, and “like the sand of the sea, which cannot be counted” Genesis 32:12. Apparently, sand is not as plentiful these days:

10a. The World is Running Out of Sand (The New Yorker)

10b. An improbable global shortage: sand (The Economist)

Majestic sunset: Piraeus. Image credit: Karatzas Images

© 2013 – present Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

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.

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S&P, Newbuilding and Demolition Update (September 27th, 2014) – Dry Bulk Market Focus

It’s hard to believe that the Baltic Dry Index (BDI) started the year above the 2,200 mark given that now is standing at below 1,100, and having spent most of the late spring and summer below 1,000. A seasonal rally had religiously been prayed for and for a few recent weeks capesize rates improved to ‘high teen levels’ (approximately $18,000 pd on average spot market), but then again, the rally seems to have run out of steam a bit too early. A worldwide bumper crop season of grains, primarily in North America, has been holding the hopes for boosting panamax rates especially in the Atlantic, but it seems railroad capacity has preferentially been tied up to shipments of shale oil, leaving inland seaways transport to cope with the movement of the cargo along the Mississippi River to New Orleans for exporting.   China, as this was put into perspective in a recent New York Times op-ed article, has been focusing on clean air and has shut down domestic coal mines of poor calorific quality or high sulphur content, and likewise imposed higher standards of imported coal, which likely would stimulate increased imports and thus help drive higher dry bulk freight rates. There has been speculation that, over the long run, China will be shifting its power generation to natural gas, which is perceived as a negative development for coal miners worldwide, but good for the LNG trade fortunes. In India, there has been noted excessive port congestion with vessels waiting to unload coal, and there is hope that such port congestion could translate to higher rates. The decision by the Supreme Court of India to declare ‘arbitrary and illegal’ the issuing of licenses for more than 200 coal mines issued since 1993 creates further hopes that coal imports would be needed for the country to meet its domestic needs. The decision is not revoking the licenses altogether yet, but taking action on the ‘coal scam’ has created great uncertainty for the approximately 30 operational mines.

MV BERGE MACCLINTOCK

Capesize vessel ‘Berge McClintock’ (Image source: http://www.shipspotting.com

In terms of sale and purchase in the dry bulk market, Bunge has exercised a purchase option to acquire from Fleet Management MV „C Phoenix” (2011, Jiangsu Rongsheng, 176,000 dwt) at a deep-in-the money price of $40 million. It is understood that the vessel has been already on charter to Bunge until January 2015 at $15,000 pd with Bunge’s option to extend at similar levels for an additional year, which definitely has affected pricing further. Navios has purchased from Berge Bulk MV „Berge McClintock” (2012, Hanjin Heavy, 179,000 dwt) at $52.5 million. MV „Rio Manaus” and MV„Rio Montevideo” (2012, HHIC- Philippines, 180,000 dwt) were sold CarVal Investors at $52 million; certain broker reports have the sale price at $48 mil, which may be better in line with the market given the thin pedigree of the shipbuilder and also the notion that sellers have been the Ahrenkiel Steamship in Germany, knowing to have been in discussions with their banks. CarVal has been active in shipping recently as a couple of week ago has been associated with the purchase of another modern cape MV „Silver Surfer” (2013, Sungdong S.B., 179,000 dwt) from Sinokor at $53.5 million, which would still be considered at a slight discount to the market, placing prompt capesize re-sales below the $60 million market, in order to reflect for the price achived for this 2013 tonnage.

MV JIDAL VADAR

Built at Burmeister & Wain (Denmark), panamax bulker MV ‘Jindal Vadar’ (Image source: http://www.shipspotting.com)

Vintage panamax bulker MV „Castillo de San Petro” (1994, Korea, 73,500 dwt) was sold for further trading at $5.7 million to undisclosed buyers, a price in line with her scrap value (10,624 ldt); vessel is immediately SSDD due. Similarly aged MV „Sinokor Pioneer” (1995, Sumitomo, 70,000 dwt) was sold at $5.95 million to Chinese buyers, with vessel having about a year to trade before her next drydock, while Danish-built MV „Jindal Varad” (1994, Burmeister & Wain, 75,800 dwt) was sold at $5.8 million to Indian interests. In terms of modern panamax bulkers, the most recent transaction of modern tonnage has been almost a month ago when MV „Zhushui 5” (2012, Seroya Zhushui, 79,500 dwt) fetched a discounted $20.5 mil by Greek buyers; the transaction is interesting that a relatively new Chinese shipbuilder built the vessel on their own account (with no independent third-party supervision besides the classification society) and then facing weak demand when attempting selling the vessel, and thus the soft cash price; interestingly, we keep seeing more tonnage of that nature.

MV SEA LILY

Supramax bulker MV ‘Sea Lily’ (Image source: http://www.shipspotting.com)

In the supramax / handymax segment, MV „Emerald Strait” and MV „Endeavour Strait” (2010, Sanfu, 56,800 dwt) were sold by Rehder Carsten in Hamburg to Maritime Opportunities in Norway at $22.5 million, a rather strong price, given the vessels’ un-inspiring shipbuilding pedigree. Norwegian financial buyers were also the buyers of MV „Free Jupiter” (2002, Cosco Nantong, 47,000 dwt) at $12.3 million while sellers Freeseas (Nasdaq: FREE) took the vessel back on bareboat charter for seven years at $5,350 pd. Supramax bulker MV „Sea Lily” (2004, Tsuneishi Zosen, 52,500 dwt) was sold to Greek buyers at $15.5 mil by CosBulk to Greek buyers.

In the smaller handysize market, the well-built in Japan MV „Kwela” (2002, Kanda, 32,500 dwt) was sold at approximately $10.7 mil to ACT Infraport in China, while MV „Caribbean Frontier” (2002, Minami Nippon, 28,000 dwt) was sold at 9.5 million. MV „Fortune Frontier” (2002, Shikoku, 29,000 dwt) was sold in August at $9.7 million, confirming an asset price stability despite the end of the summer and renewed optimism on improving shipping prospects. MV „Ocean Pearl” (1994, Kanda, 28,000 dwt, 6,352 ldt) built at same shipyard in Japan achieved a very respectable $6.8 million by Chinese buyers. Exact sistership MV „Theomitor” (1994, Kanda, 28,000 dwt) by Anbros Maritime in Greece achieved also same price of $6.8 million in independent sale to also Chinese buyers a week earlier. MV „Silver Star” (1995, Saiki, 22,000 dwt) achieved a strong price of $5.1 mil given her immediate SSDD due position (5,318 ldt). Finally, MV „Lady Anthula H” (1999, 20,700 dwt, 5,300 dwt) was sold in a bank-driven transaction to Turkish buyers at $4.5 million with her SSD immediately due.

In re-capping market activity, the trend of institutional investors or buyers with the access to the capital markets is focusing on modern, expensive tonnage; lack of credit for the traditional, independent shipowner has shifted the market towards small transactions with relatively older tonnage; reflecting the nature of the buyers, there have been a clear bifurcation in the buying interest as well in reference to tonnage quality, with owners putting their own money on the table seeking value deals with quality (read Japanese) tonnage; there is little tolerance for sub-par tonnage; for institutional buyers, shipyard pedigree is a lower priority as this apparent with the capesize transactions reported herewith.


© 2013-2014 Basil M Karatzas & Karatzas Marine Advisors & Co.  All Rights Reserved.

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.