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

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 SEAOATHat 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 RYTHMand 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 woman MV GRAND DIVA!

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)

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!

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

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S&P, Newbuilding and Demolition Update (September 30th, 2013)

Cape Asset Pricing Improvement, for now
The capesize market had a terrific last two months with freight rates briefly passing $40,000 pd recently for an eye-catching improvement of almost 300%.  As phenomenal such rates as they may be, one may even call them a ‘fantastic object’ as legendary investor George Soros would say, unreal but immensely attractive; besides the obvious question on whether the freight rally is sustainable, there have been anxious inquiries on the impact of the rally on asset pricing, especially for modern capesize vessels.We understand that the 2013-built at IHI (now called Japan Marine United after the recent merger with Universal Shipbuilding Corporation) 180,000 DWT capesize vessel MV „CAPE CHALLENGER 1” was sold last week at about $51 million. Although the owner of the vessel was a Japanese local company, we understand that the sale was controlled by Mitsubishi Corp as the Sogo Shosha. There are conflicting reports on the buyers, ranging from private Greek owners (Carras Hellas) to the publicly traded Navios Group (if the buyer is a publicly traded company we are sure to have the obligatory PR in due course.)  Also this week, the 2013-built at Hyundai Heavy (HHI) 173,000 DWT capesize vessel MV „JK PIONEER” has been reported sold, possibly to clients of Diana Shipping (DSX) at a reported price of $52-53 million. Sellers are Korean-based JK Maritime, and the solid price is partially attributable to ‘eco design’ of the vessel and very good ‘spec’ despite the below market charter-attached of about $11,500 pd for six more months (which, if true, would impacted negatively the price.)

Big Cape Docking (Image Source: Vale)

Big Cape Docking (Image Source: Vale)

These two sales indicate substantial improvement for modern cape pricing over the last few months based on a market comparison analysis. About a month ago, Belgium-based Bocimar (Compagnie Maritime Belge) sold their 2012-built by Hanjin Subic in the Philippines MV „BULK CANADA” at $41.5 million to Norway’s Berge Bulk; given the perceived ‘weak’ name of the shipbuilder in the marketplace, some discount is attributable to such fact. Shortly before that, in late July, Jinhai Heavy Industries-built / controlled 179,000-dwt Hull No J0021 with 2013 expected delivery was sold at a reported price of $38 million to reportedly Greek interests (possibly, Marmaras Navigation.) This vessel had been ordered in 2010, based on information from market reports at the time, on behalf of Fredriksen’s Golden Ocean concern with an expected April 2012 delivery, but accurate details of full-fledged newbuilding contract details, such as refund guarantees, down payment, etc are thin at least. In any event, both these older sales deserve a downward adjustment of a couple of millions due to their shipbuilding pedigree and the potential lack of any extra TLC provided during their construction; and, both of the current sales came from high quality yards and seem to be of good specification, at least of specification not seeing in the market that often from sale candidates.

Based on these sales, there has been an asset appreciation in play to the tune of probably more than 25% over the last two months (when adjusting for age, spec, quality of parties involved, reputation of shipbuilders, etc)  No bad for two months’ time, especially after the misery of the markets in 1H2013; and, again, freight improved by ten times as much in almost the same interval.  Based on our discussions with market players, we understand that several modern capesize owners were approached about the possibility of selling vessels, providing another sign that the sentiment, at least temporarily, has improved and underlying the ever stated argument that there are no good vessels for sale.

It will be interesting seeing how the market will develop, and whether the present developments in the cape S&P market are indeed signs of a cyclical recovery or just another ‘false positive’ temporary peak.  At least for the immediate future, the market is widely expected to take a breather with Golden Week underway in China – the mother of the cape market; also, the paper market (FFAs) have not softened in the last two weeks despite the improvement of the spot market (CAL 14, CAL 15 and CAL 16 trade at about $17,000 pd,) well below the spot market, although the paper markets in shipping often trade in backwardation.  And the drop over the last two weeks for HRC steel has dropped by $20/ton squeezing the margins for the steel mills.

© 2013 Basil M Karatzas & Karatzas Marine Advisors & Co.

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.