Dry bulk market dynamics shifting
Demand for second hand dry bulk tonnage has been rising of late, with shipowners’ focus being the Handysize and Supramax sectors. In its latest weekly report, it is said that following the end of the catholic easter, during which the majority of shipping market participants were on holidays, it is interesting to note a few things about the SnP market behavior. Interestingly, the dry secondhand market remained hot amid the holidays, with Handysize and Supramax sectors attracting the majority of buyers’ interest. Handysize in particular, have rebounded strongly both interest wise and asset value wise compared to past two years. In more than few cases, experts have seen owners traditionally active in other asset classes turning their interest towards Handysize purchases. Furthermore, another sign of the shift in market dynamics is that we have been hearing more often about off market deals at firm levels; some buyers prefer to pay a premium either in order to avoid competition or because they believe that this premium will turn out to be the immediate asset value upside on the next day.
Ship owners reap major fees in the demolition market
The boosting of financial incentives by scrapyards over the past few weeks seems to have worked, as more and more tonnage becomes available for scrapping. In its latest weekly report, it is said that after having seen some barren weeks in the recycling field, due to the improving freight markets and steadily rising second-hand values, there was finally something to get excited about with some large and interesting units circulated for sale. These vessels were met with an increasingly set of starved cash / end buyers, who seemed to burst into life as the magic 500/ldt price was smashed, to the delight of the Owner. This also meant experts saw the first VLCC sold so far this year which is encouraging for future sentiment. Perhaps the interest for alternative trades for older VLCC units has slowed! However, willing Sellers will have to be quick to benefit from these impressive numbers as the religious month of Ramadan is slowly approaching which is strongly observed in the Indian sub-continent and will affect sentiment in the industry and deliveries at the end of April – early May as many industry stake holders start to slow down their operations.
March marks turnaround for container sector
In March, orders for 45 Ultra-large containerships (ULCS, 15,000+ TEU) were placed, breaking a record on its own. Adding to this; 27 orders for ‘smaller’ sized ships were placed in the same month, bringing the total order capacity to 866,060 TEU and marking a real turnaround for the container shipping sector. The turnaround for the container shipping sector offers a glimpse of the level of confidence currently seen in the business on behalf of owners as well as investors. In all of 2020, a total 995,000 TEU of container shipping capacity was ordered. Capacity ordered in the first quarter of 2021 has already reached 1,398,000 TEU, a six-year-high compared to previous full years. In October and December last year, orders placed were almost exclusively for ships with a maximum capacity of 23,000-24,000 TEU, with only four out 23 orders for ULCS outside that range. So far in 2021, only 4 out of 81 orders for ships with a capacity of at least 11,800 TEU were larger than 15,500 TEU.
LNG carriers – the future is flexible
As global LNG production continues to grow, the industry is turning its thoughts towards the next generation of carrier vessels that will underpin the supply chain for this vital energy source. In an era dominated by the drive for decarbonisation and efficiency, integrated powertrain solutions open up tremendous opportunities to develop flexible, future-proof LNG carrier designs that give owners and operators a vital competitive edge. With the world’s need for energy continuing to rise at the same time as the competing need to focus on decarbonisation, the demand for LNG is growing. The wheels are already in motion in the form of several infrastructure developments for new LNG export and import terminals around the world, and shipyard slots being snatched up ready for the construction of the next generation of carriers that will form the backbone of the future supply chain.
Fewer deals were concluded last week in the S&P market
As light reduction was clear in the S&P market this past week, as Easter Holidays and Spring Break festivities were in full motion. In its latest weekly report, it is said that on the dry bulk side, the overall activity momentum shifted slightly as of the past week, given the relatively limited number of transactions that came to light. A fairly different picture compared to the volume noted throughout 1Q2021, though relatively explained by the Spring break disruptions that are taking place. Though in part we are also seeing many sellers step back and as such hold back transactions, in their effort to hopefully get better prices down the line. Notwithstanding this given the general good sentiment and recent buying appetite levels, experts can expect things to quickly ramp up. On the tankers side, another good week in terms of activity noted. Despite the prolonged uninspiring freight rate levels, we are currently amidst a different track both in terms of vessel prices, as well as, transactions levels.