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Editorial: Ship Owners Take a Break

Chennai, 15 Sept 2021:

Activity in the newbuilding and S&P markets has been rather dull during the past week, as the summer lull is gradually coming to an end. Additionally, asset valuations have increased considerably over the course of the past few weeks, with the market needing some time to catch up, according to a recent Allied Shipbroking report.

In its latest weekly report, shipbroker Allied Shipbroking said that it was “a relatively quiet week was noted in the dry bulk newbuilding market with few businesses circulated.

In particular, there was an order for 3 Capesizes and another for 3 Ultramaxes, a fair drop in activity compared to previous weeks. Newbuilding prices seem to have stabilized as of late, albeit they are still considered relatively high, given that they have reached levels not seen for at least a decade. This seems to have trimmed some appetite.

However, the robust sentiment and the persisting record freight earnings are expected to retain activity moving forward. In the tanker market, the lack of activity for yet another week has been of little surprise. The uninspiring fundamentals and poor sentiment still prevails and this reality is unlikely to show a swift change right now.

Adding more on the inactivity noted in the year so far, newbuilding prices have firmed considerably in the year so far, trimming possible buying interest further.

Finally, the impressive containership market continues to attract a fair amount of attention from buyers.

This was clearly apparent last week as 17 new units were added to the orderbook. The positive momentum in the segment is likely to hold, given the robust demand and the strong confidence levels being noted”, Allied noted.

In a separate report this week, shipbroker Banchero Costa said that “in the container market, it was reported Hyundai has received an order for 8+4 optional container vessel (abt 16,000 teu) from Maersk. Vessel to be methanol fuelled. All firm 8 units to be delivered during 2024 and options during 2025. Vessels to be priced at $175 mln each.

Furthermore, Seaspan Corporation placed an order in China for 24x 7,000 teu wide beam feeders ten of whom will be dual fuel and 14 conventional fuel. Vessels to be built at Jiangnan, Hudong, SWS and Shanaiguan. Vessels will be delivered starting from 2024 and have secured long term TC with Maersk and Hapag Lloyd. In the gas segment, one very large LNG carrier (abt 174k cbm) was added by Celsius Shipping at Samsung with delivery during mid 2024 .

Meanwhile, in the S&P market this week, Allied added that “on the dry bulk side, a setback was noted in terms of activity as fewer units changed hands this past week. However, sentiment remains robust in the sector and freight earnings are even more attractive. Therefore, we expect that last week’s reduced interest is temporary, despite the fact that the firm second-hand asset prices may well be curbing some of the buying appetite.

The focus in the year so far has mainly been on Kamsarmax and Ultramax units, a trend that is anticipated to continue over the coming weeks. On the tanker’s side, the disappointing fundamentals have trimmed interest from buyers.

Despite the fact that we are noting only sporadic deals taking place, as part of a bargain hunting strategy from potential buyers, confidence in this sector remains weak and thus the expectation is for subdued activity to emerge in the coming weeks. Adding to this the fact that asset prices are still relatively high and you start to see why things are set to remain subdued”, the shipbroker concluded.

In the dry segment, the market trend keeps moving up with both prices and rates. It will be interesting to see what is going to happen over the next few weeks as we are getting through the peaks day- by -day.

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