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Wednesday, July 08, 2009

Hellas: Ship owners bought 46 second hand vessels, investing $500 million says Clarksons

Wednesday, 08 July 2009

Hellenic shipping companies, although at a slower pace, still appear rather active in the secondhand market. According to ship researcher Clarksons, for the period from the beginning of the year and until the end of May, they had invested about $500 million to purchase a total of 46 secondhand vessels. This represents approximately 10 percent of the world’s trade of used ships. As was expected the big majority of those ships were either dry bulk carriers or tankers. According to industry stakeholders, those owners who have the necessary liquidity, or are able to secure financing, are looking into the opportunity to hedge their losses, by reducing the average purchase price of their fleet.
Although this is a process that differs for each owner, depending on the type and size of his fleet, it’s a fact that at least some of them are actively in the market to secure some vessels at today’s bargain prices, compared to those observed at the peak of the market during the summer of 2008, just one year ago. Sources indicate that those companies that bought most of their vessels during that period, are faced with major difficulties today, especially when it comes to repaying their loans. This issue is omnipresent, but is different even among those who opted for new investments at last year’s high prices, since if they secured a long-term time charter (which wasn’t renegotiated in the meantime), they could still be well off. But these cases are rare.
Indeed financing still appears to be a tricky point for almost every ship owner these days, with sources indicating that banks are hesitant to finance shipping deals even for amounts of $10-11 million, which in the past could be provided even with a plain phone call. Despite this, most ship owners have secured waivers from banks, while they state their belief that at least local banks (Hellas) which expanded their shipping portfolios during the previous years, will stick by troubled owners, with very few exceptions. After all, most banks have realized that what’s needed today is forge even stronger ties with the shipping community, because this will be properly repaid in the future, when the market fights back and enters another cycle of high returns.
As for the critical issue of where will the dry bulk rates will range during the second half of the year, there are mixed signs. Without knowing the rate by which the Chinese steel industry will be able to empty iron ore stockpiles, which are estimated to be at approximately 72 million tons (a number expected to rise even further even at 78 million tons, since many bulkers are still waiting in congested ports to unload their cargoes), it’s difficult to determine when will Chinese buyers of iron ore, the single most important factor in the market today, come back and hire ships again. Still, there’s a significant number of ship owners, who believe that the market won’t be able to surpass the 4,000 level of the BDI (Baltic Dry Index) and remain there for a sustainable period of time. That’s because supply of new vessels is expected to increase as we move closer to the end of the year and many shipyards will speed up their deliveries. Yesterday, the BDI closed at 3,216 poitns, down by 159, but the most notable was the huge drop of the capesize market, which shed 437 points. 

Nikos Roussanoglou, Hellenic Shipping News