September 2014 -Shipbrokers and consultants since 1919- Monthly S&P Report HIGHLIGHTS Gas supramax-panamax segment, however how many of these Product/Chemical Crude: Activity picking up in the VLCC market It s been a quiet past few weeks for the second hand gas vessel market. Laugfs Gas picked up the 6,571 cubic me- candidates are realistic sellers is less clear. Inspection, offers, no deals will continue to happen in the short-term. We In the stainless steel tanker market we have buyers for modern 19,000 dwt second Product/Chemical: Interest for coaster tonnage heating up ters LPG carrier Gas Puffer (blt 1995) from Greek owners Prime Marine Management for a reported US$ 6.9 million. The are expecting many Chinese blt vessels to hit the market over the coming months with continuing downward pressure hand units whilst most sales candidates remain tied up in charters or a JPY/USD headlock. Interest for smaller coast- Dry: High ordering activity might cause vessel values to fall going forward Hot Hulls vessel will be renamed the Gas Challenger, and the acquisition is part of Laugfs move towards owning, operating and chartering a varied fleet including LPG carriers. Older tonnage, especially larger sizes, have been sold at a premium for the past few months, as market demand is high and fleet supply still relatively modest. Dry Deals have been concluded over the holidays for those who stayed in the office to play this depressed market. The problems buyers have to face generally concerns the amount of tonnage coming out of China. The list of sales candidates is growing in the on asset values. Crude The late part of August saw activity picking up in the second hand tanker market. Two VLCCs dominated the last week of the month with Ulriken (built 1998 South Korea) reported sold for US$ 26.5 million, and the three years younger vessel DS Victoria being picked up for US$ 33 million. Newbuilding prices coming out of China, showed a firming trend for the month in most tanker sizes. As we entered September, the market continued to see an increase in activity with Greek buyers paying US$ 33.7 million for another 2001 South Korean built vessel in the VLCC size. er tonnage in North West Europe and Far East Asia combined with lack of modern second hand sales candidates has owners looking at newbuilding possibilities, although current charter rates do not yet justify such. Japanese stainless steel tanker yards are more or less booked until 2017, and the recently released white-list of yards approved by Chinese government so far omits some of the larger potential builders of such tonnage. In the MR market, we continue to see an increase in resale candidates from the burgeoning orderbook, while for some of our active buyers modern second hand units appear to be a more effective use of capital. 1
VLGC VLGC Fleet - Deliveries and Scrapping VLGC 82/84 kcbm Strong market conditions and heavy ordering is causing influx of deliveries to VLGC market. A strong freight market and rising second hand values for older vessels indicate that we will see little tonnage in the larger sizes being scrapped going forward. Dry Bulk Dry Bulk Fleet - Deliveries and Scrapping Secondhand 5 yr Significant ordering of past years now being delivered. Freight rates and NB prices have been at lower levels for a while, but any expectations of a recovery might be offset by supply from Chinese yards hitting the water, putting pressure on asset values. Chemical Chemical Fleet - Deliveries and Scrapping Chemical Tanker STST 19,999dwt - SH 5 Year Yards are filling up from the high ordering rate within the segment. SH 5 values have gained momentum since last year and are now increasing. 2
Special report - Private Equity One of the shipping market s most prominent features is its volatility. And as far as any main feature goes in attracting new partners, the market s rapid rate of change is doing exactly that when it comes to tempting the financial market. As traditional bank finance has grown more careful in the wake of the financial crisis, private equity and hedge funds have emerged as new actors. Speculations that a market recovery is imminent have prompted investors to take advantage of low new building prices, buying vessels and shipping companies, creating jointventures and taking over shipping loans from many traditional banks seeking to reduce risky exposure. This source of ready finance has helped make up for the recent years shortfall from the commercial banking sector, and has through its sheer volume of financial commitment set itself apart as a force to be reckoned with within the current industry. While estimates vary, Tufton Oceanic puts total private equity investment into shipping at US$ 32 bn in the last two years alone. Due to the often undisclosed nature of such deals however, real numbers could be far higher. As a result of the increased levels of available capital there has been a significant increase in new building orders, as companies take advantage of lower new building prices to expand existing fleets as expectations for a recovery grow. Some actors are voicing concern over this development, arguing that tonnage oversupply promotes the risk of a delayed recovery in some market segments. Whilst private equity in particular has been a reprieve in terms of offering fresh finance and providing equity, this source of capital may also be tempting the fate of the selfadjusting market mechanism, by enabling inefficient companies to pull through where their demise would have been a natural dynamic of the self-regulating market. -5 years. As conditions in the freight market at the moment are making it difficult to make a profit from operations, funds are employing other strategies, such as watering out ownership through IPOs or by selling ships in the secondhand market. As much as the market has benefited from the activity brought on by private funds, it is also keenly watching how they will extract themselves from investments and what the possible effects will be. Some analysts have argued that the fleet can handle the influx of tonnage represented by current order books, as they believe scrapping will increase as international regulations call for more eco-friendly vessels. Whilst we agree with the principle of this argument, we do not believe it will have the desired effect, as fleet age is very young at the moment. (Exemplified by the age of today s chemical fleet averaging at 10 years.) In addition, some older vessels are servicing long-term contracts preventing them from being scrapping candidates. Highly affected by the downturn in the global economy, the shipping industry has been attractive for investors bullish about a recovery. But as recent GDP growth estimates have continuously been adjusted downwards over the past two years, we are likely to see lower growth rates over a longer period. This is setting a sober stage for the demand side of shipping, which is also augmented by an apparent slowdown in China. What remains true is that the market will always make sense to someone, whichever way it turns. At the moment, it could be telling some actors to sell, as the current bullish sentiment might make for a hard landing in vessel values within the next 12-18 months unless we see a long awaited recovery pushing freight rates higher. By nature, private equity has a shorter investment horizon than what is the case in traditional shipping, seeking to reap returns within a short time frame, and divest from investments within 3 3
Scrapping Scrap Price Developments Panamax and Capesize Scrapping Newbuilding Prices (China) Source: MSI Dry Bulk NB Prices Trend Y-O-Y Aug-14 Jul-14 Aug-13 Newcastlemax 57,3 57,7 49,2 Firming Capesize 54,2 54,5 46,9 Firming Kamsarmax 30,0 30,1 27,2 Firming Panamax 28,8 28,9 26,5 Firming Handysize 23,7 23,7 22,0 Firming Tanker VLCC 94,8 95,5 88,3 Firming Suezmax 60,4 60,6 56,6 Firming LR1 51,0 50,9 45,5 Firming LR2 40,3 40,6 37,7 Firming MR 34,9 34,9 37,7 Softening Dry Bulk NB Prices Tanker NB Prices Bunker Prices (Monthly avrg US$/mt) This Month Last Month Trend Rotterdam IFO 380 564,6 576,5 Softening Rotterdam MGO 851,1 868,5 Softening Singapore IFO 380 592,7 597 Softening Singapore MGO 875,4 889,2 Softening 4
Interest rates, currencies, PMI US$ LIBOR Interest Rate - Maturity 3 Months Exchange Rates Manufacturing PMI US/China/EU USD/CNY 100 Office Oslo Address Lorentzen & Stemoco AS Munkedamsveien 45, 0250 Oslo P.O. Box 2029 Vika, 0125 Oslo Norway +47 2252 7700 Shanghai Lorentzen & Stemoco Shanghai Representative Office Room 2701, Shanghai Central Plaza 381 Huai Hai Zhong Road, 200020 Shanghai China +86 21 6391 5880 Disclaimer: The information contained within this report has been collected from a number of market sources and is given in good faith without guarantee, for information purposes only. Lorentzen & Stemoco and its affiliates, directors and employees are not liable or responsible for any consequences whatsoever occurring from errors or inaccuracy of the information contained within this report. 5
Transactions list - Wet -Shipbrokers and consultants since 1919- Name Size Built Yard Price US$m Buyer Seller Notes Product St Nikolai 47,300 DWT 2005 Onomichi 18 Unknown Maruta Industries Sipea 37,300 DWT 2007 STX 18,2 Ancora Investments Ottavio Novella Hull 5129 SPP 50,300 DWT 2015 SPP 38 Sinokor Merchant Marine Ceres Shipping Hull 5128 SPP 50,300 DWT 2014 SPP 38 Sinokor Merchant Marine Ceres Shipping Hull 5127 SPP 50,300 DWT 2014 SPP 38 Sinokor Merchant Marine Ceres Shipping Hull 1154 SPP 50,300 DWT 2015 SPP 38 Sinokor Merchant Marine Ceres Shipping Verige 52,700 DWT 2010 3 Maj Brodogradiliste 25 Unknown Uljanik Plovidba Hull 5126 SPP 50,300 DWT 2014 SPP 37,1 Scorpio Tanker Ceres Shipping Green Stars 36,000 DWT 2001 Daedong 12,5 Unknown Indonesia Andromeda Shipping Nord Farer 40,100 DWT 2005 SLS 15,5 Unknown Norden Nord Fast 40,100 DWT 2008 SLS 20,4 Unknown Norden Hull 1136 50,300 DWT 2015 SPP 34,00 BW Ahrenkiel Hull 1137 50,300 DWT 2015 SPP 34,00 BW Ahrenkiel Silver Lining 46,000 DWT 2003 Shin Kurushima Ujina 14,50 Unknown Greek Meiji Shipping Co Hull 1180 SPP 51,300 DWT 2016 SPP 36,20 Cardiff Marine Roxana Shipping Hull 1179 SPP 51,300 DWT 2015 SPP 36,20 Cardiff Marine Roxana Shipping Hellas Progress 46,200 DWT 1999 Hyundai Heavy Ind 10,50 Unknown Latsco Shipping Pacific Horizon 2 38,000 DWT 2007 Shin Kurushima Ujina 20,00 Unknown Unknown Japa Hellas Endurance 46,100 DWT 1999 Hyundai Heavy Ind 10,50 Unknown Latsco Shipping Moonlight Venture 61,200 DWT 2006 Sumitomo 22,50 Unknown Greek Wah Kwong Shipping Dirty Holy Victoria 75,000 DWT 2008 Minami Nippon 29,00 Prime Marine Management Shintoku Kaiun Antipolis 74,500 DWT 2006 Sasaebo 27,5 Ultranav Andriaki Shipping Dirty *sister sold for 25mio Liwa 75,000 DWT 2008 Minami Nippon 28,5 Tanker Solutions World Marine Co Pacific Bravery 69,000 DWT 1999 Koyo Dock 8,5 Unknown Middle Eastern Chartworld Shipping Dirty Tamar 70,300 DWT 2003 Daewoo 20,5 Tanker Solutions Tailwind Shipping Ottawa 70,300 DWT 2003 Daewoo 20,5 Tanker Solutions Tailwind Ship Afra Pacific Poppy 104,600 DWT 2011 Sumitomo 46,2 Tanker Investments Ltd Cido Shipping SC Sara 105,300 DWT 2001 Sumitomo 17,2 Unknown Indonesian KGAL Beech 3 109,400 DWT 2000 Dalian New Yard 12,7 Sinokor Merchant Marine Woodstreet Inc Coated Beech 4 109,700 DWT 1999 Dalian New Yard 10,8 Sinokor Merchant Marine Woodstreet Inc Coated Moscow 106,600 DWT 1998 NKK 12 Unknown Far Eastern Novoship Enrica Lexie 104,800 DWT 2008 Shanghai Waigaoqiao 34 Olympic Shipping Dolphin Tanker DT Providence 104,800 DWT 2008 Shanghai Waigaoqiao 34,5 Olympic Shipping Dolphin Tanker Coated Ambelos 105,400 DWT 2006 Sumitomo 33,8 PNSC Samos Steamship DL Iris 109,300 DWT 1998 Dalian 10,3 Far Eastern Daelim Corp Coated Morning express 105,578 DWT 2000 sumitomo (JPN) 11,80 Econav SA Nakata Mac Corp Coated Sharp Lady 116,600 DWT 2012 Sungdong 46 Eastern Pacific Shipping Blenheim Shipping Smart Lady 116,700 DWT 2011 Sungdong 43,5 Eastern Pacific Shipping Blenheim Shipping Moon Lady 105,400 DWT 2009 Sumitomo 37,5 Eastern Pacific Shipping Blenheim Shipping Sky Lady 105,700 DWT 2008 Sumitomo 35 Eastern Pacific Shipping Blenheim Shipping Star Lady 105,500 DWT 2005 Sumitomo 27 Eastern Pacific Shipping Blenheim Shipping Sea Lady 105,600 DWT 2003 Sumitomo 21 Eastern Pacific Shipping Blenheim Shipping Koa Spirit 113,300 DWT 1999 Samsung 12,5 Sinokor Merchant Marine Dr Peters Amorgos Warrior 95,600 DWT 1993 Koyo Dock 7,9 Vista Shipping Polembros Shipping 6
Transactions list - Wet (cont.) -Shipbrokers and consultants since 1919- Name Size Built Yard Price US$m Buyer Seller Notes Afra Amorgos Warrior 95,621 DWT 1992 Koyo (JPN) 7,90 vista shipping Polembros Shipping Suezmax Cygnus Voyager 156,800 DWT 1993 IHI p/o Chevron Shipping Independent Tankers Corp Sirius Voyager 156,400 DWT 1994 IVI Ishibras p/o Chevron Shipping Independent Tankers Corp Altair Voyager 135,800 DWT 1993 IVI Ishibras p/o Chevron Shipping Independent Tankers Corp Clients of Polembros Cap Isabella 159,000 DWT 2013 Samsung 65 Shipping JM Maritime Investments Huelva Spirit 160,400 DWT 2001 Daewoo 18,8 Middle Eastern Buyers Teekay LNG Partners Cape Balder 160,000 DWT 2000 Hyundai Heavy Ind 16,3 Eurotankers Koenig Cie Cape Bantry 160,000 DWT 2000 Hyundai Heavy Ind 16 New Shipping Koenig Cie Energy Sprinter 159,200 DWT 2005 Hyundai Heavy Ind 36,5 NATS Enterprises Shipping and Trading Energy Skier 159,200 DWT 2005 Hyundai Heavy Ind 36,5 NATS Enterprises Shipping and Trading VLCC Ulriken 310,000 DWT 1998 Samsung 26,5 Unknown West African Independent Tankers Corp DS Victory 299,100 DWT 2001 Daewoo 33,6 NGM Energy Dr Peters Front Opalia 302,200 DWT 1999 Kawasaki 22,8 Sinokor Frontline Front Comanche 300,100 DWT 1999 Hitachi 22,8 Sinokor Frontline Front Commerce 300,100 DWT 1999 Hitachi 22,8 Sinokor Frontline Maersk Hakata 302,600 DWT 2010 Universal 84 Euronav Nissen Kaiun Maersk Hojo 303,000 DWT 2013 Japan Marine United 94 Euronav Nissen Kaiun Maersk Hirado 302,600 DWT 2011 Universal 85 Euronav Singa Star Maersk Hakone 302,600 DWT 2010 Universal 79 Euronav Singa Star 7
Transactions list - Dry Name Size Built Yard Price US$m Buyer Seller Notes Handy Strategic Venture 39,800 DWT 2014 Tianjin Xingan Unknown Singaporean MT Maritime Management Free Impala 24,100 DWT 1997 Shanghai Shipyard 3,5 Unknown FreeSeas Inc Forte 23,600 DWT 2001 Shin Kurushima Hashihama 7,8 Unknown Greek Toko Kaiun Theomitor 28,500 DWT 1994 Kanda 6,7 Unknown Anbros Maritime Fortune Frontier 29,700 DWT 2002 Shikoku Dockyard 10,5 Unknown Greek Tri-Net Logistic Lingue 27,000 DWT 1990 Minami Nippon 4 Unknown NACHIPA Cielo Di Vancouver 37,400 DWT 2002 Shanghai Shipyard 12 Singaporean D'Amico Open Hatch Cielo Di Monfalcone 37,400 DWT 2002 Shanghai Shipyard 12 Singaporean D'Amico Open Hatch Cleanthes 29,700 DWT 1984 NKK 2,5 Unknown Middle Eastern Capital Management Atlantic Arrow 28,700 DWT 2005 shin kochi 12,5 Unknown Osaka Asahi Kaiun Global Prosperity 33,700 DWT 2006 Shin Kochi 16 Unknown Japanese MK Shipmanagement Sea Bonanza 33,600 DWT 2012 Shin Kochi 23,5 Dalex Shipping Unknown Japanese Open Hatch C Handy 36,900 DWT 2011 Hyundai Mipo 17,6 New Shipping TMT Global Horizon 33,600 DWT 2010 Shin Kurushima Ujina 18,8 Unknown Greek MK Shipmanagement Open Hatch Scarlett 33,400 DWT 2009 Shin Kochi 18,5 Unknown Greek Osaka Asahi Kaiun B Handy 31,400 DWT 2011 Hyundai Mipo Vogemann H KG TMT A Handy 36,800 DWT 2011 Hyundai Mipo Vogemann H KG TMT Bumbi 29,900 DWT 2004 Shikoku Dockyard 13,3 Unknown Greek Eiko Kisen Tan Binh 36 22,300 DWT 1990 Saiki 3,7 Unknown Chinese Tan Binh Co Handymax/Supramax Happy Success 42,200 DWT 1991 Oshima 5,9 Unknown Portunato Tess Bulker 58,000 DWT 2011 Tsuneishi Cebu First Steamship Lauritzen J Sea Lily 52,500 DWT 2004 Tsuneishi Zosen 15.5 Unknown Greek COSCO Tianjin Donald Duckling 43,900 DWT 1997 Sanoyas 0.0 Unknown Chinese TMT Alianca Orient 52,500 DWT 2006 Tadotsu Tsuneishi 17.8 Unknown Indian Kambara Kisen Island Ranger 43,100 DWT 1994 Oshima 8,0 Unknown Enterprises Shipping and Trading Alianca Orient 52,500 DWT 2006 Tadotsu Tsuneishi 17,5 Unknown Indian Kambara Kisen Hull 865 61,000 DWT 2015 Imabari 31,4 Unknown Unknown Aman Trader 48,300 DWT 1990 Brodosplit 4,1 Unknown Chinese Universal Shipmanagement Marabou 40,900 DWT 1989 3 Maj Brodogradiliste 4,8 Unknown Greek Dalex Shipping Ocean Queen 53,000 DWT 2011 Nam Trieu 16,0 Unknown Greek Hoa Ngoc Lan Shipping Good trade 53,732 DWT 2012 Hindustan 18,2 Greeks Good earth maritime Mimosa dream 48,300 DWT 1996 tadutso tsuneishi 5,1 Unknown Meiji shipping Blue ocean 57,700 DWT 2011 STX Dalian 19 Unknown Pan ocean Bright moon 56,100 DWT 2007 Mitsui Tamano 20,0 Thoresen grace ocean investment Mandarin Harvest 57,000 DWT 2009 Jiangsu Hantong Ship Heavy Industry 19,0 Unknown Greek Da Sin Shipping Crown Mina 58,000 DWT 2012 Zhejiang Shipbuilding Co 25,0 Technomar Shipping Crown Ship Crown Alexandra 58,000 DWT 2012 Zhejiang Shipbuilding Co 25,0 Technomar Shipping Crown Ship Saiko Majesty 50,800 DWT 2009 Oshima 21,5 Samos Steamship Sato Steamship Co Open Hatch CB Adventure 46,200 DWT 2002 Oshima 12,0 Unknown Singaporean Yano Kaiun Crown Esmeralda 58,000 DWT 2012 Dayang Shipbuilding Co 25,3 Technomar Shipping Crown Ship Skye 42,200 DWT 1991 Oshima 5,2 Unknown Chinese Albamar Panamax - Post PMX Jindal Varad 75,500 DWT 1994 B and W 5,8 Unknown Indian Jindal Waterways SS due Golden Kiji 76,600 DWT 2007 Imabari 19,5 Apollonia Lines Nikko Kisen Red Iris 75,800 DWT 2003 Sanoyas 15,5 Unknown Greek Arminter Lan Hai Jin Xiu 79,600 DWT 2014 Nanjing Wujiazui 22,5 New Shipping Guangdon Lanhai Navios Titan 82,900 DWT 2005 Tsuneishi Zosen 17,7 Ionic Shipping Marubeni 8
Transactions list - Dry (cont.) Name Size Built Yard Price US$m Buyer Seller Notes Panamax - Post PMX Soma Maru 90,800 DWT 1995 Koyo Dock 7,3 Unknown Chinese MOL Michele D'Amato 76,400 DWT 2005 Tsuneishi Zosen 17,7 Unknown Greek D'Amato Lowlands Nello 76,800 DWT 2004 Sasebo 17,2 Unknown Cobelfret Sea Urchin 74,200 DWT 2001 Namura 16,8 Okeanos ship Alert Auction Voge West 70,700 DWT 1995 IVI Ishibras 5,5 Unknown Vogemann CSK UNITY 68,500 DWT 1995 Sasebo 6 Unknown chinese TCC B Max 84,100 DWT 2011 Hyundai Samho Heavy Ind 24,0 Unknown TMT Eternal Salute 87,100 DWT 2006 IHI 19,0 Oceanbulk NYK Line Themis P 70,200 DWT 1994 Sumitomo 5,8 Unknown Chinese Iolcos Hellenic Duro 73,500 DWT 1993 Hyundai Heavy Ind 6,5 Unknown Chinese Seanergy Maritime Corp ABYO Natalie 75,500 DWT 1996 Fincantieri 6,8 Unknown Chinese ABYO Holdings ABYO Jennifer 75,500 DWT 1996 Fincantieri 6,8 Unknown Chinese ABYO Holdin Cape Silver Surfer 180,000 DWT 2013 Sungdong 53,5 CarVal Investor Sinokor Merchant Marine Luo Jia Shan 176,000 DWT 2014 Jinhai Heavy Industry Co 44,5 Unknown Italian Grand China Logistics Blue Cho Oyu 180,200 DWT 2011 Daehan 51,0 Alpha Tankers Blue Marine 2015- Qingdao Beihai Shipbuilding Heavy NB TBA 180,000 DWT 2016 Industry Co Ltd 55 Foremost 4 units Equator Prosper 171,200 DWT 2000 Namura 20,0 Global United Shipping Synergy Maritime Equator Peace 171,200 DWT 2000 Namura 20,0 Global United Shipping Synergy Maritime Super Star 205,000 DWT 2014 Qingdao Yangfan China Development Bank Ship Finance International Cape Warrior 151,700 DWT 1995 CSBC Kaohsiung 9,5 Vista Shipping Courage Marine Silver Pioneer 172,600 DWT 2002 NKK 31,7 Unknown Korean Sinokor Merchant Marine 180-50 (Hull) Qingdao Beihai 180,000 DWT 2014 Qingdao Beihai Shipbuilding Heavy Industry Co Ltd 58,0 Diana Shipping Eships Blue Manaslu 179,300 DWT 2011 Hyundai Heavy Ind 51,5 Unknown Greek Blue Marine KSL Seattle 181,000 DWT 2014 Shanghai Waigaoqiao Knightsbridge Tankers Frontline 2012 9