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November ended with the sentiment for newbuilding business hitting new record highs, while secondhand buying momentum surpassed last year's levels, but it showed a monthly contraction with asset prices being under an upward pressure from recovery in freight rates.

A total of 383 newbuilding orders are estimated to have been placed, which is the highest recorded during the year and the highest since the beginning of 2011. (Previous record high in September 2013-355 total newbuilding orders). The newbuilding activity is up by 73% from previous monthly levels with 169% increase in the volume of new orders reported for bulk carriers (193 new orders for bulkers in November from 72 in October).

Compared with November 2012 ordering levels, the increase is 255% with bulk carriers showing 1106% firmer volumes (only 16 new orders reported in the corresponding month last year).

The invested capital is estimated in the region of more than $12,6bn, 160 deals reported at an undisclosed contract price, which is up by 103% from the invested capital placed for newbuilding business during November 2012.

In the secondhand market, the S&P activity was down by 7% from previous monthly levels, stemmed mainly from lower vessel purchases in the bulk carrier and tanker segments, with 17% and 20% monthly declines respectively. It seems that shipping players slowed down their purchasing plans as asset prices showed pickups and they wait to see the stability of freight rates and prices at new highs.

In November, 134 vessels are reported to have changed hands at an invested capital in the region of $2,9mil, 12 deals reported at an undisclosed sale price, with bulk carriers grasping 37% share of the total S&P activity and tankers 29% share. The S&P activity is up by 14% from November 2012 levels, when 118 vessels changed hands for an invested capital of more than $1,74bn.

In the demolition market, the upturn of freight rates for dry bulkers and tankers after the end of summer season does not contribute to robust scrapping activity. Compared with November 2012 levels, the scrapping activity is 231% down, in terms of units, 73 vessels reported for disposal of a total deadweight of 4.5mil (103 vessel disposals recorded in November 2012). However, the scrapping business is 259% up from October 2013 levels, as liners and containers showed 120% and 71% monthly increases respectively, in terms of units, and bulkers kept a firm volume with 25% monthly growth.

Per vessel type:

-Bulk Carriers: The newbuilding business in the total S&P activity is 72% from only 16% in November 2012, with an invested capital of more than $3,5bn for 193 newbuilding orders, 91 contracts reported at an undisclosed contract price. The secondhand purchasing activity has lost ground with 19% share from 45% share in 2012, as the upturn of the freight market increases investors' confidence for more newbuilding orders and intensifies the threat of oversupply. The invested capital in the secondhand market is estimated in the region of $828mil for 50 vessel purchases, from $633mil in November 2012 for 46 vessel purchases, implying the upward pressure in asset prices.

-Τankers: Newbuilding business is also in a sharp upward momentum as its share in the S&P activity increased to 57%, from 36% last year, while the secondhand momentum showed a 7% decline to 33% share from 40% share in November 2012. The total invested capital for newbuilding units is estimated in the region of $2,9bn, with 20 contracts reported at an undisclosed price, from $990mil invested during November 2012. In terms of units, the newbuilding activity for tankers in up by 183% year-on-year, while its scrapping activity is on a downward incline of 25% year-on-year. The secondhand buying appetite is 44% up year-on-year with an invested capital of more than $627mil, 7 deals reported at an undisclosed sale price. (In November 2012, the invested capital in the secondhand market was region $420mil for 27 vessel purchases.)

-Containers: The newbuilding activity has more than doubled its share in the total S&P activity during November 2013 to 57%, from only 20% share in last year. The invested capital for newbuilding vessels is estimated in the region of $1,64bn for 21 new orders, from $622mil invested in November 2012 for 9 new orders. In the secondhand market, the buying appetite keeps almost the same with 20 vessel purchases, from 18 in November 2012, with a rise in the invested capital to $562mil from $115mil last year. Despite the overcapacity issues that the segment faces from the surge in newbuilding orders for post panamax units, investors are emerging more aggressive in the newbuilding arena with the scrapping activity lowering its share to the total S&P activity to 10% from 20% in November 2012.

MONTHY OVERVIEW OF S&P MARKET

COMMENTARY NOV SH_DEMO_NB 2013