++ Shipbuilding News ++  

  China falls in Jan-Feb   (http://www.asiasis.com/view_new.php?bbs_id=news&doc_num=15795)  

Chinese shipbuilding industry has dropped in all of the main shipbuildingrelated indices as well as ship export. In the first two months, Chinese shipbuilders' newbuilding delivery and order contracted decreased to 7.19m dwt and 4.94m dwt, down by 15.1% and 40.1% on the same period of 2011. Orderbook as of the end of February fell by 24.7% to 146.94m dwt year-onyear, according to the data released Monday by the China Association of National Shipbuilding Industry (CANSI). During January-February period, overall 1,618 number of China's shipbuilding-related companies above certain level increased completed production value by 9.7% to CNY 110.1bn ($17.4bn) y-o-y, while slowing down over 10%p. Among which, shipbuilding industry went up by 6.8% to CNY 81.8bn, marine equipment grew by 29.6% to CNY 13.4bn and ship repair rose by 6% to CNY 6.5bn. Also, ship conversion and offshore facility increased by 22.9% and 13.5% to CNY 4.2bn and CNY 2.96bn each. During the same period, export of those 1,618 companies stood at CNY 37.8bn, down by 10.3% on the same period last year - shipbuilders CNY 30.5bn (down 13.8%), marine equipment makers CNY 1.15bn (up 5.8%), ship repairers CNY 3.56bn (down 1.2%), ship conversion industry CNY 1.38bn (up 74.4%) and offshore facility constructors CNY 510m (up 76.8%). Meanwhile, delivery of export newbuilding, in the first two months, declined by 9.3% to 6.27m dwt, on the same period last year, about 87.2% of overall delivery during the period.  

  Lomar inks feedership deal with Wenchong yard   (http://www.lloydslist.com/ll/sector/containers/article394591.ece)  

LOGOTHETIS family shipping operation Lomar has signed an order with Guangzhou Wenchong Shipyard in China for up to six 2,190 teu containerships. The group did not specify how many vessels it has confirmed under the contract, but deliveries will begin in early 2014. According to a company statement, the new “hull-optimised” ships improve performance compared with other container vessels of this size, offering “significant savings on fuel consumption and at a wide range of speeds in comparison to those presently in the market”. Chief executive Achim Boehme, who joined Lomar in 2010 after a career as a banker with Deutsche Schiffsbank, said Wenchong had a reputation for being among the best shipyards in the feeder containership construction market. The vessels have been designed by Shanghai Merchant Ship Design and Research Institute. The move follows the

company’s order last month for up to six new fuel-efficient ultramax bulkers from Cosco and will increase Lomar’s fleet to nearly 50 vessels.  

  Daewoo & Samsung stay 'strong'   (http://www.asiasis.com/view_new.php?bbs_id=news&doc_num=15809)  

Daewoo Shipbuilding & Marine Engineering and Samsung Heavy Industries of South Korea would stay strong based on offshore sector, said Solomon Investment & Securities on March 27, suggesting buying opinions for both shipbuilders. Analyst Jun Yong-Bum said, "Daewoo would easily contract in the excess of $10bn in 2012. It already booked INPEX' FPSO totalling around $2bn, $200m of offshore plant, about $700m of UK's naval tankers and $550m of five tankers, which total about $3.5bn year to date." Added, "The yard also have options for two drillships and four LNG carriers. During the first half this year, Daewoo seems to win overall $6.8bn, as four semisubmersible rigs, valued at about $2.4bn and one optional drillship and two LNG carriers are to be additionally placed orders." Meanwhile, in case of Samsung, analyst Jun said, "It contracted about a total of $5.3bn ytd, with aorund $2.7bn of INPEX' central processing facility and about $2.6bn of LNG carriers and drillships."  

  ++ Shipping News ++  

  Venezuela’s ties to China boost VLCC demand   (http://www.lloydslist.com/ll/sector/tankers/article394593.ece)  

VENEZUELAN crude exports have shown a marked shift away from the US and towards China over the past two years, in a development that analysts believe is already proving positive for very large crude carrier tonne-mile demand. Data compiled by Lloyd’s List Intelligence shows that 1,319 tankers of all size brackets called in the south American country’s ports last year, 538 of them heading to the US. That is down from 650 in 2009 and 674 in 2010. Aframaxes are easily the most popular vessel type in this trade, carrying 454 US-bound cargoes last year. The next most popular destination for Venezuelan crude was Curaçao, although it is misleading to classify these as exports. While the island off the Venezuelan coast is, in political terms, an outpost of the Netherlands, it is also the site of a sizeable PDVSA refinery. Meanwhile, China has suddenly emerged as a major customer. Of the 64 VLCCs that left Venezuela last year, 33 were heading for China, which looked to no other vessel type for its requirements. That is a big jump on seven

VLCC loads that moved between the two countries in 2010, although the explanation has more to do with politics than to the workings of the international oil market. An analyst with McQuilling Services’ New York office, who asked not to be named, pointed out that China is now Venezuela’s biggest foreign lender, having lent $32bn in recent years. Repayments are often in crude, rather than cash. “China has been doing a lot of deals with Venezuela to secure energy sources, particularly fuel oil cargoes,” he said.  

  LNG sings as the bell tolls for Japan’s nuclear industry   (http://www.lloydslist.com/ll/sector/tankers/article394559.ece)  

ANOTHER nail was driven into the coffin of Japan’s nuclear industry today after Tepco shut reactor number six at its Kashiwazaki Kariwa plant. That now leaves only one nuclear reactor in operation in Japan, which is good news for liquefied natural gas imports into Japan on ships, say analysts. The expectation by some commentators of a full shutdown of Japan’s nuclear capacity in May is even better news for LNG shipping. An additional 14 vessels will be required to ship LNG cargoes to Japan to meet the country’s power needs if nuclear is completely offline, said Oslo-based Arctic Securities. Japan is already the world’s largest LNG importer. The forecast comes as the LNG shipping market is already tight and offering elevated freight rates as charterers search high and low for available vessels to meet the LNG demand. The LNG shipping market tightened considerably a year ago, following the tsunami in Japan that caused nuclear shutdowns and led to greater requirements for LNG to keep the country’s lights on. As a result, owners were firmly in the driving seat and freight rates rose from about $60,000 per day in early 2011 to around $100,000 per day by late summer, then up to an eye-wateringly high $150,000 per day by the end of the year. They have since dipped, but are still historically high at around $120,000 per day for spot market voyages. Highlighting Japan’s rising LNG intake, the country imported 7.6m tonnes of LNG in February, up 22% from 6.2m tonnes in the same month last year.  

  Capesize rates slump to three-year low   (http://www.lloydslist.com/ll/sector/dry-cargo/article394564.ece)  

CAPESIZE time charter rates fell to their lowest level since late-2008 today, as an oversupply of vessels and a lack of charterer interest continued to drag markets down. The time charter average reached $4,428 per day, the lowest point since 2008 and well below the operating costs of an average capesize, which shipping consultant Moore Stephens estimates to be around $7,000 per day. In addition, the Asia to Europe backhaul route fell to the lowest level

ever reported on any dry bulk route by the Baltic Exchange, at minus $10,200 per day, meaning shipowners are covering the entire operating costs and subsidising part of the bunker costs to be able to reposition their ships in Europe. Rates on the Baltic Exchange’s Europe to Asia route are currently relatively high, making it desirable to move ships here, even though there is traditionally little capesize activity on this route. The capesize fleet expanded heavily last year, as shipowners took delivery of vessels ordered in the boom years. Cargo demand has been unable to keep up the pace, with analysts reporting a reduced interest in iron ore cargoes from China recently, one of the biggest dry bulk trades. The development stands in marked contrast to smaller dry bulk trades, which have seen rates improve since February. The record low for the capesize time charter average still stands at $2,316 per day, which was reached on December 2, 2008.  

  Almi establishes gas shipping vehicle   (http://www.lloydslist.com/ll/sector/tankers/article394599.ece)  

THE group behind fast-expanding Almi Tankers has established a sister shipping vehicle, Almi Gas, as the focus of its planned move into the liquefied natural gas shipping sector. “We want to be a player in LNG and we are looking at a number of projects,” Almi founder Costas Fostiropoulos told Lloyd’s List. The group, which has an ongoing series of 10 suezmaxes, as well as two very large crude carriers, under construction by Daewoo Shipbuilding and Marine Engineering, is known to be close to agreement on an initial two LNG carriers at the same yard. However, Mr Fostiropoulos declined to give details of any further plans. It is understood DSME is being pressed for both Almi’s LNG slots to be for delivery within 2014. The group is said by gas market sources to be in talks with an eastern European state energy concern as one option for employing LNG vessels.  

  Sanko Steamship seeks standstill on pay   (http://www.ft.com/intl/cms/s/0/1edc684e-774e-11e1-93cb00144feab49a.html#axzz1qIfGH3wf)  

Shipowners worldwide could be facing the biggest single default of the global shipping crisis after Sanko Steamship, one of Japan’s largest privately held shipping lines, asked owners of its more than 150 chartered ships to accept a standstill on their payments. Since ann-oun-cing plans for the standstill on March 9, Sanko has been paying only a small proportion of each charter payment, according to people involved. Sanko has entered a process known as “alternative dispute resolution” to negotiate a restructuring of debt payments to its banks and has said it intends eventually to honour all its

obligations. However, shipowners look certain to suffer significant delays in receiving some payments and could still face large shortfalls if the resolution process produces no result. The company is due to pay $46,000 a day until at least January 2014 for one of its vessels, the Golden Feng, a large dry bulk carrier chartered from Golden Ocean, part of the Fredriksen group of shipping companies. Such ships were on Monday commanding on average only $4,428 a day in the short-term spot market. Denmark’s Torm and Greece’s Navios Group also have vessels on charter to Sanko, while there could be a severe impact for German private investors in tax-efficient KG funds, which own about 25 affected ships. Among those worst hit by Sanko’s problems are shipping funds organised by Germany’s HCI Capital. HCI’s various funds have 14 ships on charter to Sanko. Such funds are owned by private investors – although Olaf Steuer, HCI’s head of communications, said some of the funds affected owned several ships, not all of which were chartered to Sanko.  

  Half of LNGCs on order fixed   (http://www.asiasis.com/view_new.php?bbs_id=news&doc_num=15805)  

Future LNG-shipping market may depend on the status of the 30-plus newbuildings estimated to be currently open for business. Discussion about the future performance of the LNG-shipping market frequently returns to one central question — how many of the speculatively ordered LNG-carrier newbuildings have been fixed against term business? At present those following the sector in detail list the number of unfixed LNG newbuildings at somewhere between 30 to 36 vessels or around half the ships on order.  

 

++ Finance News ++  

  Deutsche Shipping sees major growth   (http://www.lloydslist.com/ll/sector/finance/article394574.ece)  

GERMAN ship financier Deutsche Shipping, part of banking giant Deutsche Bank, benefited from the weakness of its competitors and grew its new business by a third during the past year. The bank increased new business from €1.2bn ($1.6bn) in 2010 to €1.6bn during 2011 as clients from Asia have become increasingly important to the bank. While Asia accounted for merely 7.6% of the bank’s new business in 2010, it jumped to 18.7% in 2012. At the same time, commitments for German shipping clients decreased from 34.6% to 21.2%. German owners were only the third largest group of customers, trailing southern European customers, in particular those from Greece, and Scandinavian shipping companies, which accounted for 23.7% and 23.4% respectively. In 2009, German owners accounted for 60% of the fresh loans. The bank’s total shipping book was up by 11% to €5.8bn without firm commitments, which are another €800m. The number of firm commitments, however, was lower than the 2010 figure, as customers were reluctant to order new vessels.  

  Global Ports eyes Black Sea expansion   (http://www.ft.com/intl/cms/s/0/29475be4-7768-11e1-93cb00144feab49a.html#axzz1qIfGH3wf)  

Global Ports, the London-listed company that handles 30 per cent of Russia’s container movements, is seeking to expand from its present markets in the Baltic and Russian far east into the fast-growing Black Sea region, its chief executive has said. Alexander Nazarchuk was speaking as Global Ports announced post-tax profits for 2011 had risen 23 per cent to $147m on revenue up 31 per cent to $501m. The results were the first full-year figures since Global Ports listed Global Depositary Receipts (GDRs) representing 25 per cent of its shares on the London Stock Exchange last June. In the Baltic, Global Ports currently has operations at Kotka and Helsinki in Finland, at Muuga in Estonia and St Petersburg in Russia. The company also operates the port of Vostochny in the Russian far east. However, a significant proportion of Russia’s trade also moves through ports on its Black Sea coast. The company was trying hard for “something on the Black Sea”, Mr Nazarchuk said. “We’re trying to identify a suitable acquisition target,” he went on. In common with other port operators, Global Ports was examining the potential of a greenfield port development the Russian government is promoting in Taman, by the entrance to the Sea of Azov on the Black Sea.

The port offered the advantage of good road access to most of Russia without the need to cross the Caucasus mountains, a barrier to trade for some other Black Sea ports.  

  Stanford ties-up fresh funds   (http://www.tradewindsnews.com/finance/665667/stanford-tiesup-fresh-funds)  

Stanford Marine Group (SMG) has secured fresh funding in the form of a fiveyear $175m senior secured club facility. Standard Chartered and the UAE’s Noor Islamic Bank acted as joint initial mandate lead arrangers and structuring banks. SMG intends to use the proceeds to partly to refinance existing debt and to acquire secondhand and/or build new offshore supply vessels. Standard Chartered said the structure of the five year Senior Secured Club Facility is the first of its kind in the Middle East. It included dual currency tranches in both United Arab Emirates Dirham and US dollars as well as both Conventional and Islamic Murabaha tranches. The transaction included a conventional term loan and a Commodity Murabaha Shariah compliant facility sharing a security pool of 21 vessels through a security trustee arrangement and a set of common terms agreement. Other banks funding this transaction included Barwa Bank of Qatar, Mubadala GE Capital and Abu Dhabi Commercial Bank (ADCB). Standard Chartered Bank said it also acted as facility agent, investment agent, and hedging bank for the deal. “The difficult market conditions that prevailed during the fourth quarter of 2011 imposed critical challenges on the lending market,” said Knut Mathiassen, regional head of shipping finance, Middle East, Standard Chartered.  

Yields Less Than Italy’s Signal Indonesia Exiting Junk: Economy   (http://www.bloomberg.com/news/2012-03-27/yields-less-than-italy-s-signal-indonesiaexiting-junk-economy.html)  

Indonesia and the Philippines, able to raise funds at a lower cost than Italy, may be poised to get the highest credit ratings since the 1997 Asian financial crisis as the nations step up efforts to boost investment. Officials from Standard & Poor’s, the only company to grade Indonesia’s debt as junk, are visiting the largest economy in Southeast Asia this week after raising the nation’s bonds to BB+ a year ago, according to the Finance Ministry. Philippine Finance Secretary Cesar Purisima said March 23 that he’s confident about getting a rating upgrade after meeting with S&P last week. “Asian economies, including the Philippines and Indonesia, have finally shaken the effects of the Asian financial crisis,” said Frederic Neumann, co-head of Asian economic research at HSBC Holdings Plc in Hong Kong. “This period thus

marks the return to high rates of growth.” Emerging markets, with budget deficits at 1.7 percent of gross domestic product in Indonesia and 3.8 percent in the Philippines in 2009 compared with the Euro area’s 6.4 percent, are winning rating boosts even as developed markets from Europe to the U.S. get downgrades. Borrowing costs for the two Southeast Asian nations have fallen 0.6 of a percentage point this year as plans to boost investment in roads and rail systems support growth prospects amid faltering global demand.