New orders plummet in 2019

Malcolm Latarche

Malcolm Latarche · 05 July 2019

ShipInsight


According to analysts Vessels Values, newbuilding orders dropped to record lows in Q2 2019 with bulkers and tankers faring particularly badly.

The total number of bulker newbuild orders is down 73% for the first half of 2019 compared to the same period in 2018. So far this year, Panamaxes have been the most popular size to order with an interesting order placed by Klaveness Combination carriers for two Panamax CABUs (83,600dwt, 2020, Jiangsu New Yangzijiang) which will increase the global fleet to a total of 19 Caustic Soda/Bulk carriers of which Klaveness own 17.

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Despite the low earnings earlier this year across the Capesize sector, 13 orders were placed by COSCO bulk for 208,000 DWT vessels at COSCO Shipping HI for $54M each. In comparison to the 45 orders seen this time last year for Capesizes, the 13 seems minimal.

In the tanker sector newbuild orders are down 47% for the first half of 2019 compared to the same period in 2018. VLCC orders are down 60% for 2019 year to date, compared to the same period in 2018 despite having a good winter for rates.

Countries leading the way in terms of number of orders are Greece and Singapore. The Greeks have been ordering all tanker size ranging from VLCCs down to MR2s with 90% of the orders placed at South Korean yards. Eastern Pacific placed an order for four option LR2s (110,000dwt 2021, New Times) for $48M each. Hyundai Mipo has seen the biggest influx of MR2 tanker orders placed since the beginning of the year securing 70% or 23 of the total 33 MR2 orders.

The container sector follows the same declining trend as the rest of the cargo sector for newbuilds. Orders for the first half of 2019 were down a significant 49% compared to same months in 2018.

Of the bleak 48 containers that were ordered, 28 were by South Korea, clearly dominating the container newbuild market and vastly improving on their two orders from the first half of 2018. The domination is primarily due to Sinokor, which ordered 16 Feedermaxes (1,100teu, 2020) all built by Chinese shipyards, and four Handy containers (1,800teu, 2020) built by South Korea’s second largest shipyard, Hyundai Mipo. These orders by Sinokor account for around 42% of all containers ordered so far this year.

The total number of LNG newbuild orders has fallen by 39% in the first half of 2019 compared to the same period in 2018. Greeks owners are leading the way with the number of orders placed. Since the beginning of the year, Maran Gas Maritime has ordered a total of five vessels (174,000m3, 2021, Daewoo), all on separate occasions.

LPG newbuild orders have fallen by 73% for 2019 year to date compared to 2018 year to date. It has been quiet with only six orders placed so far. Mitsui and Co started the trend being first to order a VLGC LPG (84,600m3, 2020, HHI) in January of this year. Heading into the middle of the year and after a considerable uptick in rates throughout the spring months, KSS Line has been the most recent company to place an order of one option VLGC LPG (86,000m3, 2021, HHI) for $76M.

Only one offshore newbuild order was placed in the first six months of 2019. The order was placed by the British company High Speed Transfers for an FSV/Crew Boat on 22 January. When considered against the same period in 2018, where newbuild contracts were placed for six OSVs, one OCV and one MODU, the market has been quiet for some time.

In order to survive the oil price crash and subsequent downturn in the offshore markets, the industry has instead seen many vessels being sold for scrap and owners consolidating, which has led to many companies streamlining their fleets in order to reduce their operational costs.

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