Is it Golden if it glitters?

By: | at 08:46 AM | Channel(s): Maritime  Bulk  

Is it Golden if it glitters?

In a company presentation, last month, dry bulk shipping company Golden Ocean offered its case for a market recovery, and its own place in that resurgence.

The comeback is predicated on everything from grain exports to Chinese steel consumption. But one indicator stands out: New vessel order book. According to Golden Ocean analysis, the industry’s order book as a percentage of global fleet may fall to as low as 4.5% by the end of this year. That would mark a steep drop from the already paltry 8% order book for the first four months of this year. It would mark the lowest point at least in the past three-and-a-half decades. And it may dip even lower.

“It seems unlikely that we have reached the bottom of the current [shipbuilding] cycle, and pressure to remove capacity remains,” wrote Clarksons Research in a note at the end of June.

That’s bad news for shipbuilders, good news for vessel operators like Golden Ocean.

In its presentation, Golden Ocean added a cautionary note even on what new orders are out there. Some 25%, or 3.8 million dwt, of orders scheduled for delivery during the second quarter of 2017 haven’t even commenced construction yet. Construction has yet to begin as well on an additional 3.7 million dwt scheduled for delivery the second half of this year and 8.4 million dwt scheduled for delivery in 2018.

“Further delays of deliveries are likely based on progress in production,” the company said.

Just how quickly shipyards can reverse their current misfortune is also a matter of huge speculation. “The shipyards are empty right now. There’s no backlog,” said Basil Karatzas, CEO of Karatzas Marine Advisors, a New York-based shipping brokerage and advisory service. “But if everyone begins to order ships. It doesn’t mean a thing. It could go the other direction in a matter of months.”...

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American Journal of Transportation