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Articles from 2016 In April


CMA CGM gets European approval for NOL buyout

CMA CGM gets European approval for NOL buyout

The French line said it received approval from the EC for the takeover today.

“The proposed transaction was notified to the European Commission on 8 March 2016 and was cleared today following a Phase 1 review, under the conditions put forward by the company, namely NOL’s exit from the G6 shipping alliance,” CMA CGM said.

Last week CMA CGM announced plans for a new alliance from next April called the Ocean Alliance with Cosco, Evergreen and Orient Overseas Container Line (OOCL).

The acquisition requires a number of other regulatory approvals including in the US and China. “Both companies will continue to cooperate with the remaining authorities to close their reviews as quickly as possible,” CMA CGM said.

In the meantime the French company has continued to build-up its stake in NOL via open market share purchases and it now stands at 8.3%.

IMO progress on GHG emissions too slow to save many Pacific Island nations

IMO progress on GHG emissions too slow to save many Pacific Island nations

Last week’s meeting of the IMO’s Marine Environment Protection Committee (MEPC) which failed to see a definitive framework put in place on limiting shipping’s GHG emissions with the debate now set to continue at the next meeting of the MEPC in October.

A statement issued on Friday by the Pacific Island Development Forum (PIDF) it noted that while leaders of 175 countries queued to sign the Paris Agreement on climate change – COP21 – in New York on Earth Day the world had “failed to be so progressive in London” at the IMO.

“While progress is being made in the IMO, it is at an alarmingly slow rate…too slow to save many Pacific nations,” said the statement from the PIDF.

The statement noted that France had joined Fiji and the Republic of the Marshall Islands (RMI) for a progressive approach. “We must put together a plan and timeframe for GHG reduction. Or be judged as impotent,” it quoted France as telling the IMO.

On the Cook Islands surprising opposition to control of shipping emissions PIDF’s secretary general François Martel said: “Knowing the position of the Cook Islands on climate change and their strong engagement at COP21 in Paris, both in the negotiations and at side-events, this appears a contradiction – as if their representatives in London were disconnected from the climate negotiations and the Paris Agreement.”

PIDF noted the repeated support at the MEPC meeting of IMO’s commitment and contribution to the Paris Agreement and the UN body being the place to debate shipping’s role in this. “But they were seemingly oblivious to the contradiction this posed with the position taken by several states to indefinitely delay further debate of GHG.”

Looking ahead to the next IMO MEPC meeting in October the PIDF said: “It is essential that shipping determine its fair share of the climate change burden and act now. It is essential the Pacific find a united voice on this matter. We must be stronger than cyclone Winston.

“Three months after Paris, IMO failed the first test. In October will come its opportunity to pass the re-sit - while the world is watching.”

Construction starts on Singapore's Tuas Terminal

Construction starts on Singapore's Tuas Terminal

Located on land being reclaimed in the far west of the island phase 1 of Tuas Terminal will have a capacity of 20m teu a year. Once fully completed the terminal will have a capacity of 65m teu annually.

The start of construction was marked on Friday by Singapore’ Coordinating Minister for Infrastructure and Minister for Transport Khaw Boon Wan with the launching the first caisson. Some 222 caissons each 28 m tall will form the permanent wharf structure.

“The Tuas Terminal is a centrepiece of Singapore’s Next Generation Port vision and demonstrates our strong commitment to strengthening and sustaining our leadership position as a global hub port and International Maritime Centre,” said Andrew Tan, chief executive of the Maritime & Port Authority of Singapore (MPA).

The terminal will developed a time span of 30 years with phase 1 reclamation works expected to be completed in the early 2020’s.

Yangzijiang sees Q1 profits dip

Yangzijiang sees Q1 profits dip

The Singapore-listed Chinese shipbuilder made a profit of RMB448m in the first quarter of 2016 compared to RMB706.9m in the same period a year earlier. Revenues were down 11% at RMB2.7bn against RMB3.04bn in the same quarter in 2015, which the company said was due to a decline in shipbuilding revenues.

“With significant oversupply of vessels and weak demand, the shipbuilding industry is going through the downside of a major business cycle. New shipbuilding orders diminished in the market, contract value declined and profit margins were squeezed,” commented Ren Yuanlin, executive chairman of Yangzijiang

“While the market condition impacted Yangzijiang’s financial performance, we remained reasonably profitable after all the persistent efforts.

Yangzijiang has continued to book new orders and including six 400,000 dwt VLOCs worth $510m. As of 31 March the shipbuilder had an orderbook for 93 vessels worth $4.7bn.

As China’s shipbuilding continues its restructuring process Yangzijiang is also eyeing possible mergers and acquisitions. “We will also evaluate M&A opportunities that offer favourable return and are accretive to its core shipbuilding business, as the restructuring / consolidation in the industry brings along some opportunities.

Credit Suisse takes crown of largest lender to Greek shipowners

Credit Suisse takes crown of largest lender to Greek shipowners

And longtime top lender Royal Bank of Scotland (RBS) has been toppled with Credit Suisse taking its mantle. RBS has been the largest lender to Greek owners on aggregate for the past two decades but is cutting its shipping book, which is mainly Greek.

These are among the main points of the annual Petrofin Bank Research, the 15th overview of bank lending to Greek shipping. However, reflecting the high level of Greek ship purchase activity, and the standing of the order book, the author of the analysis, Ted Petropoulos, points out that while drawn loans are down by 3.25%, commitments are up by 9.62%.

"The extreme falls, in the preceding period, of the dry bulk, offshore and container sectors severely tested both owners and banks. For banks, it was a traumatic experience, as numerous clients experienced negative cash flows and were forced to consider scrapping or lay up. Loan payments were often delayed and / or stopped altogether, whilst falling asset values created enormous security shortfalls in the banks’ loan portfolios," said Petropoulos.

Most banks confirm their books to Petrofin, but the Swiss giant is among those, which Petrofin has estimated. This puts Credit Suisse with a total book of $6.72bn compared to RBS’ $5.2bn. Credit Suisse lifted its portfolio by 13.53% while RBS’ book fell 13.58%. However, a point of interest is the fact the Swiss bank has some $1.14bn “committed but undrawn” while RBS has none, indicating what lies in the future.

Other features pulled out by Petropoulos are: The number of banks involved in Greek ship finance has risen to 51, from 49; All five Greek banks are down with the overall Greek bank exposure down 15.22% and the share of Greek banks in Greek ship finance has fallen from 16.9% to 14.63%; International banks with a Greek presence continue to reduce their exposure, in 2015, by 7.94%, compared to a reduction of 4.23% in 2014, 9.35% in 2013 and 3.9% in 2012; and International banks without a Greek presence, continue their rise, at a year-on-year rate of 11.26%, albeit at a more modest pace than last year’s 17.23%.

The top 10 Greek ship financing banks have again reduced their portfolios, collectively by 8.56%, compared to reduction of 4% last year while the market share of this top group was reduced to 53.43% ($33.5bn), compared to a market share of 57.24% ($36.6bn) in 2014 and 62.38% in 2013 ($38.3bn).

Continuing the recent trend, the next 10 banks have increased their market share by 7.22% ($18.23bn), compared to 3.05% last year ($17bn).

Petropoulos said that although Greek ship finance is not directly affected by the Greek crisis, it is nevertheless indirectly affected via the reduced lending ability of Greek banks. Further, he said: "The possible departure of Greek owners to other more welcoming shipping centers, may well signify their evolution away from the traditional Greek ownership model."

The overall fall in loan volumes for the Greek-owned fleet was “not surprising”, said the researcher, adding, given tough shipping market conditions and the adoption by a number of banks of a harder policy of “zero tolerance”, although not all banks took the same line.

Petrofin, was surprised by the “low rate of decline, taking into account the problems faced by the ship finance industry and the difficulty of new loans meeting the ever-demanding bank requirements. “We suspect the decline will continue and may, perhaps, accelerate in 2016, as banks adopt a harder line across both existing and new lending.”

Precious Shipping cancels three more newbuilds, Q1 loss widens

Precious Shipping cancels three more newbuilds, Q1 loss widens

In its first quarter statement Precious Shipping said that it had reached amicable settlement agreements for its eight remaining newbuildings on order at Sanfu.

For four remaining ships to be delivered this year the contract price has been amended to $25m each. Of four more newbuildings, that were expected to be delayed in delivery, three have been cancelled and one is to be delivered no earlier than 10 January 2018 at an amended contract price of $18m.

Meanwhile the Bangkok-headquartered dry bulk shipowner reported a loss of $34.04m in the first quarter including $19m for the loss on sale of ships, loss on impairment and one-time write-off of deferred upfront fees related to the cancellation of loan facilities. This compared to a $10.31m loss in the first quarter of 2015.

Precious Shipping md Khalid Hashim said, “To put our Q1 results into perspective, please keep in mind that the average BDI (Baltic Dry Index) for this quarter at 360 was 50% below the lowest annual average BDI in history.”

While the BDI has rebounded somewhat to 710 points Precious Shipping is cautious about the market outlook. ‘Our feeling is that the BDI will lose momentum as scrapping rates that were at all time highs during Q1 have already started to slow down as the BDI has crept up. As a result, fewer ships are being sent to the scrap yards,” Hashim said.

Singapore revokes licenses of two errant bunker suppliers

Singapore revokes licenses of two errant bunker suppliers

Seaquest Tanker and Vermont UM Bunkering were the latest bunker suppliers to have had their licenses revoked by the Maritime & Port Authority of Singapore (MPA) following checks in 2015 and 2016 respectively on the companies operations.

“MPA’s separate investigations into the two companies revealed discrepancies and wrongful declarations in the records kept on board their bunker tankers,” the MPA said.

“There were also separate incidences of transfers of bunkers between bunker tankers that were conducted without MPA’s approval.”

The authorities reminded bunker suppliers they had to “strictly adhere” to the terms of their licenses.

Dry bulk FFA market: Hey now, don’t dream it’s over

Dry bulk FFA market: Hey now, don’t dream it’s over

This is thanks to a growing feeling that the recent bounce may have run out of puff - in the face of some pretty irrefutable evidence. Certainly the market has traded in an upward rise for volatility and the trend appears to be a stuttering physical market which saw the leading indicators fall.

None of this stopped the capesize paper market opening in bullish tone, though the market had a volatile market which turned into an aggressive sell-off. The reason for the downturn seemed unclear given the gains on the index which should have kept the market upbeat.

By week’s end there was an early bounce but aggressive selling followed and the long UK weekend loomed. Neither the nearby or calendars escaped the sell off and May was marked below spot, suggesting the index has more downside but since capes move in mysterious ways it wouldn’t take much to move the market back up again.

Panamaxes continued easier across the curve with prompts continuing to flatten out giving the curve little shape to play with. May and June traded in good volume while Q3 dipped lower.

Weaker again as the week closed before settling into a steady range but after another dismal index we saw the bottom end of the range tested though not broken and closed the day flat, with a cautious tone ahead of the holidays.

Supramaxes maintained a slide across the week with rates continuing to decrease in a softening market. There was a positive midweek index but still the curve saw the weight stay on the offer side with bids rather thin.

Softer again as the week ended but activity was limited throughout. Another positive index but once again we saw a very quiet afternoon, drifting to a close with little more activity.

Contact FIS: http://freightinvestorservices.com/freight-derivatives/ffas/

Samsung Heavy Industries hit by $4.6bn FLNG cancellation from Shell

Samsung Heavy Industries hit by $4.6bn FLNG cancellation from Shell

In a statement to the Korean Stock Exchange SHI said that Shell Gas & Power Developments had cancelled three FLNG units contracted with the yard between 30 June 2015 and 30 November 2023.

The contracts were valued at KRW5.72trn ($4.62bn) and were terminated after failure to receive notification to proceed.

SHI is building the FLNG Prelude for Shell, the largest vessel ever constructed, costing an estimated $10.8bn - $12.6bn.

With the slump in the shipbuilding market post the global economic crisis SHI had set its sights on offshore accounting for 70% of orderbook in the long term.

In terms of new order value terms in 2015 SHI slipped out of the top three shipbuilders worldwide to be replaced by Imabari according to Clarksons Research Services.

DP World volumes grow 3.7% in Q1, UAE numbers down

DP World volumes grow 3.7% in Q1, UAE numbers down

Historically a fast-growing region for DP World, volumes in the UAE dropped 5.9% year-on-year to 3.6m teu from 3.8m teu in Q1 2015. DP World chairman Sultan Ahmed Bin Sulayem put this down to a “loss of lower-margin cargo," adding that the company would "continue to focus on driving profitability by targeting higher margin cargo."

“Despite the challenging operating environment, we are pleased to see that our portfolio continues to deliver ahead of market volume growth. First quarter growth was largely driven by a stronger performance from our European and Indian subcontinent terminals,” he said. “Conditions in Latin America remain challenging.”

Taking into account UAE losses, DP World’s Europe, Middle East, North Africa region fell 0.4% year-on-year to 6.4m teu. Americas and Australia grew grew 13.4% in total to 1.9m from 1.6m in Q1 2015 thanks to the newly-acquired Prince Rupert terminal in Canada.

“Our new developments in Rotterdam (Netherlands), Nhava Sheva (India) and Yarimca (Turkey) are now operational and are expected to deliver an increasing contribution in the second half of 2016. The additional 2m teu of capacity at Jebel Ali (UAE) and 1m teu of capacity in London Gateway (UK) are on course to be delivered in mid-2016, which will offer further room for growth,” said Sultan Ahmed Bin Sulayem.

“Overall, we remain well positioned to grow volumes ahead of the market,” he continued. “Our encouraging start to the year gives us confidence in meeting full year market expectations.”