Following the lowest year of contracting volumes for over thirty years in 2016, newbuilding market observers could have been forgiven for not looking too hard every month for signs of improvements on last year’s figures. In the early part of 2017 they would probably have been justified, but with more positive sentiment building, recent months have seen an increasing degree of upside on last year.
On The Same Track
After four months of 2017, the year to date number of newbuild contracts stood at 248. This compared favourably to the 200 recorded in the first four months of 2016, but in relative terms, given the historically depressed nature of last year’s contracting statistics, it looked very much like things were on a similar track. Statistics in other units backed up this feeling. In Jan-April 2017 the 13.8m dwt ordered was down compared to the same period in 2016 (15.8m dwt), as was the 9.8m GT (2016: 9.9m GT). Statistics in CGT and value, meanwhile, showed the same kind of limited improvement as in numerical terms. Jan-April 2017 saw orders placed for 5.8m CGT (2016: 4.7m CGT) of an estimated total $16.4bn (2016: $14.7bn).
However, five months later, the situation merits a second look. The number of contracts from Jan-Sep stands at 573 (and late reporting might bolster this further). Since the spring, newbuild activity has started to take a different path to 2016. By end July the running total stood at 465, up by 116 on Jan-July 2016, and by the end of September the figure stood at 573, up by 135 on the 438 in the first nine months last year. This figure stands only 15 below last year’s full year total of 588, and the total today has reached 620.
The statistics in other units also support the more positive trend. In dwt terms, Jan-Sep contracting stands at 47.9m dwt, already up by 53% on last year’s full year total. In CGT, year to date contracting stands at 15.9m CGT, up 24% on 2016’s overall figure, and the Jan-Sep 2017 value stands at $44.1bn, up 20%. Of course, the percentages sound big but are from a very low base. But, still, across the summer and into the autumn there has been a move away from last year’s extremely depressed levels of activity, even if activity remains subdued in historical terms.
Improved market conditions in some sectors, and a generally more positive sentiment across many parts of the industry have certainly helped. Looking across the sectors, there have been 54 more oil tanker orders (a total of 170) in the first nine months compared to Jan-Sep 2016, and over 100 more bulker contracts placed (to total 150). Gains have been made by Korean yards which have taken 133 contracts (versus just 45 last year).
Look Once, Look Twice
So, following early 2017, when newbuild contracting activity seemed to track 2016’s depressed performance fairly closely, recent months have seen things take a different road, with an improvement in the volume of activity, however limited the overall total remains. Like many things in life, the newbuilding scene this year has been worth a second look. Have a nice day.