07/04/2017 by Alibra Shipping 0 Comments
Chinese buyers more active in the S&P market
An increased number of ships have made their way into the hands of Chinese buyers over the past 12 months, and Chinese companies have greatly reduced their ordering of newbuildings, according to Alibra research.
Alibra looked back at the past 12 months to date in order to identify China’s buying patterns. Between April 1, 2016 and March 31, 2017, Alibra tracked 1,620 vessel S&P transactions worldwide, of which 13.6% of vessels were bought by China-based companies.
The number of overall S&P transactions during the 2016/2017 period is an 18.5% increase compared to during the preceding 12 months, in which 1,367 ships changed hands and of which 12.0% went to Chinese buyers.
And what have the Chinese been going for more than ever? Perhaps predictably, the answer is bulk carriers. China bought 130 bulkers during the 2016/2017 period, compared to 95 during the 2015/2016 period.
Panamaxes and handymax/handysize bulk carriers have remained the most commonly acquired during the past couple of years: 41 panamaxes and 46 handys were bought during the 2016/2017 period. These figures are both up by roughly 30% compared to the 2015/2016 period.
But China’s appetite is changing. Over the past 12 months it has reduced its purchases of tankers (24 vessels in the 2016/2017 period, compared to 45 in the 2015/2016 period). Now, buyers have turned their attention to acquiring containerships – in a big way.
Over the past 12 months, some 53 containerships have been snapped up by Chinese companies, of which around half have been smaller, coastal/inland vessels, plus 17 panamaxes, 15 post-panamaxes and eight vessels of 10,000+ TEU. In contrast, only eight containerships (of which four were panamaxes) were acquired by Chinese buyers between April 1, 2015 and March 31, 2016.
Chinese banks make up many of the entities that have invested in containerships, particularly in en bloc deals. During 2016, China Construction Bank entered shipowning by buying and bareboating back (BBB) three containerships from APL. China Merchants Bank did a BBB deal for eight containerships from APL, and completed another BBB deal with Navig8 Product Tankers for two LR1 tankers during 2016. China’s Bank of Communications was another prolific buyer during 2016, picking up 19 vessels in total, of which nine were containerships. It also completed a BBB deal with Navig8 Product Tankers for three LR2s, in addition to eight other product tankers the bank acquired last year.
While China’s purchases of secondhand vessels have seen a slight increase over the past 12 months to date, its vessel ordering activity has become much more conservative. Alibra has tracked orders for just 49 new vessels by Chinese companies between April 1, 2016 and March 31, 2017 – a big reduction on the 175 new vessels ordered during the preceding 12-month period. What is perhaps remarkable is that this reduction has occurred even though the Chinese government’s scrapping subsidy scheme (which offers benefits for Chinese owners replacing old tonnage with new ships built at Chinese shipyards) has been extended until the end of 2017.
Of the 49 new ships China has ordered in the past 12 months, 14 are small containerships (of around 2,500 TEU) and 14 are Valemaxes. This really illustrates how China’s ordering activity has become much more muted. In contrast, Chinese companies ordered 20 Valemaxes in the 2015/2016 period and some 31 ultra-large containerships of 15,000+ TEU, plus 16 VLCCs, among other vessel types.
China’s shipping industry has undergone radical consolidation during the past few years in order to trim costs and increase efficiency. For this reason, Chinese shipping is becoming increasingly corporate, which could explain this more conservative attitude to ordering new vessels and instead picking up secondhand vessels (especially while asset prices are low).