French orders to foreign shipyards

for us just how stagnant this market has been. The reasons
for this are readily identifiable to all players. They may be
summarised as follows:
• Newbuilding prices are down since 1997 and are being
maintained at attractive levels in comparison with actual
or probable prices for modern ships.
• Over-capacity of vessels with respect to tonnage to be
transported and distances to cover.
• The dearth of available time-charters offered by shipping
companies.
• Returns for shipowners on the time-charter and spot
markets are weak.
• The ratio of units scrapped and new units entering the
fleet - by the end of November 1999, 30 units had been
scrapped compared to 23 vessels delivered. Although
this ratio should reach an equilibrium in terms of numbers
of ships by the end of the year, the new ships have a
higher performance rating.
• To these, some add the low consolidation effort in the
sector ; however, it can be justifiably maintained that
shipowners in other domains, such as the large chemical
carriers, have been hurt by the crisis despite ventures of
this type.
• Almost all buyers for FSO or FPSO conversion projects
have disappeared.
These reasons, combined with charter operators growing
selectivity through vetting policies in markets favourable
to them, have generated a perceptible acceleration of
scrapping to levels observed in 1998.
For the record, 30 units were scrapped in 1995, followed by
16 in 1996, then only seven in 1997 (when rates culminated)
and 18 ships in 1998. At year’s end, as stated earlier, we
observed 36 departures of vessels of this type to the
scrapyards. More than half of shipowners facing the fifth
Dwt
12,000,000
10,000,000
8,000,000
6,000,000
4,000,000
2,000,000
0
special survey this year preferred to scrap their vessels.
Unless a significant reversal of freight rate trends occurs,
it is very likely that the current scrapping rate be maintained
in 2000.
• The second-hand Suezmax market
This market segment can boast of being the one in which
the number of units changing hands between shipowners
in 1999 surpassed that of 1998. Remember, more than
45 units changed hands in 1997, while only 11 ships
were sold in 1998 for storage or for navigation. At the
end of November 1999, we recorded 19 sales. Sales were
divided roughly equally between modern ships (9 units
built since 1992, of which no fewer than six were resales)
and nine built during the seventies. An exceptional event
occurred with the sale of one of the rare vessels built in
the eighties, the M/T “Nitten Maru”, 180,377 dwt, which
was sold in October for around $9,000,000. The remarkable
maturity of players in the market segment for sales of ships
aged less than ten years is worth noting. Buyers were able
to resist the temptation of ordering new vessels and sellers
were able to make decisions to sell units acquired several
years earlier at losses that were certainly painful. This is
one manner in which tonnage over-capacities can be
avoided, something we will return to in our conclusion.
The following sales occurred:
• In the first and second half, the Hyundai hulls 1179
and 1180, for 1999 and 2000 delivery, at a price of
around $43 million each.
• In the last quarter, the Hyundai hulls 1172 and 1173
for a price of about $45.5 million each (through a share
exchange).
• In October, the M/T “Chevron Atlantic”, a 149,748
dwt double-hull, built in 1992, sold for a reported $34
million with a bareboat charter of around $22,000 per
day ending in 2002.
VLCC scrapping figures
1995 1996 1997 1998 1999
T h e t a n k e r m a r k e t
S H I P P I N G A N D S H I P B U I L D I N G M A R K E T S 2 0 0 0
53