Intermodal Weekly Market Report, Tuesday 11th April 2017, Week 14
Market insight By Vassilis Vassiliou
Ship-repair Broker, Interyards S. A.
The first quarter of 2017 started relatively busy for the ship repair sector, with most of the repair facilities being nearly fully occupied till the first half of the year. Compared to the very silent first half of the previous year, there is an enormous increase in the demand for dry-docking slots, which is more than justified. Apart from the obvious, i.e. that the physical number of vessels due for special survey is greater compared to last year past, we have also observed that some non-Greek shipping companies have the tendency to bring the dry-docking schedule earlier to avoid the imminent implementation of the ballast water management regulations.
On the other hand, as far as Greek shipping companies are concerned, this strategy has not found solid ground, as the great majority of the Owners have agreed to proceed with the de-harmonization of the IOPP certificate, as a way to avoid the BWMS regulation altogether. The first wave of the high demand for ship repairs came during the Chinese New Year. This was mainly due to the lack of good employment options for a number of dry bulk owners trading spot at that time, who took the advantage of the low market by using that period to repair their vessels.
Despite the increased demand for dry-docking slots, shipyards pricing policies have not changed. Price levels are maintained almost at the same record-low level as the year before. In some cases, shipyards’ prices have slightly increased their prices, but even in those cases the increase has not been proportional to the spike in slot demand. As a general observation therefore we can say that shipyards didn’t manage to get the full advantage of the increased demand during Q1 2017 and that since the repair market prices remain at record low levels, they still offer an excellent opportunity for repairs. Additionally, It is anticipated the second half of the year will be smoother, with the shipyards’ workload slightly lower compared to now.
As far as the Greek market is concerned, Chinese yards remain on top of Owners’ choice, with one out of two Greek vessels being repaired in that area. While the first-class Chinese shipyards are focusing in big projects and tanker vessels, the most ‘value for money’ Chinese shipyards offering are those to fill all of their slots first, giving by rule of thumb a 40 days’ notice requirement for a slot. Thus, the gap is filled by the medium, less-known shipyards, with relatively short reference list of foreign vessels, which are directly benefiting from the repair congestion. Those shipyards during the slack period of 2016 where unknown to the majority of ship-owners but they are now building up their reputation.