Market Commentary – January 31, 2008

The confluence of a credit squeeze, fallen charter rates and ailing equity markets appears to have set off a wave of consolidation. While many have been enjoying the good times, there has been no shortage of market players looking forward to the day when vessel values would reach their peak and begin to descend. This makes vessel acquisitions more attractive, while stock prices that have fallen below NAV almost across the board are making public companies look like increasingly attractive targets.

Even brokers have been getting in on the game, as ICAP Hyde acquires Capital Shipbrokers, together with its 37 staff in London and representative and associated offices in Dubai and Beijing. Rumors also continue to swirl regarding the future of Stamfordbased MJLF.

At the same time the rumors that owners might run into trouble financing newbuildings are being confirmed. Jinhui Shipping & Transportation announced this week that it is canceling contracts for two VLOC (Very Large Ore Carrier) newbuildings ordered in November 2007 from China Shipbuilding & Offshore International and Dalian Shipbuilding Industry Co. The total value of the orders was over $245 million and a total of $4 million in cancellation fees shall be paid to the yards. Hong Kong-based, Oslo-listed Jinhui eloquently described the financial considerations behind its decision:

This is only an excerpt of Market Commentary – January 31, 2008

Content is restricted to subscribers. To continue reading please Log-In or view our subscription options.