HK owners set to ride rates increase
TERRITORY ship owners are well placed to take advantage of any improvement in market conditions, according to Peter Cowling, chairman of the Hong Kong Shipowners' Association (HKSA).
Speaking at the association annual meeting, Mr Cowling said industry fundamentals are basically sound, with relatively modest order books in both the dry and wet markets.
''If this continues, and China remains a dominant player in the demolition market, then I believe that with some improvement on the economic front we can expect to see an enhanced trading environment develop towards the end of 1994,'' he said.
Hong Kong has maintained its status as one of the world's foremost maritime centres and with territory-based owners controlling ships totalling 71 million deadweight tonnes (dwt) ''we remain and can expect to remain a significant force in world shipping''.
Mr Cowling said 1993 has been a year of mixed fortunes for the industry, with the dry-bulk sector getting off to a spectacular start while the tanker sector has drifted with a lack of any real direction.
Cheap bulkers and low interest rates have benefitted owners during the year.
The dry-cargo market witnessed a strong increase in rates from the beginning of the year through to the summer.
However, since August freight rates have slipped to virtually retrace the progress made during the first half.
Throughout the year, general economic fundamentals have been weak, but strong import demand, particularly from China, combined with some congestion resulted in a surge in demand and improved rates.
The Handysize sector was the primary beneficiary of Chinese demand, with time-charter rates for Handymax bulk carriers for trips from Europe to the Far East soaring to US$18,500 a day during the first half.
A scaling back of Chinese imports, combined with the delivery of a number of newbuildings during the second half, has led to a softening in rates.
With owners finding second-hand prices increasingly strong and quality tonnage difficult to acquire, there has been a move towards ordering newbuildings.
HKSA members placed orders for Handymax, Panamax and Capesize tonnage, Mr Cowling said.
The Japanese shipyards struggled throughout the year with a strong yen, while Korean yards were the main beneficiaries of the recent round of contracting.
Over the year, the prices of second-hand tankers have increased by five per cent to 33 per cent, depending on the type and age of the vessel.
He said until the middle of the year, scrapping volume was maintained at good levels, with 9.2 million dwt sold for demolition.
This was a healthy 30 per cent increase over the same period of 1992.
Chinese breakers were the dominant buyers, but with the austerity measures adopted by Beijing in June, demolition by China of large lightweight tonnage ground to a halt.
''It is only now that we are beginning to see Chinese breakers return to the market for large tonnage,'' Mr Cowley said.
China's absence meant that scrapping volumes slumped during the third quarter of this year, and from being 30 per cent ahead of 1992 in the summer the industry is now back to similar levels.