Page 16: of Maritime Reporter Magazine (January 2004)

The Shipbuilding Report

NEWBUILDING PRICES "Happy" New Year?

Little more than 12 months ago new- building prices had been drifting down steadily for more than a year and some industry analysts were warning that soft

Newbuilding prices

Tanker prices

VLCC

Suezmax

Aframax

Panaraax

Products

Bulk Carrier prices

Capesize

Panamax

Handymax

Handysize

Latest $76 m $52 m $42 m $33 m $31 m

Latest $48 m $26 m $23 m $18 m

Average(2002) $65 m $44 m $35 m $29 m $26 m

Average(2002) $35 m $20 m $17 m $14 m ship prices could be here for some time.

Simultaneously, the closure of some yards were more than offset by the open- ing of new ones, particularly in China, while improvements in productivity were constantly adding capacity.

Some brokers and industry analysts were warning of surplus capacity, not just in containerships. but in the

Aframax, Suezmax and 45.000 dwt products carrier range.

What a difference a year makes.

Today the picture is radically different.

The container, tanker and bulk carrier markets are all buzzing, with certain sectors of the dry bulk market reaching record levels, beyond most owners' wildest dreams. The world's shipyards

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Let us tell you about it. are full, almost without exception, for the next three years and some builders are now taking orders for 2007 delivery.

New ship prices are rising dramatically (see table) and the markets are so buoy- ant that there are few re-sales available.

Secondhand vessel values are spiralling, with some buyers prepared to offer over the odds just to secure the tonnage they want.

There are significant new ship price rises in both the dry and liquid sectors.

But it is the increase in the cost of

Capesize units that is the most dramatic.

Fuelled largely by Chinese demand for iron ore and coal, Capesize charter rates have climbed to unprecedented levels, pushing up both new and secondhand prices too. Newbuilding brokers believe it is only a matter of time before the price tag for a new Capesize will start with an almost incredible five.

However, shipbuilders may not have it all their own way. Iron ore prices are climbing, which could soon manifest into rising steel prices.

WORLD'S LARGEST

Jahre Viking to Get $22 Million Make Over

Dubai Drydocks has won a $22m con- tract from Norway's First Olsen Tankers to convert the world's largest ship, the 564.763 dwt ULCC Jahre Viking, to a specialized 4.2 billion barrel Floating

Storage unit for a five-year charter by

Maersk Oil for the A1 Shaheen oil field off the coast of Qatar. The vessel has already arrived in Dubai with the con- version program due to be completed by

June 2004. This is likely to be the final phase in a chequered history for this ship. She was originally ordered by

Nomikos as a 400.000 dwt unit in the seventies in Japan, but. following the collapse of the oil markets in mid-1974, construction was halted. The hull was then purchased by Hong Kong's C Y

Tung — lengthened to her current size, and sailed first as the Seawise Giant.

She was attacked during the Iran/Iraq

War during the late eighties and was expected to be classed as a Constructive

Total Loss (CTL). However, Norway's

Anders Jahre purchased the hull and she was rebuilt in Singapore's Keppel

Shipyard during 1991, sailing out of the yard as the Jahre Viking.

REPAIR STANDARDS

Standardizing Contracts

Contracts relating to the broad range of ship repairs have not, traditionally, lent themselves to any form of standard- ization. That could all be changing,

London law firm Ince & Co., has made recent effort with Bimco's Documentary

Committee to develop a standard ship repair contract. Part I of REPAIRCON,

Bimco's standard contract, is set out in the usual Bimco format — with boxes to be completed covering key details of the contract and its main terms. These include place and date of repairs, identi- ty of owner, contractors, vessel, repair yard, delivery and cancellation dates, etc. REPAIRCON's Part II contains the main terms defining rights and obliga- tions. These can be amended or deleted, says Ince, while warning that "great care needs to be exercised to guard against confusing the balanced allocation of risk and responsibility". The law firm is clearly impressed with Bimco's efforts: "Brevity and clarity have always been guiding principles of Bimco forms and, to that end, REPAIRCON addresses the main commercial terms required for a notional contract of one month's dura- tion." However the lawyers draw atten- tion to Bimco's advice that for shorter or longer contracts, and for conversion work, the standard form may need to be carefully modified. "It will also be important to include tailor-made clauses dealing with technical and practical issues, particular the allocation of responsibility for safety and procedures for ensuring that the repairs are moni- tored and carried out safely in accor- dance with application safety manage- ment systems," Ince notes. marine and offshore travel solutions

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The Shipbuilding Report