Carboflotta might order a newbuilding
In order to replace Marola, the unit about to be sold, the Genoese group is evaluating the possibility to order a newbulding featuring hybrid propulsion
Being about to sell Marola – one the 6 gas carriers of its midsize and handysize fleet transporting LPG and ammonia - Genoa-based group Carbonfin-Carboflotta will probably order a new unit.
Carbonfin chairman Enrico Filippi – managing the family group with his cousin Enrico Telesio – explained the company’s strategy to Ship2Shore. The unit Marola (with a capacity of 37,000 cubic meters) could be disposed of in upcoming weeks: “Negotiations are in progress”, the Genoese shipowner ensured.
The unit will be sold for a very simple reason: “Since it was delivered, in 2003 by Fincantieri’s Ancona-based plant, Marola was deployed by the same charterer, which always used it to transport ammonia. The contract will expire at the end of this year”, Filippi explained.
At this point, the company can choose among several options: “Being 16 years old, the unit still has a rather long useful life, i.e. some 10 years. At present, the product in greatest demand is LPG but, although changing products is technically possible, it requires expensive cleaning operations of both tanks and loading system”.
The decision to sell the ship is based on the present state of the market which, as for all shipping segments, is cyclical, thus causing shipowners to operate with a countercyclical dynamics: “Between 2012 and 2015, freights, and consequently the value of second hand units, remained high, achieving 1 million dollars per month for 1-year time-charter agreements. After that, they witnessed a drop and in 2018 they achieved their negative record of the past 30 years with less than 450,000 dollars per month”.
During that weak market period, “we managed to conclude a good deal purchasing the almost new ship, Enrico Fermi, at a very competitive price”.
Now that the market is growing steadily again, “with monthly instalments up to 900,000 dollars and the value of second hand units increasing accordingly, we think it is the right time to sell Marola”.
Carbofin already applied for its cancellation from the Italian register of ships – “we acted in advance because the application must be published for 60 days before becoming enforceable” – and Filippi is confident about the outcome of the ongoing negotiation, though keeping its details confidential.
As concerns the possible units to replace the ship for sale, Filippi explained: “We are evaluating several options and we might even purchase a modern second hand vessel, though our most likely option is ordering a newbuilding”.
It all depends on the market: “Prices of second hand units rapidly adapt to freight trends, therefore at present they are quite high. This is a good time to sell, but not as good to buy”.
On the other hand, as concerns newbuildings “shipyards still have a significant capacity available, and they need to saturate it in order to bear the costs to manage their plants. For this reason, although the market is growing, it is still possible to obtain good prices for newbuildings”.
In this respect, the Genoese company has already made up its mind about the shipyard and the necessary investment: “At present, there are not many shipyards which can built midsize gas carriers (with a capacity of 38,000 cubic meters): Hyundai Mipo enjoys the monopoly, therefore I believe that we might place our order with them”. Filippi did not exclude Chinese shipyards, although in this market segment they are penalised by several factors: “Despite the fact that they are not as reliable and efficient as their South Korean competitors, for this kind of ships their prices are not significantly lower, therefore choosing them would be pointless”.
As concerns the price, Filippi revealed that “at present, the standard version of this kind of ships costs some 48 million dollars, which might increase to 50 in case of changes”.
In fact, Carbonfin will probably require a change: “Since we plan to order a modern ship, we are evaluating the possibility to equip it with a hybrid fuel supply system in order for it to be powered by part of the LPG cargo it carries”.
This system works like that of LNG carriers and it is being used also for LPG carriers: “So far, a similar system was installed on a larger unit, but it is available also for mid-size tonnage”.
This extra option is quite expensive, “around 4-5 million dollars”, but it will definitely imply returns: “A similar feature would have a significant commercial appeal because it is not common, and it would allow us to comply with the IMO 2020 regulation at competitive prices because LPG is cheaper than low-sulphur bunker fuel”.
“If we place our order, we will do it in the first quarter of 2020, and in said case the newbuilding might be delivered in the first months of 2022”, Carbofin chairman concluded.