Norden Orders 17 New Eco-Ships

Since the first of January, Danish tramp shipper Norden has been executing a significant growth plan focused on both the dry bulk and clean product tanker markets. The result is 17 new vessels on order and an increase in their financial net commitments by $605 million. This number includes a newbuild CAPEX of $288 million.

Norden’s President and CEO Carsten Mortensen commented: “In the last couple of months, NORDEN has taken advantage of the attractive newbuilding prices to expand the newbuilding programme by a total of 17 fuel efficient vessels. Scrapping of dry cargo vessels is still at a high level with around 7.5 million DWT in the first quarter.”

Mr. Mortensen admits however, that “2013 will be a very difficult year earnings-wise.” NORDEN maintains its expectations for the results for the year with a group EBITDA of USD 15-45 million.

In their earnings presentation, Norden notes that the dry bulk market got off to a terrible start in 2013 with the Baltic Dry Index seeing the lowest quarterly average in 27 years. This was offset however by a booming South American grain trade that helped support demand for Handysize, Handymax and Panamax-sized vessels. According to the Baltic Exchange, average Handymax and Handysize spot rates were approximately USD 8,100 and USD 6,900 per day, respectively, while average Panamax spot rates were approximately USD 7,100 per day. Capesize spot rates experienced a drop of 4% since the beginning of the year to a level of around USD 6,100 per day.

Norden notes Capesize rates were particularly affected by a significant drop in Brazilian iron ore exports to Asia and a decrease in Australian iron ore and coal exports due to heavy rain and other weather related disruptions.

According to data by Clarksons, 106 bulk carrier newbuild orders were placed in the first quarter of 2013 corresponding to 10.6 million dwt. Deliveries of these vessels are expected between 2014 and 2016.

Despite this huge increase in newbuild orders, fleet growth will be balanced by a significant amount of scrapping. In the first quarter, 7.5 million dwt were scrapped according to data provided by Clarksons.