Third of dry bulk orders are poised for the chop

The figure could be as high as 60%, he suggested at the company’s first-quarter conference call. Together with fewer than expected new ships delivered in the first quarter, increased scrapping and signs of recovery in China and India, the dry bulk sector has grounds for “near-term cautious optimism”, he added.
Eagle Bulk said it had been tracking developments at major engine makers Wrtsil and MAN B&W, and had increased its estimate of “potential cancellations” announced from these two majors from US$1.5bn to US$2.6bn.
The dry bulk orderbook was “in flux”, and ship supply statistics available through traditional channels were unreliable, Mr Zoullas said.
“Shipowners around the world are cancelling orders because a lack of finance, lack of employment and other financial problems,” Mr Zoullas said.
“We believe a more reliable indicator is to track developments at component manufacturers for ship construction, such as engine makers, since they are lead indicators of changes in ship supply.”
Apart from the data available from engine makers, Mr Zoullas said statistics available from other sources also pointed to “increased cancellations over the next two years”.
A critical component of this theory was that 40% of the world orderbook was with greenfield or newly-established yards.
“Current estimates indicate that a substantial portion of the world orderbook does not have secured financing in place,” Mr Zoullas said.
“As a result, we estimate that 30% of the world orderbook could slip for 2009, although we have seen reports that this could hit 60%.”
Eagle Bulk has prepared a “progress report” chart that stacks up actual 2009 deliveries against the total scheduled deliveries for this year in four different sizes of bulk carriers.
In each case, the number of ships delivered so far indicated that “all vessel types are well behind meeting their scheduled delivery dates”, Mr Zoullas said.