The international outbreak of coronavirus has made it more difficult to complete ship sales.
Chinese buyers remain actively interested in veteran secondhand vessels, according to several sale-and-purchase brokers in the country. But handovers, crew changes and sale closings that were possible just a few weeks ago have fallen victim to quarantine and social distancing measures, brokers say.
Although numerous brokers have reported interest from bargain-hunting Chinese buyers, Pan Hongzhao's Forocean Shipbroking is one of few S&P brokers to have completed a satisfactory number of transactions for Chinese buyers since the Chinese New Year.
"The Chinese buyers are cautious, but we also have confidence in the market during the year to come," Pan said. "The deals I have done have not been at extremely low prices. Compared with deals done before Spring Festival, the levels are about 10% down."
The seven so-far unreported deals that Forocean concluded in February include purchases of a panamax, supramaxes and general cargoships. They also include secondhand trading sales to Chinese buyers and demolition sales to Bangladesh by Chinese sellers, Pan told TradeWinds.
Several of the private owners traditionally in the market for bulkers are also now interested in MR product tankers.
Deal flow slows
In comparison to its February deals, Forocean completed more than 30 secondhand sales for further trading in the whole of 2019, making Pan's company the biggest Chinese S&P broker, he said.
But another ship in Pan's series fixed for delivery in March has suffered delays. The Chinese buyer of the Japanese-owned handymax has agreed to take the vessel as soon as the handover can be arranged.
As coronavirus continues to spread, authorities have responded with stricter measures and, as a result, the handymax is still prowling the Indian Ocean in search of a suitable port for a handover.
"I have more closings to do this week if we can find a place for a handover," Pan said.
"In February, foreign crews could do handovers and exchanges in some Chinese ports on a case-by-case basis, but it is more difficult now that many countries have the virus.
"Closings are not such a big problem. As Chinese brokers, we cannot travel to Singapore now for a closing, but the owners can authorise a HFW escrow lawyer to sign papers for them. We can do the same with sales closings in Japan."
Pan arranged February handovers in Dalian, while Guangzhou and Zhoushan are among other Chinese ports that have been more open to handovers until recently.
Both the undelivered handymax's present crew and their successors are non-Chinese. The latter are mainly Filipino, so that rules out Chinese ports as the Philippine government is not allowing its nationals to embark there, Pan said.
One bright spot for Chinese crews is in Bangladesh, where the government now allows Chinese crew members of a ship that is scheduled to be demolished to disembark under supervision of a port agent. They can fly directly home after their vessel is beached if they have not been in a Chinese port in the past 21 days, Pan said.
