Earnings remain low in Southeast Asia - turnaround still 12 months awayNews // July 28, 2011
Fearnley Offshore Supply reports that after what it described as a slow first quarter to the year, the second proved to be equally depressing in terms of earnings for vessel owners.
"The flow of newbuilds arriving from shipyards around the region has yet to be stemmed," said the broker. "There are however signs indicating that by the end of this year we will see a more controlled flow of new vessels entering the market."
The company said that the regional rig count has remained stable in the second quarter, Malaysian and Indonesian activity are showing signs of improvement, and 'Sakhalin season' has kicked off, leading to some much sought after optimism among owners.
"As a direct result of this added confidence we're seeing a rate push initiated by owners for the first time in many months," said the broker, although it noted that the underlying fundamentals are not in place to support a turnaround at this stage and the market is still flooded with older tonnage, new tonnage is still being churned out from the yards, cabotage laws are yet to be properly defined, new orders are again being placed, leading to most market experts predicting that a turnaround is still another 12 months away.