BULKER secondhand transactions are likely to end the year lower than in 2019 as coronavirus restrictions made it harder to conclude the deals. The final figure is set to be the lowest since 2015.

So far this year, 450 deals have been recorded, according to data from VesselsValue. That compares with 563 in the whole of last year, 679 in 2017, and 436 in 2015. 

“The bulker market is still playing catch up with previous years as the Covid-19 pandemic stalled the number of vessels being sold, due to uncertainty in the market, difficulty of finalising deals, and due to a prolonged period of low rates through the spring and summer months,” said the data provider’s head cargo analyst Olivia Watkins.

Japanese owners, such as Nissen Kaiun and NS United, were seen selling older vessels amid firming asset prices and rates, and as a number of major domestic steel mills reduced their tonnage demand, she said, adding that contracts are either being terminated early or no new contracts were being offered for newbuildings. 

Ordering of new tonnage has also remained low this year as owners tread cautiously due to uncertainty in the dry bulk market and shipyards are lowering prices to try and attract interest. 

“We will likely see the lower number of orders placed carry through until the beginning of 2021 but with the new incentive of lower newbuild prices, we could potentially see an uptick” thereafter, said Ms Watkins. 

A sales and purchase broker in Asia said that in addition to the strong rates in recent months, buying appetite was fuelled by quantitative easing by banks and the low interest environment.

He called it a “retaliatory rebound” because buyers had been withholding their investments due to concerns that the pandemic would badly hurt the freight market. When it turned out that rates were much better than expected, while ship prices were still about 15% to 20% below the same period last year, depending on different vessel types and ages, deals resumed.

In many cases, while deals have now been finalised, negotiations can be traced back to last year, and should have been concluded earlier, had the pandemic not hit, the broker said, adding that about 40% of the ships he has sold this year have been this sort of “delayed transaction”.

Overall, he expects confirmed transactions to be lower in 2020 than in previous years, partly because of the crew change crisis, which has increased the difficulty and cost of vessel deliveries.

Delivery of secondhand vessels at Chinese ports has been almost impossible thus far this year, and as a result, some Chinese buyers chose to move the handover to Japan, where restrictions were looser. But the cost could double or even triple, depending on the actual arrangement in each case.  

Buying momentum has however again slowed in recent weeks, given the reintroduction of lockdown measures in Europe after the second wave of coronavirus outbreaks, said the broker.