Lloyd's List is part of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC’s registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call UK support at +44 (0)20 3377 3996 / APAC support at +65 6508 2430

Printed By

UsernamePublicRestriction
UsernamePublicRestriction

Hot dry bulk market spurs interest in secondhand ships

An unusually strong dry bulk market has spurred interest in secondhand tonnage, although owners would prefer not to sell while freight earnings are at decade highs

Asset values across the bulker spectrum from handysizes up to kamsarmaxes have increased by 40% in a short space of time, driven by sentiment, said a sales and purchase shipbroker

THE dry bulk market, which is witnessing the best first quarter in a number of years in what is traditionally a weak period, has generated a lot of buying interest for secondhand tonnage, especially for smaller-sized ships, according to a sales and purchase broker.

“There is a huge amount of interest in ships that have been undervalued for a long time,” said Simon Ward, Ursa shipbrokers’ Athens-based director.

There is a lot of money hanging around waiting to pick up used tonnage, given the current limited interest in spending on newbuildings based on the uncertainty over future environmental regulations, he said.

Sentiment is driving the spurt, which started earlier this year, although owners seem reluctant to part with their assets while the freight market is hot, he told a webinar.

The handysize market is outperforming the other size categories, which is an unusual trend.

The disconnect with the larger sizes boils down to the dispute between China and Australia, which has affected coal trades, mostly carried on capesizes and newcastlemaxes, according to Mr Ward.

China is sourcing coal from Indonesia, Russia and South Africa primarily on the smaller-sized vessels from kamsarmaxes down, he said.

A 10-year-old Japan-built supramax is up 40% since the start of the year, now priced at about $14m, while a similarly-aged kamsarmax is at $21m from $15m just six weeks ago.

The hunger to pick up tonnage is even leading some buyers to close deals without surveys or inspections, said Mr Ward.

Fleet utilisation will remain high as the global economy and demand to transport dry bulk commodities continue to improve, he said, with signs of a healthy, sustained market emerging.

For every $10,000 per day gain in the freight market, owners will receive an extra $3m per year, leaving them awash with cash.

However, the current market climate should not be described as a supercycle, which is actually a reflection of high commodity prices. Mr Ward said. For shipping, it is the volumes and tonne-mile demand that matters.

There may be a supercycle coming for copper and rare earth materials given the focus on renewable energy, but that will be on pricing.

Bulkers act like trucks for moving raw materials around and he does not see “another China” emerge, nor does he see growth being retained in “this China” over the long term.

He predicts capesizes will become “stranded assets” over time mainly because of a decline in overall coal volumes.

Related Content

Topics

UsernamePublicRestriction

Register

LL1136137

Ask The Analyst

Please Note: You can also Click below Link for Ask the Analyst
Ask The Analyst

Your question has been successfully sent to the email address below and we will get back as soon as possible. my@email.address.

All fields are required.

Please make sure all fields are completed.

Please make sure you have filled out all fields

Please make sure you have filled out all fields

Please enter a valid e-mail address

Please enter a valid Phone Number

Ask your question to our analysts

Cancel