Dry bulker bonanza drives owners to pay premium for resales
A kamsarmax being built in China has been sold for $36m — 19% higher than the opening bid and about 10% more than today’s cost of ordering a new ship at a Chinese yard
Secondhand prices have doubled as freight earnings are elevated. The sector has turned into a sellers’ market, where acquiring quality tonnage is no easy task. Brokers see an upsurge of interest in resale candidates, which are expected to drive up transactions in the coming weeks
THE surging appetite for dry bulker tonnage is pushing buyers to pay more for resales over new orders.
Shipbid, a Chinese online vessel trading platform, said a kamsarmax was auctioned via its system for $36m — 19% higher than the opening bid.
The ship, with the hull number B85k-9, is under construction at Shanghaiguan Shipbuilding, a subsidiary yard of China State Shipbuilding Corp.
The final cost suggests owners could save about 10% by placing a newbuilding of the same type in China at today’s ship price, according to shipbrokers’ data.
Lloyd’s List understands that the 85,000 dwt was part of the 10-ship order signed by Avic International Leasing, a major Chinese ship lessor, in January 2019.
The newbuilding project was said at the time to be backed by the charterer SDTR Marine, a joint venture between China's state-run Shandong Shipping and Singaporean firm Transcenden Global.
An Avic leasing executive confirmed his company’s role as the seller of the vessel, without commenting further.
The lessor is expected to reap bumper profits from the deal as ship prices were about $28m when the orders were placed.
Market sources linked the buyer to Chinese individual Ye Shengbing, who is the chairman of Taihua Ship Management. An official from the China-based firm denied the speculation, however.
Whoever the buyer is, the willingness to pay for a resale at a premium over a newbuilding order shows owners’ desire for available dry bulkers amid a strong upcycle expected to last, said industry experts.
The hull number B85k-9 vessel is scheduled for delivery in mid-2022 compared with end-2023 for a new ship ordered now, according to Wang Qijun, chief analyst of Shipbid.
“Optimism is growing in dry bulk shipping, so the buyer might want to catch up with the market boom,” he said, adding auction activity over the past month has attracted the interest of more than 10 buyers from China, Greece and Turkey, among other countries.
Acquiring a quality ship on the secondhand market nowadays is no easy task, said a Hong Kong-based sales and purchase broker.
“The sector has turned into a sellers’ market and they are not keen to sell at the current freight rate levels, unless the price is extremely attractive,” he said.
Dry bulker tonnage is already being sold at double the price since the beginning of the year, with expectations of strong upside in freight earnings for the coming quarters.
The Baltic S&P assessments show that secondhand prices for a five-year-old capesize vessels have surged by 38.1% year on year to $27.6m, with panamax up 41.4% to $30m and handysize rising 52% to $22.29m.”
A Singapore-based shipbroker expected the uptrend to continue at least into 2022, despite some possible corrections.
Considering the $36m price tag for the auctioned vessel was “conservative”, he said there was an upsurge of interest in resale candidates that will drive up transactions in the coming weeks.
“Kamsaramax is a must-have tonnage bracket now, so the price it fetched for resale is very obvious given the strength in the markets,” he said. “I would have asked for more.”