In Hellenic Shipping News 08/04/2017
Values for dry bulk carriers are now rising exponentially, as demand is growing among ship owners, encouraged by the market’s recovery since the start of 2017, in direct contrast to the year before. In its latest weekly report, shipbroker Intermodal noted that “with the help of what so far appears to be a very strong grain season together with the fact that imports from China have remained so far robust in 2017, it is no wonder that momentum in the dry bulk market has become particularly strong, pushing second-hand and lately newbuilding prices as well to higher levels. The speed in which second hand prices have been firming is indeed impressive across all dry bulk sizes but particularly Panamaxes and Capes, where the average monthly price for a 5-yr old vessel has increased more than 19% and 20% respectively within just one month. A very representative example of this jaw dropping increase is the sale of the Panamax ‘RED GARDENIA’ (76,294dwt-blt 05, Japan), which was sold at the end of February at $7.3m and the sale of the Panamax ‘ALESSANDRO VOLTA (76,806dwt-blt 05, Japan, sold at $10.0m last month”, said Intermodal.
According to Mr. Giannis Andritsopoulos, Intermodal’s SnP Broker, “this strong upward movement in second-hand prices has undoubtedly brought euphoria among owners and has given extra incentive to invest to those who have been feeling a bit insecure to do so, due to this very speedy increase in prices that has brought back memories of past asset bubbles. Saying that, there is a number of medium sized shipowners who have already moved back to the sidelines and there is a good chance to see these owners return to the second-hand market in the near future to invest in the tanker or the container market, where prices have been less strong and could probably offer achieve a bigger premium down the line compared to dry bulkers”.
Andritsopoulos added that “at the same time, collaborations between private equity funds and shipowners have been intensifying again, as the former seem to once more be intrigued by this recent positive reversal in the freight market. So if you wonder “Where did this guy find the money to buy?” the answer is most probably that a fund has provided debt or equity”.
“This is also the case in regards to newbuilding investments, which started to pop up here and there during the past month. Indeed, as sale candidates have decreased and in addition to the fact that prices of modern second hand tonnage have started to close the gap with the respective newbuilding price, has caused a spike in newbuilding enquiries by a big number of owners, a substantial part of which has already translated in either firm orders or discussions in the LOI stage”, he noted.
Intermodal noted that “it has certainly been an interesting first quarter for the newbuilding market that has been witnessing much healthier volumes of activity compared to the same period in 2016. The most unexpected development though is without a doubt the fact that Q1 contracting partly consists of – more than a few – dry bulk orders. With earnings in the sector having only recently recovered after a prolonged period of extremely poor performance, the fact that some owners are already displaying appetite for new orders does certainly raise a few eyebrows but the reality is that the very strong momentum in second hand values of modern vessels is partly defending such choice. The quick rise in dry bulk asset values of modern vessels during the course of March has in fact not only pushed a number of owners towards the newbuilding route but has also created a rather unusual situation in the newbuilding market, with newbuilding prices for tankers and dry bulkers now moving towards opposite directions. In terms of recently reported deals, Luxembourg Based owner, CLdN, placed an order, for two firm Post-Panamax bulkers (98,000 dwt) at Oshima, Japan for a price of $28.5m and delivery set in 2019.”
Meanwhile, “on the Tanker side things have been less rosy as far as asset prices and SnP activity is concerned. The softening trend in the freight market during the past year has pushed second-hand tanker prices down during the past months but it seems that these cheaper prices have not inspired strong SnP activity”, Intermodal’s analyst said.
“Indeed potential Buyers were waiting for even lower ideas on behalf of Sellers, with the former seeing no major reason to offer greater discounts on their vessels amidst a freight market that hasn’t been bad. Saying that, we have been lately noticing a few big names starting to invest in the tanker sector once again, fact which might eventually help towards steadier and possibly higher values ahead…after all opportunity is in the eye of the beholder”, Andritsopoulos concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
