In Hellenic Shipping News 10/04/2017
A lack of availability, as a result of a reduced life-cycle as well, has prompted dry bulk ships’ price increases as of late. According to a recent report from shipbroker Intermodal, “the dry bulk market has undoubtedly rebounded since the same period last year and currently enjoys healthier freight rates. The positive reversal in earnings that showed its first signs during the end of last year has today become a reality that has led asset prices into an impressive rally during the first quarter of 2017. It is no wonder that a big number of shipping companies are steadily differentiating from more reserved strategies followed during the historical lows of 2016 and currently revisit the idea of investing in the secondhand market with additional vessels or to renew their fleet altogether”.
“In the meantime it is clear that the average life cycle of a Bulk Carrier has decreased. The majority of purchase enquires in the Dry sector concerns vessels from prompt resale up to maximum 15 years of age, in contrast to 2013 when purchase enquiries were mainly for vessels of around 20 years old and 2010 when 25 year old vessels were more popular. A shorter vessel life cycle combined with increased purchase appetite, luck of ample sale candidates along and firmer demolition prices have caused a “boom” in asset prices of both modern and older tonnages in a rather short period of time. It is no wonder that voices raising concern that current asset prices might be inflated are getting louder. But are these concerns excused?”, wondered Intermodal’s SnP broker, Mr. Konstantinos Kontomichis.
According to Kontomichis, “it is clear that a 10-year old Japanese Supramax vessel, valued at around $10.0m according to the latest sale- is still very cheap compared to oldest sales during times when the index was at the same levels and the orderbook for the size was substantially higher. The following sales further support the argument that prices today are higher when compared to last November but certainly not inflated at all when compared to previous years. The M/V Admiral Schmidt (55,000 dwt, blt 07, Japan) was sold at $9.8m in early March 2017. In September 2014 the ex-M/V Sea Lily (52,000 dwt, blt 04, Japan) was sold at $15.7m. In May 2013 the ex-M/V Ultra Paguera (53,600 dwt, blt 03, Japan) exchanged hands for $14.8m. Finally, in July 2012 the ex- M/V Vega Eternity (52,400 dwt, blt 02, Japan) was sold for $16.8 million”, he noted.
“To sum up, it seems that the improvement in today’s prices is not the result of a market bubble that has led to inflated prices but merely a delayed correction, which has shocked perspective buyers only because it has taken place in such a short period of time. More importantly, looking into previous years, it seems that there is more room for further correction and we will most probably witness additional price increases sooner rather than later”, Kontomichis concluded.
In the S&P market this week, Intermodal noted that “SnP activity remained firm last week, with a number of sales taking place across all of the conventional sectors, while on the dry bulk side Buyers focused on all sizes except Capes, probably a bit disheartened by the particularly high premiums they now need to pay compared to a couple of months ago. On the tanker side we had the sale of the “MARE CARIBBEAN” (46,718dwt-blt 04, S. Korea), which was sold to U.K Based owner, Union Maritime, for a price in the region of $11.4m. On the dry bulker side, we had the sale of the “KMTC CHALLENGE” (52,026dwt-blt 02, S. Korea), which was sold to Greek buyers, for a price in the region of $7.0 million”, the shipbroker concluded.
