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Last updateΔευ, 01 Ιουλ 2024 7am

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Despite indices softening over the past few weeks

Bulk carrier 1

Despite indices softening over the past few weeks dry bulk asset prices remain relatively firm. Indices today are at decent levels, high enough for the owners to have earnings from freight rates. Reflecting back to May 17 2018, indices were at the same levels as today with BCI at 2,106 points, BPI at 1,239 points, BSI at 1,064 points and BHSI at 589 points, however asset prices were quite lower than today. Taking for example the prices of 5-year-old vessel in May 2018, a Capesize was valued at about USD 35 million, a Kamsarmax about USD 24 million, an Ultramax about USD 22.1 million and a Handysize USD 15.5 million. Today, vessels of the same age are valued much higher despite indices (and therefore earnings) are almost the same as 5 years ago. Handysize vessels have seen the highest difference as they are valued about 70% higher, Kamsarmax and Ultramax vessels are valued about 40% higher and Capesize vessels about 54% up. High newbuilding costs, inflation, low orderbook, big cashflows from recent years along with uneager owners to offload vessels at lower prices are the main reasons for the second-hand price paradox.

Following our previous week analysis of the tanker fleet and its possible development by the end of 2025, we have done a similar analysis for the dry bulk fleet. Our estimations show that the dry bulk fleet (>= 10,000 DWT) will grow by around 2.8% to 13,655 vessels by December 2025. More specifically, in the next 32 months 895 newbuilding vessels are going to be added to the fleet (according to April’s 2023 orderbook), while 519 vessels 21+ years old are estimated to be broken up (this assumption is based on 20-year-old scrapped bulk carrier vessels data – an average of 173 ships per year). As per our April’s 2023 fleet data, the dry bulk orderbook to fleet ratio stood at 6.9%, below the mark of 7%, which is the lowest level of the past 27 years. Modern vessels, aged 0-10 years old, are estimated to be decreased by around 10% by the end of 2025, which may sustain firm values for such modern vessels on the water. On the other hand, vintage vessels (16-21+ years old) will be expanded by around 23% and will constitute 27% of total bulk carrier fleet, vessels that may not keep up with the IMO emissions policies. The Newcastlemax sector is anticipated to witness a significant increase of around 15%, reaching 508 vessels, as 65 newbuilding Newcastlemax vessels will enter the dry bulk fleet, whilst we assume that none of those ships will go for scrap by the end of 2025. During the same period, Supramax/ Ultramax sectors and Panamax/ Kamsarmax sectors are expected to grow by around 6% and 8% respectively. In other words, 272 new additions are expected in the Supramax/ Ultramax sectors increasing their fleet category to 3,652 vessels (27% out of total bulk carrier fleet), while throughout that period 60 vessels aged older than 21 years old are projected to be demolished (assuming that an average of 20 vessels go for scrap based on last 20 year's data). Similarly, the Panamax/ Kamsarmax sectors will account to 2,810 ships, after the entrance of 260 newbuildings by the end of December 2025 and an average of 20 vessels per year (a total of 60 vessels) to go in the scrapyards. In contrast with the aforementioned segments, the Capesize sector may be reduced by 4% to 1,061 vessels during the next 32 months as the depletions are estimated to be more than the additions. A total of 23 newbuilding Capesizes are expected to join the dry bulk fleet and 63 vessels to be broken up (an average of 21 vessels per year).

Sale and Purchase:

On the dry S&P activity, Far Eastern buyers acquired the Capesize “Bao May”- 178K/2010 SWS for USD 25.5 mills, while the one year older “Mineral Ningbo” - 178K/2009 SWS was sold for USD 23.5 mills to Chinese buyers. Furthermore, on the same sector the vintage “Berge Cristobal” - 177K/2003 Namura was sold for low USD 13 mills. Moving down the sizes, the Kamsarmax “Xin Han” - 82K/2013 Dalian was sold for region USD 20 mills to Greek buyers. On the Supramax sector, clients of PT Pelayran Bahtera Adhiguna acquired the “Magnum Fortune”- 54K/2009 Yangzhou Dayang for USD 12.9 mills, while on the same sector, the “Ella” - 52K/2003 Tsuneishi was sold for USD 9.3 mills. Finally, the Handysize “Ionic Hawk”- 34K/2012 Dae Sun was sold for low USD 16 mills to Greek buyers, while the 3-year older “Caribbean Spirit”- 35K/2009 Nantong Changqingsha found new owners for USD 10.8 mills.

On the tanker S&P activity, Middle Eastern buyers acquired the Scrubber fitted Aframax “Sperchios” - 107K/2018 Namura for USD 68.5 mills. On the LR1 sector, the “Gulf Crystal” - 75K/2009 HMD was sold for USD 29.5 mills. Furthermore, on the same sector 3x LR1, the “Gulf Coast”- 75K/2005 HHI, the “Gulf Horizon”- 75K/2005 HHI and the “Gulf Pearl”- 75K/2005 HHI were sold for USD 61.2 mills enbloc. On the MR1 sector, the “Eastern Quince” - 41K/2009 SLS was sold for high USD 21 mills. Finally, the StSt Chemical tanker “Fortitude” - 20K/2004 Shin Kurushima found new owners for high USD 14 mills.

 

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