By George Iliopoulos
During the previous month, the dry bulk market witnessed an impressive increase in the BDI index that has reached 1800 points from 500 with a clear impact on the SnP market. The period in which Covid-19 prevailed in both Asia and Europe has brought many changes and created great insecurity to shipowners, a feeling that has not totally disappeared as there is always the fear of a new potential lockdown. However, market dynamics during the last month attracted the interest of many investors, an interest that had moved to the side-lines for many months amidst the low freight rates and the technical issues in inspecting and delivering vessels.
As a result, secondhand sales in the last month increased greatly, compared to the March-April period while the Dry bulk candidates draw most of buyer’s attention. Consequently, this had an upward impact on asset values and mainly on bigger sizes such as Panamax and Capesize vessels, a consequence not limited to the higher freight rates but also due to the fact that many buyers rushed to buy secondhand ships. In contrast to the rest of the sizes, the Handysize secondhand activity did not support such a rise on vessel values despite the fact that many sales took place.
An interesting fact regarding the SnP market is that during this crisis, the most affected prices were those of Handsizes. We have witnessed 10 years old ships more than 30k dwt being sold for approximately 5.5 million and similar Japanese ships with both SS and DD passed being sold for about USD 7 million. Also impressive was the deal in the Handysize sector, which happened recently, where Nisshin Shipping sold two Japanese 38k dwt vessels built in 2014 for USD 12.5 million; evidence that the Handysize prices didn't follow the same trend of the other sizes.
On the other hand, In the Supramax sector, owner of a Japanese 15 years old vessel in early-mid June was aiming at low USD 6 million while the same vessel today, is trading at low USD 7 million, an increase of 15-20% on its asset value.
It is worth mentioning that although we saw vessels staying spot or even mooring for days during the first quarter of 2020, almost a similar situation to 2016, prices did not retreat at the same levels. This indicates that the shipowners did not follow the similar trends as of during 2016, where Japanese 15-years old Supramaxes and 10 years old Panamaxes have been sold at 3-3.5 million and 6 million respectively.
Let us hope that the sentiment will maintain its upward momentum and we will finally see a better market ahead.
Chartering (Wet: Soft-/ Dry: Firm+)
The dry bulk market kept moving positively during the last days, with Capesizes once again displaying the best performance further supporting expectations for a healthy marker for the following months. The BDI today (07/07/2020) closed at 1949 points, down by 7 points compared to Monday’s (06/07/2020) levels and increased by 150 points when compared to previous Tuesday’s closing (30/06/2020). The tanker market has lost further ground this past week, with owners putting forth little resistance. The BDTI today (07/07/2020) closed at 487, increased by 25 points and the BCTI at 367, a decrease of 29 points compared to previous Tuesday’s (30/06/2020) levels.
Sale & Purchase (Wet: Stable-/ Dry: Firm+)
The love for the dry bulk candidates continued this past week on the secondhand market, with Capesize vessels providing popular amongst buyers while the number of the SnP deals in the tanker front still remains fairly low. In the tanker sector we had the en bloc sale of the “HIGH PROGRESS” (51,303dwt-blt ‘05, S. Korean) and “HIGH PERFOMANCE” (51,303dwt-blt ‘05, S. Korea) which were sold to Turkish buyers, for a price in the region of $12.5m each. On the dry bulker side sector we had the sale of the “GRACEFUL MADONNA” (180,242dwt-blt ‘10, Japan), which was sold to Singaporean owner, Eastern Pacific Shipping, for a price in the region of $20.8m.
Newbuilding (Wet: Stable+/ Dry: Soft-)
Last week Newbuilding contracting activity revealed sings of life in the industry, while tanker orders are having the lion’s share despite the fact that earnings in the segment are admittedly at very low levels. The almost non-existent activity in the dry bulk sector cannot go unnoticed, however we could assume that the appetite of owners for Dry bulk candidates is satisfied in the second hand arena where dry bulk vessels are making up the bigger part of the confirmed SnP deals. Moreover, as the memories of historically low freight rates are still fresh, owner’s hesitation for new projects is more than justified at the current time. However, in respect to the first half of 2020, dry bulk newbuilding orders are counted at a total number of 67, increased by 10 order compared to the same period of the previous year. In terms of recently reported deals, Norwegian owner, Ludwig Mowinckels Rederi, placed an order for two firm two optional Suezmax crude carriers (156,500 dwt) at New Times, in China for a price in the region of $52.1m each and delivery set in 2022.
Demolition (Wet: Stable+/ Dry: Stable+)
The demolition market followed the same momentum of the previous week with another generous round of sales reported while pricing details reflecting a positive upward trend in the Indian subcontinent. Cash buyers has been displaying strong resistance lately with Pakistani breakers leading the race followed by the Bangladeshi buyers who are appearing decisive in holding onto their increased market share focusing mostly on non-green recycling demo tonnage. India has also witnessed an improvement following the strengthening of local scrap steel prices in the region. On the other hand, pressure still looming in the Turkish market with the weakening momentum evidenced in soft prices on behalf of cash buyers. Average prices in the different markets this week for tankers ranged between $180-320/ldt and those for dry bulk units between $170-310/ldt.
Please click here to open Intermodal's Weekly Market Report for the week 27,2020