Dry Bulk Ships in High Demand as Owners Are Expecting the Market to Bounce Back
As the dry bulk market could be in for a rebound, the demand for second hand bulkers is intensifying. In its latest weekly report, shipbroker Intermodal noted that “looking at the state of the Dry Bulk market exactly a year ago, there is no doubt that there is a significant improvement and despite the fact that there are still many challenges, there is now also more hope that things are finally moving towards the right direction. On 11 February 2016 the BDI was at its historical lows, touching 290 points, while during that first quarter many vessels remained unfixed for long periods as in most cases below OPEX rates made no sense even for repositioning. Laying-ups naturally followed and extremely bad psychology led to extremely low asset prices, which even at historical low levels failed in many cases to ignite buying interest especially for vessels approaching 15 years of age”.
Intermodal’s SnP Broker, Mr. George Iliopoulos said that “as the market gradually started improving towards the end of the summer, sentiment also strengthened, helping the BDI climb above 1,000 points during the last quarter of the year. This improvement brought buying interest back, even from owners who had been inactive for years in the second-hand market. What is impressive though is the fact that even today, with the index standing at below 700 points, buying interest remains exceptionally strong despite the fact that prices remain firm – and in some cases even higher than what they were just before Christmas”.
According to the shipbroker, “this definitely signals positive expectations for this year, which come on the back of improved forecasts for iron ore and coal demand in 2017, while the extended absence of newbuilding activity combined with high levels of scrapping last year, are also reinforcing the positive momentum that is currently supporting second-hand prices. The percentage of slippage during 2016, which will be translated into delayed deliveries this year, is nonetheless important to watch out for in this rather optimistic environment”.
Iliopoulos added that “so as the market now has more reasons to be optimistic compared to a year ago, potential buyers might look at this time as the time just before the window of opportunity to buy at fairly attractive levels closes. Consequently, interest, especially for modern tonnage has been high, with an impressive number of owners competing for such vessels. Most popular are modern Supramax and Kamsarmax vessels, with more than 10 owners inspecting each of these candidates, shaping in turn a strong momentum in prices, with every deal being fixed at a premium over the last done”.
Additionally, “vessels built during the mid-late 90’s have also become popular compared to a year ago when almost no interest existed for such tonnage and when a big number of them was being sent for scrap. Indeed, we have been noticing during the past months that prices for Handymaxes and Panamaxes built at that time have inched up as buying interest particularly from Chinese and Middle Eastern buyers is firm. A representative example of this trend is the sale of two ’99 built Panamax bulkers last month at around $ 4.3 – 4.5m whereas during the same period last year a ’01 built Panamax was being sold at around $3.0m. All in all things have undeniably improved and we are now waiting to see whether the positive signs and the restrained optimism, successfully translate into a healthier market during the second half of this year”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide