Which Sector should we invest in drybulk shipping, Kamsarmax?
Sentiment in dry sales & purchase market have been a bit improved recently and more dry bulkers physically has been under new ownership now, comparing last month.
Most of all, kamsarmax newbuilding activities are noticeable this year and number of newbuilding orders made in last 3 weeks.
Total 78 newbuilding orders made upto 5th September this year and that includes 44 kamsarmax bulkers, which consists 56% of total orders. (Please note that 44 was a total number of newbuilding orders in 2016.)
Feasibility study of Kamsarmax Bulkers
Wonder what made owners move forward to kamsarmax newbuildings rather than other segment?
Please refer to kamsarmax bulker 1 year timecharter rate curve in blue and its hire base level in red. (hire base for both kamsarmax newbuilding and 5 year old second hand one is similar around US$ 9,400 per day. Ship price, operating cost and other conditions for such calculation will be mentioned last of this posting.)
Interestingly, we can find no difficulty with the fact we are now in green zone of profit(B). Passing through such long depressed dark era(A) of loss, it seems people (who ordered newbuilding or purchased young kamsarmax second hand) might have bet their equity on upside potential for the kamsarmax sector. And their decision has been correct so far.
※ Pre-condition for the calculation :
Ship price : US$ 24.5 mil. & 1.0 mil. for extra cost (newbuilding) US$ 21.5 mil. (second-hand) / Operating Cost (OPEX incl. insurance) daily US$ 6,500 / Residual value US$ 340 multiple 13,500 tons of LDT /
And lastly, I did not consider Net Present Value(NPV) for the calculation.
Source: Eddie Youn, S&P Manager at Hyundai GLOVIS