Dry Bulk Market: Confidence is Growing Among Ship Owners

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Things are shaking up in the dry bulk market of late. In its latest weekly report, shipbroker Intermodal said that “after an admittedly challenging 2016, the Dry Bulk market kicked off this year on a much more positive note, with all indices steadily increasing until the end of March market peak. During the second quarter and until the beginning of this month, the freight market witnessed pressure, which was more evident in Capesizes, with the BDI nonetheless resisting to break below 800 points. During the past couple of weeks, we have seen rates across the board steading and the Dry Bulk Index once again moving towards 1,000 points.”

According to Intermodal’s SnP Broker, Mr. Konstantinos Kontomichis, “in the SnP market, following the significant premiums asset prices enjoyed during most of H1, the downward correction in freights seemed to be affecting values but not as much as one would expect, fact that evidences the change in both expectations and psychology among dry bulk owners. At the end of March, the ‘DONG-A ARTEMIS (179,213dwt-blt 12, S. Korea), was sold for a price of $33.0m, while a couple of months later the ‘HYUNDAI TALENT’ (178,896dwt-blt 12, S. Korea) was sold for a price of $30.5m, a rather soft decrease given that the correction in Capesize average earnings during this time was around 40%”.

“Moving on to Panamaxes, the ‘BARILOCHE’ (75,395dwt-blt 07, Japan) was sold for a price of $13.8m in March, whereas the ‘BULK MONACO’(76,596dwt-blt 08, Japan) invited best offers in early July and was withdrawn from the market as the best offered received was rumoured to be in the low $11.0m level. Furthermore, during the second and the third week of April the Kamsarmax vessels ‘OSHIMA ISLAND’ (81,364dwt-blt 12, Japan) and ‘UNITED GALAXY’ (82,169dwt-blt 12, Japan) were sold for a price of $20.5m each, while a month later the ‘HANJIN PARADIP’ (82,600dwr-blt 13, Japan) was sold for a price of $21.0million” Kontomichis said.

He went on to note that “Supramax SnP activity also saw resistance as far as asset prices were concerned. The ‘MARITIME EMERALD’ (58,717dwt-blt 09, Philippines) was sold in April for a price of $14.7m, whereas the three years older sister vessel ‘SUNRISE SKY’ (58,100dwt-blt 12, Philippines) was sold in the beginning of July for the same price. With the summer season peak just around the corner, all eyes remain fixed on the reaction of the SnP market in terms of activity and – of course – asset values. Despite the fact that the BDI slipped at the low 800 points level earlier in the summer, we saw second-hand prices resisting a similar drop, while what is even more interesting is that newbuilding appetite is still alive. If earnings extend the positive gains of the past few weeks, we won’t be surprised to see sale candidates being withdrawn if Buyers continue to look for discounts that most probably won’t be achieved”, he said.

Concluding his analysis, Kontomichis said that “after all, for anyone looking to sell it makes much more sense to wait until the traditionally stronger Q4 to do so, especially given the fact that the summer has so far exceeded expectations in terms of freight rates performance. For those who are firm Buyers on the other hand, accepting to increase their budget a bit in order to get closer to current asking levels before Q4 might not be such a bad idea after all. It remains to be seen”.

Meanwhile, in the S&P market this week, Intermodal noted that “SnP activity witnessed a significant slowdown last week, with just a few orders being reported across bulkers and tankers, while in the case of the former, the recent positive correction in the freight market seems to have resulted in both Buyers and Sellers taking a step back and reassessing their ideas. On the tanker side we had the sale of the “FRONT ARDENNE” (153,152dwt-blt 97, S. Korea), which was sold to undisclosed buyers, for a price in the region of $8.0m. On the dry bulker side we had the sale of the “NORTH TRADER” (176,955dwt-blt 06, Japan), which was sold to Taiwanese owner, Shinyo International, for a price in the region of $17.2million”.

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Source: Intermodal

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