The dry bulk market has seen a record high in secondhand vessel sales in 2024, driven by strong interest despite economic uncertainties, but rising asset values may lead to increased supply and potential price declines, reports BreakWave Advisors.
Dry Bulk Market in 2024
The dry bulk market has seen a rise in secondhand asset values this year. While average earnings have remained healthy, the ratio between earnings and asset values has deviated from historical trends, with asset prices rising disproportionately relative to average earnings. Despite these discrepancies, there has been strong interest in secondhand sales and purchase activity, pushing prices higher.
This strong market activity persists even in the face of uncertainties, including fears of a global economic slowdown, the ongoing slump in the Chinese real estate sector, and geopolitical turmoil in the Middle East, factors that could potentially result in negative momentum for the remainder of the year. In this report, the sales and purchase activity in the sector of dry bulk throughout 2024 was examined.
Capesize Sale and Purchase Activity
Beginning with Capesize sale and purchase activity, last month 9 vessels changing hands, bringing the total number of Capesize transactions in 2024 to 82. This marks the highest number ever recorded for the first seven months of a year, surpassing the previous record set in 2023, when 69 Capesize units were traded in the same period, culminating in a record total of 124 sales for the entire year.
Regarding the Panamax/Kamsarmax sale and purchase activity, six deals were materialized last month. The year-to-date volume stands at 83 deals, surpassing the 62 sales recorded in the same period last year but falling short of the 89 sales in 2022 and below the record number of 121 sales recorded during the first seven months of 2021.
Supramax/Ultramax Sale and Purchase Activity
The Supramax/Ultramax sector also saw significant activity, with 15 sales occurring last month, bringing the total number of sales this year to 158. This surpasses the transaction volumes of 2023 and 2022, which saw 143 and 156 sales, respectively, during the first seven months of each year. Nonetheless, similar to the Panamax/Kamsarmax sector, the year 2021 holds the record with a total of 203 transactions during the same period.
The key question moving forward is whether the looming uncertainty, combined with rising asset prices, might prompt owners to capitalize on the current momentum in the SnP market by opting to sell their vessels. Such a shift could potentially alter the balance between supply and demand, leading to an increase in supply and, consequently, a downward trend in secondhand vessel prices in the coming months.
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Source: Breakwave Advisors
