Secondhand asset prices in the dry bulk market are showing a premium over vessel earnings that is unprecedented in the past 30 years, writes Plamen Natzkoff, associate director, Maritime Strategies International, reports Splash247.
Future dry bulk vessel earnings
Positive sentiment towards future dry bulk vessel earnings, predicated on the possibility of stronger Chinese stimulus, the low orderbook and potential CII/EEXI effects is serving to prop up second-hand vessel prices even in the face of negative fundamentals for spot earnings.
The extremely elevated levels relative to timecharter rates, suggests a significant overvaluation. If earnings do not improve significantly and quickly, the current sentiment-driven premium is likely to deflate and there is potential for asset values to drop to much lower levels.
As period rates across the dry bulk market have remained relatively buoyant in the past several months, values in the secondhand market have been resilient too. Indeed, second-hand price assessments saw a broad-based rally accelerating in March of this year which was sustained until May.
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Source: Splash247
