- S&P activity is now booming across multiple sectors, which should be a plus for shipping stocks.
- Higher secondhand ship demand should equate to higher asset values, which should theoretically equate to higher share prices.
- It has been over a decade since buying activity has been elevated and aligned across the three conventional shipping sectors of tankers, dry bulk and containers.
- Allied Shipbroking of Greece counted 185 ship sales in February and 176 in January. Those are the highest monthly tallies in at least a half-decade.
A recent news article published in the Freight Waves written by Greg Miller reveals that shipping sale-and-purchase (S&P) activity slowed to a crawl for several months last year.
Box ship sales highest in years
According to a new report by Alphaliner, S&P activity in container shipping has “surged to the highest levels in four years, with prices in some segments now double those seen a year ago.”
Buying interest is so intense that the average age of ships bought in the first two months of 2021 has risen to nearly 15 years as operators look to lay their hands on scarce tonnage to meet demand.
Alphaliner noted that ships with combined capacity of 140,000 twenty-foot equivalent units (TEUs) changed hands in January alone.
One example of a sale reported by Alphaliner in February: TS Lines bought the 2013-built, 4,957-TEU Songa Toscana for $42.3 million. That’s 84% more than seller Songa Container paid for it in 2018.
Dry bulk sales ‘frenzy’
Brokerage Eastgate Shipping said Wednesday that there is now a “frenzy” of dry bulk S&P transactions.
It pointed to the surge in rates for Handysizes (bulkers of up to 35,000 deadweight tons or DWT), Supramaxes (45,000-60,000 DWT) and Panamaxes (65,000-90,000 DWT).
“This surge in rates naturally attracts buying interest, which subsequently continues to push asset values higher,” said Eastgate.
“This, in turn, attracts more owners to consider becoming sellers, keeping the stream of available candidates, especially in the Panamax and Supramax segments.”
Mørkedal noted that the majority of listed dry bulk companies have been “discussing plans to remain acquisitive or become more acquisitive in the coming months.”
Deals are piling up. On Wednesday, Star Bulk (NASDAQ: SBLK) announced two more ship acquisitions. They were its 11th and 12th ship purchases in the past three months.
Golden Ocean (NASDAQ: GOGL) is buying 18 bulkers in a related-party deal. Eagle Bulk (NASDAQ: EGLE) has purchased seven vessels since December.
Even tankers trading hands
During the Annual Capital Link International Shipping Forum on Wednesday, Euronav (NYSE: EURN) CEO Hugo De Stoop implied that his company could soon switch from buying shares to buying ships.
In general, the closer public shipping companies’ shares trade to NAV, the more likely management will stop buying back their own shares and start buying secondhand vessels. That change in behavior would increase S&P demand even further.
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Source : Freight Waves
