Dry Bulk Rates’ Rebound Triggers Strong Demand for Older Bulker Tonnage

It seems that the recent rebound of dry bulk freight rates, which has come as a result of improving fundamentals (i.e. lower tonnage growth and improving demand), is already having a significant effect on the secondhand ships’ market. In its latest weekly report, shipbroker Intermodal noted that “during the past couple of months the dry bulk market has displayed particularly strong momentum and we have been witnessing steady appetite and activity on behalf of Buyers in the second-hand market. This positive momentum is particularly evident if one considers the fact that the Chinese holidays that are currently taking place and usually bring pressure on rates have not affected buying activity to the least. Of particular importance is also the fact that interest for older candidates has also been firming, a usual occurrence when the market starts to become particularly strong”.

According to Intermodal’s SnP broker, Mr. George Iliopoulos, “it is remarkable that during the last quarter, we have seen more than 25 bulk carriers (from Handysize up to Panamax) built between 1997 and 2002, being sold. This very strong activity as far as older tonnage is concerned is something we hadn’t observed for quite a while, as firm buyers for vessels of around 15 to 20 years old are not standard occurrence”.

Mr. Iliopoulos also noted that “additionally, we have seen many firm buyers for vessels built between 2000 and 2002, which is explained by the fact that the China Classification Society only approves of vessels built from 2000 onwards. Modern vessel sales are also impressive in terms of numbers. During the last quarter around 124 vessels built from 2003 onwards we sold, this number also including Capesize vessels as well as resales. Specifically in Supramax and Panamax/Kamsarmax vessels, every last done is at a premium over the last comparable sale, which evidences the potential of Buyers who adjust their ideas very quickly in order to successfully position themselves within a market that is exciting one of the biggest crisis ever”.

Meanwhile, “greatly improved newbuilding activity compared to last year is another important sign as far as the solid momentum of the market is concerned. Although contracting is nowhere close to the volumes we witnessed back in 2013 and 2014, the fact that owners have slowly but steadily started to once again see potential in the newbuilding option is definitely reflecting the reversal in psychology”, Intermodal’s broker said.

He added that “another interesting fact is that a number of Buyers, those interested in modern vessels in particular, are offering on a waving inspection basis and paying a small premium in order to secure the respective vessel, something that we hadn’t seen for quite a while, as most investors were rather hesitant before actually offering up until recently. At the same time interest for Chinese tonnage is firming across all sizes, with prices also inching up in tandem with Japanese tonnage that has been quickly appreciating in particular for 10-yr old Supramaxes. Additionally, we have started to see a number of sales concerning vessels that were bought last year during the lows of the market, and are now being re-sold sometimes for double the price”, Iliopoulos said.

“Chinese buyers themselves have also become particularly active in the past couple of months, which is another positive market sign. Despite the more relaxed mood they have been displaying during the past days in anticipation of the National holidays in the country, we expect them to return with the same interest in second-hand tonnage once the holidays are over. After all a number of purchase enquiries from Chinese buyers still remains uncovered, while the fact that very recently eight Chinese buyers inspected a ’98 built Panamax is indicative of their appetite”, Intermodal concluded.

Meanwhile, in the S&P market this week, the shipbroker said that “bulkers are still having the lion’s share as far as SnP activity is concerned, while during the past week tanker candidates have also seen increased interest as prices slowly become more attractive. On the tanker side we had the sale of the “TRIKWONG VENTURE” (298,000dwt-blt ‘11, China), which was sold to U.K based owner, Zodiac, for a price in the region $53.0m. On the dry bulker side we had the sale of the “ADS KRISTIANSAND” (76,565dwt-blt ‘08, Japan), which was sold to Greek buyer, for a price in the region of $14.9million”.