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Dry Bulk Back From the Brink

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Bulker Values in the last 12 months have hit rock bottom and are now looking to show considerable promise. 5-year-old handysize values are up by over 40%; as are 15-year-old Panamax and Supramax asset prices. Pre-2002 built Capes are up by around 35% since February 2016.

1 Year % Change in Value
Year of Build Capesize Panamax Supramax Handy
2017 -4% 9% 15% 15%
2012 -3% 28% 34% 41%
2007 11% 38% 39% 39%
2002 35% 43% 43% 38%
1997 36% 36% 36% 37%
1992 36% 36% 36% 36%

To put the opportunities in perspective, a 2012, Korean-built handysize bulker was sold at USD 6.2 million. Today that vessel is worth USD 12.3 million. Also of note is the Panamax Songa Maru, (2008-built, Tsuneishi Zhoushan). The vessel was bought by Wilmar at USD 7.8 million in March last year and was transacted again only six months later at USD 11.3 million.

Historical Charter Rates (USD/day)
Type 1 Year 1  Month Today
Capesize          20,063          10,851            5,432
Panamax          12,478            7,768            7,298
Supramax          10,198            7,813            7,813
Handy            8,619            6,354            5,816
Source: Baltic Exchange

Charter rates have not had the strong rebound that values have. Many are lower now than they were both a month ago, and year ago. In February, the Baltic Capesize Index fell below standard OPEX (c. USD 6500 /day) to sit at a spot rate of USD 5432 /day. Despite this the Capesize period charter market is up. A recent example is a 2015-built, Hyundai Mipo Cape being done at USD 14,500 /day, the highest seen in period charters since 2015.

The Supramax sector saw some of the highest gains. Average increase in asset prices across the sector was 31%. The sector has seen fleet growth slowing considerably. Growth in 2016 was only 2.9% down from 8.2% in 2012. This can be attributed to the emergence of the market for Ultramaxes. In 2015 there was 75.8% growth in for Ultramaxes that shrunk to a more manageable 35.2% in 2016.

 

 

The result of this growth in the Ultramax sector means demand growth for Supramax has been slowing. From 2012 to 2013 seaborne demand for Supramaxes grew by 12.7%. Fast forward to 2016 and this figure shrunk to 2.7%. This hasn’t been god news for the sector. At the beginning of 2015 the percentage of vessels in the Supramax fleet that were underway and laden sat at 51%. Today that is lower at 49%. Looking at ton miles per vessel (a measure which analyses the effect of supply on demand), this shrunk by 1.8% in 2015 and continued to shrink marginally in 2016 (-0.1%). This clearly shows how the Ultramax has begun to take hold and steal Supramax cargoes, however Ultramaxes are also feeling squeeze as ton mile demand per vessel growth slowed from 1.8% in 2015 to almost half at 0.8% in 2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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