Ship prices are increasing on the back of improved market sentiment The dry bulk market has kept on retreating from its recent highs, ending yesterday at 1,786 points, down 61 points on the day, with Capesizes leading the decline. Still, according to shipbrokers, market sentiment remains positive, despite the fact that the average Capesize earnings have declined from their recent peaks of $42,000/day, down to $28,000/day. According to the latest weekly report from shipbroker Intermodal, in addition to the strong Capesize market, which found support from the recent Chinese restocking and strong demand for iron ore, chartering activity for the other segments has also improved and is surging on the back of increased shipments of grains from the US Gulf and the Black Sea. According to Mr. Yannis Olziersky, SnP Broker, the dry bulk market, it seems, is witnessing a U-turn in fate; bullishness, although restrained, has return to many market players since to them it appears as if the worst phase is now behind us and the market is expected to advance at a faster pace compared to that of last year. This restrained optimism has had its impact on second hand sales as well as on the new building market, as a significant number of vessels are changing hands at prices well above last done deals and sometimes well above Sellers’ ideas, due to the fact that competition between Buyers, in an effort to secure tonnage, is driving values well above recent levels he noted. The same story is taking place in the new building market, where slots at good shipyards are now scarce and offered prices have surged and are about 10-15pct higher compared to orders that were placed during 1H of 2013. What will happen next? Are we on a firm recovery track or were the latest positive developments in freight rates based only on a typical seasonal spike? Having foresight in a volatile industry like shipping, which is highly dependent on so many different parameters, is difficult and dangerous to do. On the other hand there are some irrefutable facts which cannot be overlooked. Seaborne commodities have increased about 6pct compared to last year; fleet growth increased about 5.8pct (year to date), which is the lowest we have seen during the last couple of years. Taking also into consideration that the world economy is on a recovery phase and that the global GDP is projected to increase at a higher rate compared to previous years it is expected that dry bulk commodities will keep trading at higher volumes compared to 2013, Olziersky mentions. He added that at the same time it is expected that today’s rates will face a correction once Chinese iron ore inventories are replenished and the strong grain season comes to an end. There is no doubt that the market does not have the ability to grow at the same pace we experienced the past couple of months since the overcapacity issue is still there and uncertainty over the global economy remains despite better forecasts. However, what is more important to note is that dry bulk fundamentals are expected to improve and as a result the average earnings for the years ahead look to be better compared to previous ones. Hence, taking a long term perspective and in the event that the global economy will remain firm on its recovery path, the demolition market keeps active and the new building ordering will hold near its current pace (i.e. at a more moderate pace compared with booming years), we see substantial signs to be optimistic and expect to have an overall upside in freight rates over the coming years, Olziersky concluded. Commenting on the newbiulding market this week, Intermodal said that activity on the newbuilding front is keeping its pace, with the majority of the deals coming to light this past week being for dry tonnage. Although we are trying to be as realistic as possible regarding this recent boost in newbuilding prices for dry bulkers, the truth is that most of the contracts that are being inked lately, are steadily done on firmer and firmer prices, creating a higher market average for almost all sizes in the sector. Some of the most recently reported orders for Capes are displaying a clear trend that we should be soon moving into the mid $ 50s million territory for the segment, having us think that from that level the figure could easily jump to the $ 60.0m area, especially for earlier slots should demand continue to be strong and the freight market improve further in the next twelve months. In terms of new orders, Greek owner Alpha Tankers & Freighters, was reported placing an order of four firm Capesize vessels (180,000dwt) at Hyundai Mipo, in S. Korea, for a price of $ 56.5m each and with delivery set between 2015 and 2016. Source : Nikos Roussanoglou, Hellenic Shipping News Worldwide
Posted on: Sat, 26 Oct 2013 15:17:00 +0000
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