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Despite improving conditions, dry bulk carriers’ sales lag b

Postby seaworkadmin » Thu Dec 11, 2014 1:56 am

ImagePerspective goes a long way when it comes to shipping and more particularly the dry bulk market as of late. Despite the relatively healthy state of the market, even compared to last year, as well as the elimination of the oversupply issues which have plagued the market over the past four years, ship owners have refrained from snapping up extra tonnage in the SnP market during the last quarter. According to shipbroker Intermodal, activity has been particularly soft. According to SnP broker, Mr. George Iliopoulos, “this is more obvious if one looks at the number of potential buyers inspecting sale candidates. During the same period last year, for every dry bulker, Handysize up to Cape that was up for sale there were numerous of interested buyers inspecting, while most of them would end up offering as well. This resulted in a dynamic upward drive in prices in the SnP market during that period”.

According to Iliopoulos, “a representative example of this drive is a ’99 built Japanese dry Panamax that was inspected a year ago by thirteen prospective buyers and acquired ten offers before finally being sold for a price in the region of USD 14,5m. This marked the start of a period of elevated activity lasting for the first five months of 2014. However, the strong momentum of the market started to weaken just before the summer season kicked off and purchasing interest for dry vessels naturally declined as the freight market started to witness further challenges”.

Intermodal’s broker added that “looking back, this period is reminiscent of the end of 2012/start of 2013 when the lowest post 2010 sales for Supramaxes and Panamaxes were recorded. An example of this is that a 7-year old Panamax that was sold at circa USD 15m when today an equivalent sale would go for approximately USD 17mil. Another reason for the increased pressure on the SnP market, apart from the bad performance of freight rates, is the overabundance of vessels for sale in the dry market. A large number of vessels have entered the second hand market in the last two months mostly from Japanese owners following the performance of the Japanese Yen. As a result, most prospective buyers have a number of alternatives and therefore apart from very exceptions offer at fairly low levels compared to what owners are looking for”.

This is therefore another characteristic of the SnP market nowadays, which is also weighing down on activity volumes, the shipbroker said. Iliopoulos noted that “in fact the growing gap between buyer and seller price ideas is exactly what is forcing many owners to withdraw their vessels from the market. It is worth noting that a number of such vessels were Japanese-owned which is uncharacteristic of Japanese owners, who are traditionally known to sell at the best obtainable prices once they are set on selling their assets”.

Moving forward, “the The big question troubling potential buyers is whether this is a good time to invest in the dry market or if waiting a little longer will reward them with even lower levels. The belief that we may sooner rather than later be revisiting the price levels of 2012 is gaining more and more support lately. It remains extremely challenging to discern whether we have reached the market’s lowest point in order to invest and calling the floor of a market is always more of a guess rather, which makes any predictions an uncertain bet; it is safe, however, to say that prices during the past few months have certainly been attractive and the coming period has the potential to be extremely busy in terms of interest in the SnP market.
In any case, we should hope that the dry market picks up in 2015 to return to healthy levels in order for vessels to become attractive due to their freight rates and not their low prices, as that’s where the true value lies after all”, the broker concluded.

Meanwhile, in the demolition market, softening prices were predominant for yet another week across the Indian sub-Continent, “whileChinese breakers have also decreased their bids sharply, remaining comfortable in sustaining the gap between their prices and those offered by the competition in excess of $100/ldt . Despite fundamentals in the market remaining on the edge of the developments surrounding the oversupply of cheap Chinese steel, it seems that the prices levels the market has now reached have helped certain breakers move away from the sidelines and get back into action. This translated into increased activity this past week, the majority of which was in fact recorded in India, where a fairly stable Rupee seems to have offered some extra level of confidence to local breakers. Average prices this week for wet tonnage were at around 250-455 $/ldt and dry units received about 230-430 $/ldt.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Source: http://www.hellenicshippingnews.com
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