Capesize values hit lowest level since 1992
The market value of a five-year-old capesize vessel has hit its lowest level in over 24 years, according to data from VesselsValue.com (VV).
VV estimates a five-year-old vessel is worth just $23.87m today, less than half of what the cape would have been worth in May 2014, when its market value would have been around $50.65m (see graph 1 below).
Toby Mumford, VV’s valuation analyst, says the market is currently seeing the worst drop in dry bulk values since 2008 with each deal concluded at a price significantly lower than the last.
Values for five-year-old capesizes hit a record high of around $181.96m on June 10, 2008, at the height of the bull run in dry cargo shipping markets.
Five-year-old vessels are currently worth around 61% less than their long-term average value of $61.76m, calculated since January 1, 1992. Similarly, 10-year-old capes are estimated to be worth around $13.33m today, which is 72% lower than their long-term average of $47.52m (see graph 2 below).
As secondhand values plummet, the global fleet is set to be awash with new capes being delivered this year. Around 35.57m dwt is due to hit the water over the next 12 months, which is the largest volume of new tonnage to enter the fleet since 2012.
Deliveries scheduled for 2017 and 2018 (so far) look likely to snap back to pre-2005 levels, with 7.17m dwt and 2.43m dwt expected to be delivered in each respective year.
But it’s not all doom and gloom. Greek buyers have spent $2.4bn on capesize vessels since January 1, 2015 – nearly five times more than the next biggest spender, China, which has spent a total of $591m (see graph 3). Greek buyers have snapped up 31 vessels with an average age of five years, whereas China has bought 10 vessels, each of around four years of age.
“There is still an appetite for vessels, particularly from the more traditional owners, with the Greeks picking up eight out of the 11 capesizes sold so far this month,” Mumford tells Splash.
If buyers are cash-rich and can weather the low rates, then now is the time to buy, VV says.
All graphs and data: VesselsValue.com.
$47.52 is the average long term value for a ten year old cape? If you take away the China Bubble years I would be far less. Over what period was this average value calculated?