Bulker prices are at historic all-time lows, broker Intermodal claims in a recent weekly report.
In regards to dry bulkers, Intermodal said there is essentially no newbuilding market due to the steep discount of newbuilding resales versus new newbuilding contracts. For example, Chinese cape resales stand at around $33m while no yard can quote less than low $40m for newbuildings.
“Newbuilding prices are well into all-time inflation-adjusted lows,” the broker reported. For instance, in 1985 at the absolute nominal nadir, panamax bulker newbuildings could be contracted at $13.5m which translates at $30.2m today .
“This is low enough for investing because it is substantially below the true cost of creating the underlying asset and the current [newbuild] resale prices benchmark a nominal 15-year low versus newbuilding prices, a metric that appears unbeatable for several investments including shipping,” Intermodal noted.
The broker added that shipbuilding prices are moving towards the bottom and will remain low for some time – unless something spectacular occurs in the freight market – due to government subsidies, over-competition, low commodity prices, currency devaluations, lack of financing and the yards’ resolution to accept loss-making orders to keep production lines going.
