Dry CargoEurope

Cleaves on dry bulk: buy, buy, buy

Cleaves Securities, the number one shipping analyst in the world according to Bloomberg, issued its quarterly shipping report today and the message to dry bulk owners wondering if they’ve missed the boat on acquiring tonnage is to buy, buy, buy.

The 316-page report, led by Joakim Hannisdahl, puts dry bulk as Cleaves’s top investment pick.

“An unseasonal high earnings environment and a sudden influx of capital into dry bulk shipping equities have propelled our dry bulk share index to multi-year-highs. The orderbook is record-low, and only marginal demand growth is needed to improve an already strong sentiment,” Cleaves noted, adding: “Super-cycle is a strong expression, but the probability is increasing each day at the current newbuild ordering trend.”

Cleaves is forecasting its dry bulk share index to potentially gain 111% over the next year and grow by 165% over the coming two years.

Many owners have been questioning whether asset prices have leapt too far this year for them to get in on the booming market, but Cleaves clearly thinks there is still plenty of upside to come.

Secondhand values surged in Q1 with Cleaves’ dry bulk asset price index up 19% quarter-on-quarter, led by panamaxes and supramaxes. Cleaves sees further upside to its asset price index, potentially up by 59% by Q2 2023 (see chart below).

Speaking with Splash today, Hannisdahl, head of research at Cleaves, said that in addition to the “great opportunities” to be had in the secondhand market, canny players might look to make some resale plays.

“Despite yards’ backlogs having improved and steel prices being higher, I think newbuilds offer an attractive alternative with relatively early delivery slots still available,” Hannisdahl said, adding: “I surely hope investors continue to refrain from ordering too much, but with resale prices likely moving higher over the next two years, one could always unhand the newbuild before delivery.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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