Weekly Broker: Capes and falling knives

Weekly Broker: Capes and falling knives

Dry bulk sentiment plunged in dramatic fashion this week. Capesizes saw a 200% drop in rates in a week to push the Baltic Capesize Index into unchartered negative territory, forcing the Baltic Exchange to review how it charts cape fortunes. Coronavirus, record rainfall in Brazil and an approaching cyclone off Australia have all added to the negative sentiment.

Nevertheless, in the shipowning art of catching a falling knife, and with an eye on improving FFAs in Q2, there have been some bargain hunters ready to snap up cheap capes this week.

According to Allied Shipbroking’s indicative dry bulk values, the average prices of five-year old 180,000 dwt capesize bulkers and 10-year-old 170,000 dwt capesize bulkers have dropped by 3.4% and 4.3% respectively in the past month.

“On the dry bulk side, a considerable boost was noted during the past few days, with a firm volume of transactions coming to light, especially for the bigger size segment. This, may well have caught many by surprise, given the current turbulent scene and excessive negative sentiment surrounding the overall dry bulk sector. Notwithstanding this, given that the current trajectory of earnings is partially due to a single shock event, it is highly unlike that we will see a robust activity being sustained in the SnP market over the coming weeks at least,” Allied Shipbroking said.

Splash has already reported on three cape sales this week with brokers confiding there are another dozen being circulated for sale at the moment.

Intermodal and Lorentzen & Stemoco both listed the sale of the 2005 Chinese-built supramax bulker Novo Mesto. The vessel was sold by Slovenian owner Splosna Plovba to Indonesian interests for $6.3m.

Intermodal and Lion Shipbrokers reported a deal in which Norwegian owner Sole Shipping sold its 2010-built 32,600 dwt handy bulker Fantholmen to Chinese buyers for a price of $5.8m. Illustrative of dry bulk’s fading fortunes, the same ship came very close to being sold in May last year for $8.5m.

“On the tankers side, a w-o-w growth in volume was noted here too. This is in contradiction to the sharp downward correction noted in freight rates over the last couple of days or so. It’s fair to point out that most of these deals where well in the works before the current freight rate trends took shape or form, while we expect things to subside slightly in terms of activity over the next few days as the market takes its time to re-balance to the new state of play,” Allied Shipbroking said.

Splash already reported a deal this week that US investment bank JP Morgan snapped up two 2018-built 49,700 dwt MR tankers, Eco Holmby Hills and Eco Palm Desert, to enter the tanker market.

Lion Shipbrokers, Lorentzen & Stemoco and Banchero Costa all reported that Winson Shipping, the shipping unit of Hong Kong oil trader Winson Oil, sold the 2001-built 312,000 dwt FSO tanker Winson No.5 to Turkish buyers. The Hyundai-built tanker fetched a price of $28m.

Lion Shipbrokers, Lorentzen & Stemoco and Anchor Shipbroking reported that Belgian owner Euronav sold the 2002 Universal-built 149,000 dwt suezmax tanker Filikon to Greek buyers for $20.8m.

Allied Shipbroking, Intermodal and Lorentzen & Stemoco all identified Chinese owner Taihua Ship Management as the buyer of the 2000-built 16,000 dwt chemical tanker Bow Andes. The Shin Kurushima-built vessel was sold by Norwegian tanker operator Odfjell for $5m.

In the containership sale and purchase market, according to Braemar ACM Shipbroking, the developing situation of the coronavirus and the extended Chinese New Year holidays logically will further hamper the return of tonnage back into the market after scrubber retrofit programmes and delay upcoming newbuilding deliveries in a similar fashion.

“It is of no surprise therefore that while the majority of the market waits to take a view on the direction of 2020 buyers and sellers of post-panamax tonnage continue to find themselves busy,” Braemar said in its latest report.

Multiple shipbroking houses reported that Hyundai Corporation sold its 2003-built 5,700 teu post-panamax ship Hyundai Confidence. The Hyundai-built vessel was acquired by Greek owner Embiricos for a price of $11m.

Braemar identified Greek owner Thenamaris as the buyer of the 2009 DSME-built 4,860 teu panamax vessel San Francisco II. German owner Reederei NSB sold the vessel for a price of $10.65m.

Additionally, Braemar reported that South Korean owner SM Lines sold two 2000-built 5,400 teu boxships, SM Vancouver and SM Tacoma, to cash buyer GMS on a lumpsum basis at a price of $10m each, while SM Lines is in negotiations to sell three more vessels.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.

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1 Comment

  1. Avatar
    Chanoch Winnykamien
    February 11, 2020 at 4:25 am

    “Capesizes saw a 200% drop in rates in a week”. This must be a new arithmetics since the max reduction is 100%.