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Weekly Broker: Plunging volumes and asset prices

The prolonged uncertainties brought by the coronavirus have sent asset values in the sale and purchase market on a downward trajectory. The distressed freight market and the declining demand for a number of commodities have made recovery unlikely in the short term.

According to Vaslis Moiris, S&P broker at Intermodal, preliminary data reveals a 56% drop in the number of dry bulk secondhand sales year to date and the shipbroking house expects this trend to continue in the short term.

“Going forward, uncertainty reigns over both the dry bulk and tanker second- hand markets for different reasons. On one hand, dry bulk asset values still fail to reflect the returns in the freight market, rendering an alignment of buyers’ and sellers’ ideas challenging and further impeding SnP activity as a result. On the tanker side, the fact that freight rates have been moving down quickly in the past days could substantially impact the appetite of buyers given that it was the lucrative returns that enticed them in the first place to go after prompt delivery candidates that would allow them to enjoy a quick and substantial return on their investment,” Moiris wrote in a new weekly report.

“On the dry bulk side, things were kept at relatively uninspiring levels in terms of activity noted for yet another week. At this point, it is rather difficult to name just one main culprit behind this trend of late. Poor freight returns, disruptions in different SnP processes and macroeconomic uncertainty are mostly responsible for these prolonged poor volumes. Notwithstanding this, during the past week, we saw some movement in the smaller size segments,” Allied Shipbroking said in its latest report.

Intermodal reported that Vietnamese owner FGAS Petrol has taken over the 2002-built 28,100 dwt handy bulker Lovely Klara from Singapore’s AFO for a price of around $4m. The vessel has been renamed Golden Leaf.

Both Allied Shipbroking and Intermodal reported the sale of the 2009-built 18,930 dwt handy bulker Squamish. Panama-based Whistling Straits Line sold the Japanese-built vessel to Middle Eastern buyers for $6m.

“On the tankers side, another strong week in terms of SnP deals that came to light. At this point, alongside with the VLCC segment, that initially pushed activity on the upward side overall, all of the other main size segments also managed to show a rather strong face. This, though, came hardly as a surprise, given the recent trends from the side of earnings. However, given both short-term and long-term risks, it is highly unlike to continue at the currently amassed transaction volumes, especially for the bigger sizes,” Allied Shipbroking said.

Multiple shipbroking houses reported Greek owner Kertsikoff Costis’ Eletson Corp sold two 2002-built 106,000 dwt LR2 tankers Agathonissos and Makronissos while Intermodal identified the buyer as compatriot owner Capital Maritime and Trading. The two vessels were sold for a price of $13m each.

Intermodal also listed a deal in which South Korean owner KSS Line acquired a resale 50,000 dwt newbuild MR tanker (Hull 2282) from Samsung Heavy Industries at an undisclosed price. The vessel has been fixed to GS Caltex under a five-year charter arrangement at a rate of $17,100 per day.

In the secondhand containership sale and purchase market, according to Braemar ACM Shipbroking, the asset values are starting to soften as charter rates continue to be squeezed by the lack of fixing opportunities from liner companies.

The shipbroking houses noted that a 3,300 teu insolvent ship has been sold to European buyers, with dry dock freshly passed at around a 25% discount to the price offered just two months ago.

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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