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Weekly Broker: What constitutes a bargain?

What constitutes a bargain in today’s volatile dry bulk market? Unsurprisingly brokers and ship operators have hugely divergent points of view on this subject. Writing on LinkedIn earlier this week, Jens Ismar, CEO of Norway’s Western Bulk Chartering, referencing a Weekly Broker column from earlier this month, claimed that while the dry market was now at sustainable levels, it was far from a big party.

“Reading analysts’ reports it is easy get the wrong ideas about the state of the union. Today’s market hardly justifies today’s asset values and newbuild prices,” Ismar wrote, predicting prices for modern tonnage would gradually improve next year, but would not spike.

Brokers on the other hand, ever keen to close a deal, continue to talk of bargains to be had in the frenetic, topsy-turvy dry bulk market.

London-based Alibra for instance this week maintained: “Secondhand bulk carrier values are still relatively cheap, sentiment seems to be driven towards the attitude that there are perhaps still more opportunities for bargains to be had and the sheer number of sales alone do not lie.” Leading the way is the supramax sector that has accounted for 33% of dry bulk sales this year, according to Alibra data.

The same broker also believes bargains are to be had on the tanker side, noting in a report issued yesterday: “[A]s the tanker market has picked up in the last few months, so too have tanker sales with over 31 transactions coming to light so far, this month alone with many viewing this sector as an area where bargains are still to be had, in contrast to the current price of newbuidings.”

It would appear that more owners are buying into the broker bargain argument with another bumper week of concluded ship sales to report.

Mutiple shipbroking houses reported that the 2002 Japanese-built 177,000 dwt capesize bulker Southern Explorer was sold by Japanese owner Mizuho Sangyo to Greek owner Navitas Compania for $13.5m.

Lorentzen & Stemoco and Adavnced Shipping & Trading listed a transaction in which Japanese leasing firm Century Tokyo acquired the 2002 Japanese built 77,000 dwt panamax Nord Hydra from Hong Kong’s Grace Ocean Investment for an undisclosed price. The vessel has been fixed to Danish company Norden under a time charter arrangement.

Chinese leasing company Minsheng Financial Leasing continues to expand its fleet, according to reports by Intermodal, Lorentzen & Stemoco, Fearnleys and Andreas J. Zachariassen. The company has acquired two 2016 Chinese-built sister ultramax vessels, Ocean Venture and Ocean Enterprise, from Hong Kong owner Wah Kwong. The two 63,000 dwt vessels were sold for $24m each.

The four shipbroking houses have also identified Greek owner Load Line Marine as the buyer of the 2011 Chinese-built 56,000 dwt supramax bulker Nautical Amethyst. The vessel was sold by Nautical Bulk for a price of $11.3m.

“On the tanker side, another week with a fair amount of SnP transactions being witnessed in both the crude oil and product tanker segments. The improved freight market has played a major role while many still see this sector as an opportunity for bargain deal hunting. With the discount between secondhand and newbuilding carriers still at fair levels, this should help keep buying appetite on the rise,” Allied Shipbroking said in its weekly report.

This week, Splash has already reported an en bloc deal with Bergen-based Viken Shipping buying three MR tankers previously owned by Germany’s Rigel Schiffahrts.

Fearnleys and Intermodal report a transaction, already covered by Splash, in which Greek owner Nicholas Moundreas’ NGM Energy acquired the 2001-built 159,000dwt suezmax tanker SCF Altai from Russian state-run shipping firm Sovcomflot for a price of $13m.

Intermodal, Advanced Shipping & Trading and Andreas J. Zachariassen all reported the sale of the 2009-built 3,442 dwt tanker Toli. The vessel was sold by Turkish owner Kaptanoglu Group to Greek owner Sanmar Shipping for $5m.

Multiple shipbroking houses listed the sale of the 2005 South Korean-built suezmax tanker Toledo Spirit. Greek owner Eurotankers has taken over the 159,300 dwt vessel from Spanish owner Cepsa for a price of $17.5m. This week, Splash reported Eurotankers also snapped up another suezmax, Teide Spirit, from Cepsa for $18.8m.

More than eight shipbroking houses reported that Greek owner Latsco Shipping bought the 2009-built 115,000 dwt aframax tanker Singapore River from Japanese owner K Line. The vessel fetched a price of $23.25m.

In the containership sale and purchase market, according to Braemar ACM Shipbroking, demolition continues to make up the majority of sales activity in the past week.

In the secondhand sector, Tufton Oceanic recently announced the acquisition of a 2,500 teu vessel for $13m including a two-year charter to a major fruit carrier.

Brokers are hopeful of plenty more deals across all sectors to be done before Christmas.

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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