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DIFFERENT OUTLOOK AND PERFORMANCE
FOR VESSEL TYPES
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(SEPTEMBER 2015)
:
to larger vessels than to smaller ones,
with larger vessels exhibiting higher
charter rate and vessel value volatility
as a result of the larger volume of cargo
shipped on board, their reliance on a
few key commodities, and long-haul
routes among a small number of ports
9
.
Additionally, perhaps surprisingly
given the current environment, Drewry
reported in its Second Quarter 2015
Dry Bulk Forecaster that, following
some research with ship owners in
the Dry Bulk sector, barely 5% of their
vessels were on long-term charters.
This indicates a significant measure
of vulnerability to day to day price
adjustments, but also possibly some
confidence in those adjustments
being positive rather than negative.
Interestingly, the Capesize owners had
the highest proportion of Capesize
vessels on long-term charters, at 11%.
Whilst charter rates and therefore vessel
values were at a market low in late 2015,
the market expects a recovery in charter
rates over the next three to five years.
Forecast rates provided by independent
researchers Drewry suggest a recovery
for the Handymax and Supramax to over
twice their third quarter 2015 rates by
2019/20.
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NEW AND SECOND HAND VESSELS
Newbuilding prices are influenced by
demand vs shipyard output, the cost
of raw materials, freight markets and
exchange rates. Newbuilding prices
started to weaken in the second half of
2008 and although some increases were
seen in 2013, by 2015 prices had dropped
again and continued to be very depressed
late into the year.
The second hand market is directly
influenced by the newbuilding prices and
charter market
9
and market sentiment
towards them can vary, depending on
market conditions, “Unlike newbuilds,
buyers and sellers don’t have to wait
about two years to have the ships
delivered. When newbuild prices
continued to fall throughout much of
2009, due to uncertainty around a large
backlog of orders placed before 2008
when rates were high, second hand
vessels rallied.”
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“Whilst charter rates and therefore vessel values were at a market low in late 2015, the market
expects a recovery in charter rates over the next three to five years”
HANDYMAX
Baltic Supramax rallying as imports of thermal coal, petcoke and urea
are likely to increase.
HANDYSIZE
Market likely to continue to improve as the minor bulks trade will shore
up. The increase in petcoke and urea imports by India is expected to
support the earnings of Handysize vessels. Sugar exports from Brazil will
also climb with improved production and currency depreciation in the
country.
PANAMAX
Bleak outlook with the fall in Chinese coal imports and its growing
fleet. Coal imports to remain low following the stricter environmental
regulations in China. Expectations are that freight rates will come down
from their current level. However, the increased grain trade will provide
some support to the falling Baltic Panamax Index.
CAPESIZE
The Baltic Capesize Index is expected to fall further as demand for
Chinese iron ore is likely to decline with falling industrial output and
falling steel demand and falling Chinese iron ore imports may depress
demand for Capesize units.