Market insight 

By Nassos Soulakis,

SnP Broker

Tanker Asset values have surprised to the upside, despite the downward pressure on the freight market. Tanker rates have been hovering close to their historical lows throughput the year, however asset values have disconnected from the market trend responding to higher steel prices and a countercyclical investment behavior, stemming from oil demand recovery expectations. As a matter of fact, across all tanker segments, values of wet tonnage enjoyed a significant uptrend since the beginning of the year with notable SnP interest in older units for the most part of the year.

In the larger sizes, a representative sale of this trend could be the FOS (307KDWT 2002 Hyundai) which achieved a price of $28m, significantly higher than when compared to the August sale of M/T KOS (306kdwt 2001 Daewoo) which fetched a price in the region of $26 million or even the sale of Maran Cygnus (306kdwt 2001 Daewoo) which fetched $23,7 million in Q1-2021. Moreover, the Olympic Legend (309kdwt 2003 Samsung) was sold for region $31 million in July, while in January the Pantariste (309kdwt 2002 Samsung) was sold for xs $23 million.

Another sale following this trend in the larger sizes would be Jag Lata (105kdwt 2003 Hyundai) which was sold in the region of $ 13,5 million during this quarter, compared to the same aged Aegean Freedom (106kdwt 2003 Hyundai) sold in February 2021 at a price in the high 10s.

At the same time, as far as modern sale candidates are concerned, the trend continues in the sales of LR2 vessels, Cabo Misaki (74kdwt 2017 Sungdong) which achieved around $32 million within August, while the Nord Lavender (74kdwt 2017 Sungdong) got sold for xs $31 million in May.

Looking at the smaller sizes, latest sales in the last couple of weeks show the BWTS fitted Justice Express (46kdwt 2011 Shin Kurushima) managing to fetch $ 17 million, around 6% more than the last same-aged Mearsk Miyajima (48kdwt 2011 Iwagi) also fitted with BWTS which got sold in May for around $16m. In addition to that, New Breeze (48kdwt 2010 Iwagi) changed hands in July for $15,5 million, while sister vessel Bright Fortune achieved high $ 13 million back in February, both vessels fitted with BWTS and with similar dates for SS/DD.

This is without a doubt a positive sign and one could be reservedly optimistic that asset prices are going to continue to rise. The way the SnP tanker trend develops, and factoring in the rise in bunker prices, it seems that we could be in for a further upward repricing point with the focus potentially shifting on younger units

Chartering (Wet:

Stable+ / Dry: Firmer)

With Capes being the main driving force behind the upward movement, the Dry Bulk market continued to move full steam ahead last week. The BDI today (28/09/2021) closed at 4,962 up by 552 points compared to previous Tuesday’s (21/09/2021) levels. VLCC market ended the week on a positive tone followed by Aframax sector where trade activity noticed an uptick yet with no positive effect on rates while Suezmax rates remained unchanged w-o-w. The BDTI today (28/09/2021) closed at 618 points, an increase of 11 points, and the BCTI at 498, an increase of 12 points compared to previous Tuesday’s (21/09/2021) levels.    

Sale & Purchase (Wet:

Softer / Dry: Softer)

SnP activity was softer this past week with only a handful of dry bulk and tanker units being concluded. In the tanker sector, we had the sale of the “FOS” (306,999dwt-blt ’02, S. Korea), which was sold to undisclosed buyers, for a price in the region of $28.0m. On the dry bulker side sector, we had the sale of the “PALAIS” (75,434dwt-blt ’14, China), which was sold to Chinese buyers, for price in the region of $23.25m.

Newbuilding (Wet:

Softer / Dry: Firmer)

The newbuilding market remains upbeat, with the dry bulk units having the lion’s share among the recently confirmed deals while it’s interesting to note that all orders are destined for Chinese shipyards last week. The dry bulk bonanza has revived owners’ interest in newbuilding orders as earnings have reached outstanding levels during the past months. At the same time, the crude carrier sector which experiences an unhealthy freight market so far this year, has seen another week of muted newbuilding activity. In terms of the recently dry bulk newbuilding orders, Atlantska ordered two firm plus two optional 82,000 units at Jiangsu Hantong at a price of $34.2 million each. DACKS yard secured a deal for the construction of two 64,000dwt Ultramaxes at a price of $33.0 million each while both Wah Kwong Maritime and Norwegian investor Harald Moraeus-Hanssen chose New Dayang yard for the construction of four and three 63,000dwt units respectively. Lastly, German owner Reederei H. Vogemann declared an option for two more 40,000dwt vessels at Yangfan Group at a price of $26.0 million each.

Τhe presence of the Container deals was once again represented by Seaspan with another mammoth order of ten conventionally fuelled 7,000teu units. Each vessel will cost around $86.0 million with a charter contract to ONE being attached to the deal.

Demolition (Wet: Stable- / Dry: Stable-)

The majority of the cash buyers across the main demolition destinations are not fervid in securing a notable share of the few fresh vintage candidates as the shape of market fundamentals remains erratic. However, the fact that the supply of tonnage remains weak has kept scrap prices at strong levels with the more aggressive buyers continuing to offer bids at levels even above the $600/ldt mark. Having said that, Pakistani breakers are emerging as the leading destination by showing the strongest appetite for new tonnage. It remains to be seen, how Bangladeshi breakers will react in the coming months especially if yards slots start to empty. At the same time, it seems that the increased demand for Indian steel has not affected the local demolition market with breakers displaying weak demand for conventional tonnage. Lastly, a sharp decrease in Turkish Lira value has been reported during the previous week (TR:8.85/USD at the time of writing) which may affect buyers’ appetite.