Older dry bulk ship values fall significantly, spelling weakness

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Newbuilds versus second-hand vessel values

Second-hand vessels are characterized by faster deliveries, so they reflect short-to-medium term fundamentals. Second-hand vessel prices tend to be more responsive to changes in current rates compared to newbuilds, which are affect by changes from industry turnarounds.

Bulk vessel 5 yr

Bulk vessel 10 yr

On the contrary, buyers and sellers of newbuilds have to wait for almost two years for delivery and thus indicate longer-term fundamentals.

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October second-hand vessel values

Vessel values for five-year-old and ten-year-old Capesize vessels in October dropped to $43 million and $32 million, respectively, from $47 million and $34 million in September 2014. Panamax values for five-year-old and ten-year-old vessels declined to $22 million and $16.0 million, respectively, from $23 million and $17.5 million in the previous month. Handymax prices almost remained consistent, with five-year-old vessels at $22 million and ten-year-old vessels at $15 million from $22 million and $16 million, respectively, in September 2014.

Vessel price appreciation

Following the limited number of reported sales in the preceding few months, activity in October picked up. The month ended on a positive note on the back of improved freight market rates. Specifically, among all the vessel classes, Capesize bulkers fared the best.

RS Platou comments that if the freight market continues to improve, the recent slide in values will stop. So there might be some upside going forward.

Second-hand vessels’ recent data indicate a negative implication for the dry bulk markets. With the movement of these vessel prices, dry bulk shipping stocks such as Diana Shipping Inc. (DSX), Knightsbridge Tankers Ltd. (VLCCF), Safe Bulkers Inc. (SB), and Navios Maritime Holdings Inc. (NM) should be affected. The Guggenheim Shipping ETF (SEA) should also be affected by vessel price movements.

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