The impact of low iron-ore demand on Capesize values

Capesize values softened in December 2022

Capesize values continued to soften over the course of December with the most dramatic fall seen in 15 year old Capes of 180,000 DWT, down by c.3.4% from USD 20.09 mil to USD 19.34 mil. Sentiment for the Capesize sector has been marred by concerns over low iron ore demand. Consequently, earnings have come under pressure and are unlikely to pick up as the Lunar New Year celebrations in Asia approaches at the end of January. The Baltic Exchange 54-TCA is currently at 12,188 USD/Day, down c.30% YoY.    

Notable sales include the Newcastlemax Cape Maple (206.200 DWT, Aug 2005, Imabari) that was sold (SS due) to unknown Chinese buyers for USD 15.50 mil, VV value USD 16.01 mil. The Aquahope (177,200 DWT, Oct 2007, Namura) that sold to unknown Turkish buyers for USD 18 mil, VV value USD 18.87 mil.

Container values fall year on year

Container values have fallen further as sentiment softens, based on continued global macroeconomic concerns and reduced consumer spending. Values for five year old Sub Panamax Container vessels of 2,500 TEU have fallen by c.41% year on year (YoY), from USD 52.39 mil to USD 30.83 mil. Whilst this figure represents a significant decline from last year’s highs, values remain above average. Prior to the recent spike, the last time such levels were seen was in 2011.

Similarly, although Sub Panamax earnings are still well above historical averages, current freight rates have declined by c.71% YoY to 18,070 USD/Day.

Notable sales include a benchmark deal that indicates softening values for this sector, the Sub Panamax Sealand Guayaquil (2,546 TEU, Jan 2009, Jiangsu Yangzijiang) that sold earlier this week for USD 13 mil, the sellers had originally bought the vessel in 2018 for USD 12.6 mil. The ship has been chartered to Maersk at 17,500 USD/Day for two years since March 2021.

Disclaimer: The purpose of this blog is to provide general information and not to provide advice or guidance in relation to particular circumstances. Readers should not make decisions in reliance on any statement or opinion contained in this blog.

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