Market Chat: Have opportunists hit a temporary dip in Capesize market?

Author: Rebecca Galanopoulos Jones

Bulker values have softened over the last week, and it is the Capesize sector that has seen the sharpest declines with values for 15Y0 vessels of 180,000 DWT down by c.7.87% since the star of June.

Recent sales have shown a downward movement in value and benchmark deals have set values lower; the value of a Capesize Bulker is now USD 20.13 mil down from USD 21.85 mil at the beginning of the month. A contributing factor to the decrease in values is a softening in the chartering market since mid-May, where the Capesize 54-TCA plunged to around 9,254 USD/Day from 20,845 USD/Day.

Of the sales reported in this sector in early June, the majority went to savvy experienced owners, keen to invest at slightly lower values, despite the dip in rates at that time.

Notable deals include the Capesize BC Atlantic Tiger (180,200 DWT, Sep 2006, Imabari) sold to Winning Shipping for USD 16.65 mil, VV Value USD 17.58 mil and the Herun Zhoushan (181,100 DWT, Sep 2017, SWS) sold to Chartworld Shipping for USD 41.50 mil, VV Value USD 43.54 mil – BWTS fitted.

However, stimulus from China is looking positive and we have seen rates rebounding. Over the past couple of days, spot rates have improved modestly with an increased demand for iron ore, due to inventories from China and greater bauxite volumes from Guinea. Rates have climbed to 13,163 USD/Day, a 42% gain since the beginning of June. There is also an element of seasonality at play, and as Australia reaches the end of its financial year, it is common to see a firming in Pacific rates, with plenty of activity coming out of Western Australia before the end of June.

Despite declining Capesize values, overall Bulker values remain high. Combined with weaker earnings, this has resulted in a quiet start to the month for Bulker sale and purchase activity with just 18 sales reported so far, compared to 29 sales for the same period last month. Opportunists may have hit a temporary dip in the market, but with rates set to rebound in the coming weeks, it remains to be seen who will be the biggest winners or losers.  

VesselsValue data as of June 2023.

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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