As the second quarter of 2017 draws to a close, the number of second-hand bulk carrier sales has fallen considerably from the first quarter of 2017, as the softening freight market instils caution among buyers.
Data compiled by Greek shipbroker Intermodal showed that from 219 transactions in the first quarter of 2017, the number of sales in the second quarter totalled 130. This is a 41% decrease.
Intermodal broker Timos Papadimitriou said, “We can say that buyers and investors have switched more into a reflection mode, contemplating whether and when they should buy or sell again. Some are looking to flip ships they bought cheaper and others wait for second-hand prices to keep pointing downwards and move to more attractive levels.”
Buyers and investors have become less aggressive as the freight market moves downwards.
With the exception of Capesize rates that are today 58% down compared with year highs, average earnings for all other bulker sizes are more or less faring around 2017 average levels.
However, buyers are still sniffing around for attractive buys, convinced that the market has recovered from historic lows seen in February 2016.
The fact that ships are no longer operating below operating costs as they were during the better part of 2016 is indeed encouraging for a lot of owners who are contemplating buying, but the decisive factor is purely the overall picture that the fleet has.
“Regulations, no excessive orderbooks, and lack of financing are all factors highly anticipated to start having an impact on the supply-and-demand equilibrium between cargoes and vessels,” Papadimitriou said.
Allied Shipbroking suggested that buyers could act quickly in anticipation of rising freight rates and asset values in the fourth quarter of 2017. The year-end tends to be a better period for the freight market because of the winter stockpiling of coal.
“Expectations have started to shift towards the possibility of a more active summer period, especially when you take into consideration that most view that the fourth quarter of 2017 will see another strong rally in freight rates and as such will have marked this summer as the last chance for relatively cheap buys in the second-hand market,” Allied said.