Picking Up Panamaxes Like Pokemon

Maritime Activity Reports, Inc.

July 30, 2016

Image: Alibra Shipping Ltd. Research

Image: Alibra Shipping Ltd. Research

 Alibra Shipping Research Weekly Market Report takes a look on current market scene of bulk carriers.

For a little while now, the story has been “Now’s a great time to buy bulk carriers, asset prices are low…” We’re cautious of following the herd mentality so we wondered: is that still the case or has the moment passed?
On Monday, the Baltic Exchange assessed the price of a five-year-old, 74,000-dwt Panamax at $13.6m. This is quite a decline on 18 months ago, when the benchmark vessel was assessed at$20m in the first week of January 2015.
But the value of the Baltic’s benchmark Panamax has been appreciating ever since hitting an all-time low of $11.14m on March 29 this year.
Unfortunately – or fortunately, if you’re a prospective buyer – the appreciation seems to haveplateaued and has been more or less static around the $13.5m mark for the past month. 
This week’s Baltic assessment is an increase of just $7,000 on a week previously. 
As for Alibra’s own assessments, we estimate$21m for prompt resales, around $9m for fiveyear-old vessels and around $6m for 10-year-old Panamaxes.
So, returning to our original question, is now still a good time to pick up secondhand Panamaxes?
The market seems to think so. July has so far seen 13 S&P transactions for Panamax and Kamsarmaxbulk carriers, of which the majority were picked up by Greek buyers (a certain gauge of cyclical timing).
Since January 1, we’ve tracked 76 sales, compared to 61 during the same period in 2015. Interestingly, the majority of the Panamaxes sold this year have been built in Japan (37 vessels), with Chinese and Korean yards accounting for just 17 and 16 vessels respectively, showing that buyers are opting for quality builds while prices are low.
Kamsarmaxes still command a price premium and account for 29 of the Panamaxes sold this year so far. Last week, Greek owner Blue Planet Shipping picked up four Kamsarmax resales being built in China for $19.5m each, a very healthy price considering the rest of the market.
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