24-02-2017 Is cheap bulker buying era drawing to a close? By Harry Papachristou, TradeWinds Weekly
Greek owners have shown a big appetite for resale and secondhand bulkers in the past week, with some analysts saying this may reflect anxiety to act before prices rise to levels no longer considered dirt cheap. A fear of missing out on ultra-low prices seems to be gripping the secondhand market. Even owners inactive for years are taking the plunge, says Intermodal analyst George Iliopoulos in a report to clients. Iliopoulos says potential buyers might see it as “just before the window of opportunity to buy at fairly attractive levels closes”.
It is telling that names such as Diamantis Lemos Ltd, which has not made a dry bulk purchase for at least 15 years, are appearing in brokers’ sale-and-purchase (S&P) reports. Some suspect the London-based owner and its Piraeus affiliate, Diamlemos Shipping, is the buyer of the 75,000-dwt Conti Spinell (built 2011), acquired from Germany’s Conti Group for about $10.5m. It would be the first S&P move by Diamantis Lemos since 2002, when it assembled its current four-ship panamax fleet built at Hudong Zhonghua Shipbuilding. However, Diamlemos spokespersons were unavailable to comment and other brokers suggest that South Korean interests have picked up the Conti Spinell instead.
Vessel prices have already appreciated significantly since the multi-year lows they hit during the freight rate crisis early last year. Adjusting for inflation, secondhand values may even have hit record lows then. Average reference prices cited by Clarksons for 10-year-old capesizes have gained one-third over the past year; the price of 15-year-old panamaxes has almost doubled over the past 10 months; ultramax resale prices gained nearly 30% over the same period; and five-year handysizes climbed by half. Ship values are expected to increase further, Clarksons says.
Positive expectations for the remainder of the year come on the back of improved forecasts for iron ore and coal demand in 2017. Newbuilding activity in dry bulk remains practically non-existent. This, combined with high levels of dry bulk scrapping that reached a combined 59.4 million dwt over the past couple of years, has brought the dry bulk newbuilding-to-fleet ratio to a 15-year low of about 9%. Intermodal expects that ratio to drop even lower, to a record low of 6% in the second quarter of this year.
“Whoever moves now, moves wisely,” a senior executive of a big dry bulk operator, whose principals purchased a capesize in recent weeks, told TradeWinds. Another Greek owner who dipped into the market is Ismini Panayotides. Her Athens-based company, Pavimar, confirms it has bought the 81,000-dwt Epson Trader II (built 2009). Brokers believe the Nisshin-owned ship changed hands for $12.25m. It was one of several whose purchase had been initially attributed to Greek peer Chartworld. However, Lou Kollakis-led Chartworld is still believed to have purchased the sistership Epson Trader I (built 2009), again from Nisshin, at a higher price of about $13.2m. However, George Economou has also been touted as a possible buyer of that vessel.
Nisshin is said to have sold another two kamsarmaxes – the 82,000-dwt Bergen Trader I (built 2012) and sistership Bergen Trader II (built 2013) – en bloc last week for $32m. Brokers say these ships were sold to Koreans, with the deal being on subjects until the end of February. Unidentified Greek owners have been linked to another two Japanese-held dry bulk vessels: the 60,200-dwt Red Sakura (built 2017), which reportedly changed hands for $23.2m, and the 76,300-dwt Red Gardenia (built 2005), which went for more than $7.5m. Keishin Kaiun, owner of the Red Gardenia, had attempted to sell the ship last July but held back from doing so after failing to secure a sufficiently high price.
In the smaller ship classes, many Greeks are active as sellers, taking advantage of buying appetite from Chinese and Middle Eastern buyers. Madias family interests are said to have offloaded the 53,400-dwt MIM Supramax Vivi (built 2008) to Chinese buyers for $7m. Sources are already listing the ship in the fleet of China’s Nanjing King Ship Management under the name of KSL Deyang. The vessel was last listed under the management of Maria Madias-led Axis Bulk Carriers. It had been previously managed – since its delivery as a newbuilding – by Chian Spirit Maritime, an Athens-based company run by Nicholas and Panayiotis Madias. The sale of the MIM Supramax Vivi leaves Axis Bulk Carriers with two panamaxes in its fleet.