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The first week of July has come to an end, and the dry market is still in shallow waters

The first week of July has come to an end, and the dry market is still in shallow waters, prolonging the anxiety of many analysts and shipowners who believed that after the opening of the Chinese economy, a very good summer would come for dry trade and freight rates. The lacklustre iron ore demand, along with weaker steel markets and softer coal trade are putting pressure on demand and this is reflected on freight rates. Despite that the Chinese economy has not lived up to expectations, the steel market outside of China is also weak, creating more concerns about the course of the dry bulk market. Along with that, in April 2023 the EU approved a plan to impose a tax on high carbon good imports from 2026, something that might hurt India’s exports of steel, iron ore and cement towards EU nations. But things in economy and trade are never just black or white. Many Chinese economists and analysts expect that the central government would eventually allow stronger monetary easing to be introduced in order to boost the economy. Within July, China’s Politburo will probably announce more stimulus packages during its meeting to ensure sustainable economic growth. It is expected that this stimulus package will be linked mainly to industries like green energy, digital economy and high-end manufacturing which consume fewer bulk commodities than the property and real estate sectors, but the revival and growth of the Chinese economy even if it commences from these sectors will eventually boost more “traditional’ industries like infrastructures, real estate, & construction. Apart from that, Brazil’s iron ore exports within the first half of 2023 are about 4% higher compared to the same period of 2022. Brazil is willing to achieve a bigger role as an iron ore exporter by making operational improvements and investing in infrastructure that could boost iron ore output and export capacity if demand calls for it.

The Capesize 5TC is at USD 12,625/day about 7% higher than the first days of January and about 462% higher than February’s low of USD 2,246/day. Moving to smaller vessels, Panamax 5TC is at USD 8,852 and Supramax 10TC is at USD 7,959/day, down by 31% and 25% YTD respectively. Handysize vessels are the ones that have received the hardest hit in 2023 as their 7TC is now at USD 7,627/day, which is 31% lower YTD and 2% lower than the February lows – at the time when all the other vessels rates have rebounded from February lows. Capesize rates are the ones that have managed to hold their ground in 2023 and fall less as iron ore exports and especially those from Brazil have proven a reliable foothold.

Analysing the second-hand prices of Capesize, Panamax, Supramax and Handysize we observe in some categories a significant increase, while other segments are either at the same levels or slightly below since the beginning of 2023 depending on the age group and the size of the vessels. More specifically, the Capesize segment has witnessed an upward trend in second hand prices, with a 5-year-old valued around USD 50 mills, almost 14% higher compared to early January’s 2023 prices. Furthermore, as of 30th June 2023, the value of a 10-year old Capesize was USD 30.5 mills, a 5% increase year to date, while on the same sector, a 15-year old vessel is worth around USD 19 mills, which is almost at the same price level compared to January 2023. Moving down the sizes, the Panamax sector has shown an increase in the younger vessels with the price of a 5-year-old Kamsarmax vessel being at USD 31.5 mills, up by around 5% since the beginning of the year, while the 10-year-old Kamsarmax and 15-year old Panamax are slightly below (4% & 2% down respectively) year to date valued at USD 21.5 mills & USD 14.5 mills accordingly. An increase of around 4% & 5% has also been noted in the 5-year old & 10-year old Supramaxes respectively, with the former being valued at USD 26 mills & the latter at USD 19.5 mills in end June 2023. However, the 15-year old Supramax has lost almost 8% since the start of the year with its value being now at USD 13.5 mills. The 5-year old, 10-year old & 15-year old prices of Handies are also up by around 2%, 3% and 5% respectively year to date, and their values are at USD 25 mills, USD 17 mills & USD 11 mills accordingly. It’s obvious that younger and eco friendly vessels have managed to hold their ground on asset values, while on the other hand older and more energy consuming vessels are not in the front line of preference, seeing their values go down since the start of 2023.

Sale and Purchase:

A firm S&P activity was noted on the dry bulk sector. Far Eastern buyers acquired the Newcastlemax “Stamatis” - 203K/2004 Universal for USD 18 mills. On the Capesize sector, we see high activity, with clients of New Shipping acquiring the “Aquamarine” - 182K/2009 Odense Staalskibsvaerft for USD 18.7 mills. Furthermore, the “Ocean Cobalt” - 180K/2008 Imabari was sold for low/ mid USD 19 mills to Chinese buyers, while the “Agios Charalambos” - 185K/2003 Mitsui was sold for USD 14 mills to Indian buyers. 2x very modern Ultramaxes, the “Gemini Confidence” - 63K/2019 New Dayang and the “Virgo Confidence” - 63K/2019 New Dayang found new owners for high USD 27 mills each. Clients of Lomar played an active role on dry S&P activity this week, as they acquired the 12-year old Panamax “Joy” - 79K/2011 for an undisclosed price and the 13-year old Supramax “Chris” - 57K/2010 Cosco Guangdong for high USD 11 mills. Finally, the Handysize “IVS Orchard” - 33K/2011 Jiangmen Nanyang changed hands for high USD 10 mills.

The tanker S&P activity revs up compared to dull activity of previous weeks, with high interest on MR2 sector as almost all sales belonged to that sector. The MR2 “Dong-A Triton”- 50K/2015 HMD was sold for excess USD 38 mills, while the “Magellan Endeavour” - 48K/2006 Iwagi Zosen was sold for USD 17.5 mills to Chinese buyers. Finally, the “MTM Potomac”- 51K/2004 STX found new owners for USD 17.5 mills.

Xclusiv Shipbrokers Inc.