BULK carrier values are continuing to fall due to depressed dry cargo markets, while rising levels of newbuilding deliveries in 2025 are expected to push older tonnage to the recycling beaches.

Values of most bulk carrier classes have dropped from their mid-2024 highs by up to 20% while asset prices of capesize units, which maintained their strength through most of last year are also on the descent.

Xclusiv Shipbrokers analyst Eirini Diamantara said that declining freight markets across all vessel segments were the key driver for the decline in vessel values.

“Since late September 2024, dry bulk freight rates have declined significantly. The Capesize 5TC Average index decreased by 56%, the Kamsarmax 5TC Average lost 41% while the Ultramax 11 TC Average is now down by 39% since the beginning of the fourth quarter,” Diamantara told Lloyd’s List.

She noted that smaller segments such as handysize, which operate on shorter routes and handle a broader variety of cargoes, had experienced more stable demand with asset values remaining more firm than for larger tonnage.

The correction in values is expected to see an upturn in the sale of older tonnage for recycling, which has been minimal in the past two years.

“Prolonged periods of low freight rates significantly impact the profitability of older vessels. Faced with declining revenues, owners may find it more economically viable to scrap these older ships rather than continue operating at a loss,” said Diamantara.

She added that this trend was exacerbated by the ageing of the bulk carrier fleet, which is a consequence of low recycling volumes since 2022.

“Currently, approximately 16% of the active bulk carrier fleet is 20 years or older, a notable increase from 14% in the previous year. This expanding segment of older vessels is now more susceptible to being scrapped as their profitability continues to dwindle,” noted Diamantara.

Meanwhile, rising levels of newbuilding deliveries due to more orders for new ships since 2023 are expected to put additional pressure on the older vessel fleet.

“New ships offer improved efficiency and often greater appeal to charterers. This could result in higher valuations for newer ships, while older vessels may experience a decline in value. This disparity in value could accelerate the scrapping of older, less competitive ships,” said Diamantara.

Some 540 bulk carrier newbuildings were added to the fleet in 2024, while only 70 ships left the fleet for recycling. It is expected that around 590 bulker newbuildings will be added to the dry cargo fleet by the end of this year.

With dry cargo freight markets not expected to improve until after Chinese New Year celebrations at the earliest, values of bulk carriers are expected to remain under pressure.

However, due to the correction in values, brokers expect an upturn in enquiries for the purchase of secondhand bulkers during the first quarter.   

Recently reported sales by brokers included the 2012-built kamsarmax Pan Clover (IMO: 9621417). This 81,000 dwt vessel was sold by South Korea’s Pan Ocean to undisclosed buyers for circa $16m.

Greek shipowner Kanellakis Group is said to have sold its 2002-built panamax Alpha Melody (IMO: 9221889) to Chinese buyers for $6.6m. The relatively low price is reflected by the vessel’s requirement for a special survey.

In the supramax segment, DryLog is reported to have sold the 56,000 dwt, 2012-built, Jasmine (IMO: 9514327) to Indonesian buyers for $17.5m.

Recent handysize sales included the 2011-built, ice-class, Hongsheng 7 (IMO: 9607605), which was sold to undisclosed buyers. The 22,700 dwt ship realised $6.4m for its seller.

Diamantara said that while the outlook for the capesize bulk carrier market after the Chinese New Year was uncertain, market sentiment for China’s coal and iron ore imports in 2025 was generally positive.

“Historically, demand for raw materials such as iron ore and coal increases following the holiday as industrial activity in China ramps up. In 2024, China’s iron ore imports reached a record high and are expected to set another record in 2025.”

Chinese coal imports in 2024 rose by 14.4% to a record level, though projections indicate a slight decline in imports for 2025.

“Unexpected events, such as sanctions or trade disruptions, could create volatility and potentially drive up freight rates. We must always keep in mind the unpredictability of the new US administration under Trump,” said Diamantara.

She warned that if vessel scrapping activity remained low, it could create an imbalance in the supply and demand dynamic, putting more downward pressure on freight rates and ultimately vessel values.