BULK carrier values look set to start rising again after declining from highs in the third quarter of 2024, with buyers outstripping sellers.

Asset prices, depending on vessel segment and age, have lost up to 20% since August 2024, as time charter equivalent rates fell to five-year lows.

Nevertheless, bulk carrier values have remained relatively high despite poor market earnings.

Xclusiv Shipbrokers analyst Eirini Diamantara believes that strong shipowner cash flows have kept asset values high.

And if recent improvements in freight rates in most dry cargo markets stick, then values could soon head north again.   

“The robust cash flow currently enjoyed by shipowners could stabilise existing asset values for now,” said Diamantara.

“However, if rates climb to higher levels, promising a positive outlook for 2025, we may see asset values increase, mirroring the trend observed in 2024,” she added.

Diamantara noted that few modern ships are presently being circulated for sale.

“Market prices hinge on the balance of vessel availability and demand and presently we’re seeing a distinct scarcity of modern vessels, built within the past decade, at a time of strong buyer interest,” said Diamantara.

She says that this dynamic is due to well capitalised shipowners having few reasons to sell when there are many well-funded buyers eager to invest in modern ships.

Since the start of the year just over 100 bulk carriers, of more than 10,000 dwt, have been sold. This is down by some 36% compared to the first two months of 2024.

According to Xclusiv Shipbroker’s analysis the average age of bulk carriers sold in the first two months of this year was 16 years.

The handysize segment provided 23% of total sales followed by supramaxes and panamax units, which each provided 19%.

Diamantara notes that panamax bulkers sold had a particularly high average age of 19 years, with Greek shipowners in particular offloading their oldest panamaxes to Chinese buyers.

“Chinese owners acquired more than half of total panamax sales, often of high age. Older panamax units are favoured by Chinese owners for deployment in China’s substantial domestic coastal trade,” said Diamantara.

Chinese coastal trades have less stringent age restrictions than international trades.

Recently reported bulk carrier sales by shipbrokers included the 2010-built newcastlemax HL Frontier (IMO: 9398113). This 208,000 dwt vessel was sold by Japanese owners to undisclosed buyers, with handover in May, for $32.5m.

UK-based owners are said to have sold the 2010-built capesize Bulk Northville (IMO: 9457567) for circa $21m to undisclosed buyers.

In the post-panamax segment, Germany’s Oldendorff Carriers has sold the 93,000 dwt Cora Oldendorff (IMO: 9622916) to Chinese buyers. The 2012-built ship is said to have been sold for $13.8m.

Chinese buyers also picked up the 2008-built kamsarmax Ellina (IMO: 9398668). This 82,600 dwt vessel was sold by Greek shipowner Thenamaris for $12.75m.

In the handysize segment, a Greek shipowner is understood to have purchased two 2012-built ships from South Korea’s Daelim Co. The 33,700 dwt sister vessels DL Marigold (IMO: 9621170) and DL Tulip (IMO: 9621182) were each bought for almost $10m.

With freight rates having descended since the third quarter, interest in ordering bulk carrier newbuildings has waned.

Data tracked by Lloyd’s List shows that only 12 bulk carriers have been ordered since January, compared to some 60 in the first two months of 2024.

“The recent period of lower rates, with the BDI plunging to its lowest level in five years, coupled with elevated newbuilding prices has generated uncertainty for shipowners. This has led to a marked deceleration in dry bulk newbuilding investments,” noted Diamantara.

The downturn in orders could be welcome since the orderbook to fleet in service ratio is relatively high. As of late February it was 9.2% compared to only 6.9% two years ago.

Due to a lack of recycling candidates, and a steady flow of newbuildings entering service, the active bulk carrier fleet has expanded substantially, rising from 13,628 ships in February 2023 to today’s 14,180 ships.

“Over the past two years, the bulk carrier fleet has experienced significant growth. With a projected 550 bulkers booked for delivery in 2025 shipowners are going to adopt a cautious approach to newbuildings.

“And with shipyards fully booked for the next three years shipowners are in no hurry to commit to orders with delivery as far out as 2028 or even 2029,” argued Diamantara.