Recent regulatory changes in China regarding the use of modern vessels has brought about mayhem in the market for second hand ships, as ship onwers are scrambling to comply to the new rules. In its latest weekly report, shipbroker Intermodal said that “the new regulations for Chinese flag restricting import of Tier I ships have dominated market sentiment during the past days as buyers have been trying to secure vessels with very prompt delivery (by end of July). We have seen a number of reported deals not going through in the end due to buyers’ uncertainty in regards to whether it is feasible to register the vessels within time. Indeed, as we get closer to the effective date of September 1st and the deadline becomes tighter, it appears unlikely to see more activity coming from this type of buyers. These developments have had an impact in the second hand S&P market as ocean going buyers are taking a stand still to monitor the impact in vessels’ values”, said Intermodal.
According to Mr. Vasilis Moiris, SnP Broker with Intermodal, “nonetheless, there are still buyers willing to invest in modern vessels where the Chinese have not been active. Most interest is drawn into the Supramax-Ultramax sectors where we have been seeing the majority of the activity. Most notably, Greek owners are reported to be the ones buying the freshly drydocked “NAVIOS ARMONIA” (55,522dwt-blt ’08 Kawasaki) at levels in excess of USD 14 million, which shows some robustness in asset values. Additionally, USA buyers are reported to have bought the Dolphin 64 “BAO TONG” (63,800dwt-blt ’14 Chengxi) at USD 21.3 million, a price pretty much in line with recent activity in the sector”.
Moiris added that “the situation on the tanker side is still somewhat different from the dry sector. Rates remain close to historically low levels in some cases, with the effect on asset values being evident. Buyers are seizing the opportunity to buy modern ships at the current lows with a view to benefit from any freight rate increase in the future that will also give a boost to prices as a result. Iraqi buyers AISSOT are reported to be paying USD 88 million for each of the BW’s 2018 Samsung VLCC resales with hull numbers 2229 & 2230. The Japanese controlled VLCC “BRIGHT HARMONY” (309,774dwt-blt ’09 Imabari) is understood to have been sold at USD 41.5 million to Greek buyers”.
Meanwhile, according to Intermodal’s analyst, “as we are getting closer to the peak of the summer season and in view of the above developments, it will be interesting to see how buyers will react. In the dry bulk sector the different indices seem to be stabilizing and slowly gaining momentum as we are seeing more and more grain exports coming out of Brazil as a result of the trade war between USA and China. USA grain prices are at the same time falling day by day as the largest importer China – up till now at least – has not been buying, prompting others to seize this opportunity. As far as tankers are concerned, despite the fact that rates remain flat for now, we expect any modern tonnage coming for sale to get sold without too much difficulty as a number of buyers seem keen to invest in today’s low values”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
