Bulk Carrier S&P on the up despite market low point

In recent weeks we have seen a steady increase in Sale and Purchase (S&P) activity, despite the downward pressure that the dry market has been experiencing both on the spot and period front. The sentiment for the short-term also seems to be positive with interest in sale and purchase expected to continue until the end of the year.

Dry time-charter rates plunged to the lowest point of the year last week, with the one-year time charter rate for capes in the Atlantic at $14,800/pdpr, a fall of almost 30% from the previous month according to the Alibra weekly time charter rates. In contrast, in the sale and purchase market has been steadily improving, and in particular for bulk carriers which have accounted for 66% of sale and purchase activity recorded this year, compared to just 33% for tankers. 

Unsurprisingly, as the tanker market has picked up in the last few months, so too have tanker sales with over 31 transactions coming to light so far, this month alone with many viewing this sector as an area where bargains are still to be had, in contrast to the current price of newbuidings. 

Second- hand bulk carrier values are still relatively cheap, sentiment seems to be driven towards the attitude that there are perhaps still more opportunities for bargains to be had and the sheer number of sales alone do not lie. Leading the way is the supramax sector that has accounted for 33% of dry bulk sales this year with 23 vessels changing hands last month, followed closely behind by the handys at 28% with 17 second hand sales reported. 

Both the Supras and handys are considered to be versatile vessels- due to their size they encounter less port restrictions than their larger counterparts. Whilst Capes and Panamaxes are more focused on Iron ore Coal markets, Handys and supras tend to carry a much wider range of commodities, ranging from agribulk and fertilisers to Iron ore and coal. This versatility leaves them less exposed to the market pressures of individual commodity markets and in a period of uncertainty. The future of long- term global demand hangs in the balance, due to the ongoing US trade wars, therefore flexibility to meet demand is an advantage and perhaps the reason for the continued interest in the supramax market.

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