​Kamsarmaxes are like a fine vintage – they get better every year

Kamsarmaxes are the gift that keeps on giving for shipowners, who are seeing year-on-year improvements in charter rates and asset values. A six-year-old Japan-built kamsarmax (Harbor Hirose) was sold in mid-August for $19.3m. Twelve months previously, vessels of the same age and build were changing hands for around $14.0m at best.

Shipowners appear to have been on something of an ordering frenzy so far this year – but all may not be quite as it appears.

We have tracked firm orders for 86 kamsarmaxes since January 1 this year, plus a further six options. Of these vessels, our research shows 18 have already been assigned IMO numbers. This would seem to confirm research released this week by another shipbroker that says many of these newbuilding are, in fact, resales of keels laid before the IMO’s January 2016 deadline. This has allowed yards to build vessels to the cheaper NOx Tier II emission standard.

Our research points to a total of 155 firm kamsarmaxes on order for delivery by the end of 2020. This is equivalent to around 18.0% of the live kamsarmax fleet, or 7.5% of the global panamax fleet. These are manageable ratios as long as vessel demand remains on its current trajectory.

Some 109 panamaxes have changed hands in the S&P market so far this year. Of these vessels, around 50 have been kamsarmaxes. In contrast, at this point last year some 32 kamsars had been sold, plus a further 62 other panamaxes (94 vessels total).

Owners are choosing to hang on to their tonnage – demolition of panamaxes has more than halved year-on-year. We tracked 88 vessels sold for scrap up to this point in 2016 and only 31 so far in 2017.

The uptick in kamsarmax interest corresponds with a year-on-year improvement in spot rates (see graph). Period rates have doubled: panamaxes can currently achieve $13,500/day for 12-month charters, compared to around $6,500/day at this point last year. We’ve also noticed about 25% more panamaxes have been fixed on period charters this year (around 192 reported fixtures to date) compared to the same period in 2016.

The year-on-year improvement can be attributed to a number of factors. Firstly, vessel supply and demand has reached a healthier level, thanks to high levels of scrapping over the past couple of years. A rebound in commodity prices has also added to chartering demand, most recently with coal, for which the expanded Panama Canal has enabled a price arbitrage to open up between the north-west US/Canada and Europe, where prices are rising.

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