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Bulkers seen having their day in the sun

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Figures from ship valuation platform VesselsValue.com are suggesting that a significant change is taking place in the asset values of the global fleet with dry bulk vessels staging a strong resurgence.

“The trend in shipping cycles across various vessel types is upending expectations about their total valuations against each other,” VesselsValue.com said.

Dry bulk asset values have surged over the past two years following a period of soft returns which encouraged scrapping while ton mile demand continued to climb, it noted.

Meanwhile surging hire rates have encouraged investment in dry bulk carriers and the dry bulk fleet is now worth more than the combined value of the tanker fleet, leapfrogging container ships as well, VesselsValue.com pointed out, illustrating in a chart (below) how the total valuation of each major shipping segment has varied each year from 2015 to now.

Asset value chart

Significantly, the value of the tanker fleet has slipped by almost $50bn from 2015, while bulkers have appreciated by a net $56bn.

“Tankers appear to be in the middle of a down cycle, which has depressed the valuation of the tonnage on the water and the outstanding orderbook to second place,” it said.

And while the main three vessel segments have shuffled places, gas carriers and smaller dry bulk ships (from 1,000 - 38,000 dwt) maintained more historic trends. As a result, the overall value of total freight carrying assets fell by about $43bn from the end of 2015.

“After years of a depressed market that led to scrapping of older units the prime tonnage on the water is earning rates more attractive to investors, which in turn is pushing up the value of the ships,” commented VesselsValue.com.

While some analysts have expressed concern that an oversupply situation will re-emerge on a strengthening market, VesselsValue.com noted that the outstanding orderbook “is not alarming from an oversupply perspective at this point”.

The online platform, which provides a comprehensive database of vessel values, said investor interest has been limited to smaller units in the second hand markets.

It suggested that “institutional memory of the losses incurred following the commodity supercycle remain strong, and most will attempt to profit from this cycle by buying existing assets rather than risking delivery of ships in two years that may be delivered to a much weaker market”.