“New bulker prices would not go any higher from the current prices – they will just stay stagnant,” Ren told Seatrade Global.
The weak bulker freight market in recent months has cast a murky outlook for the dry bulk sector, as the BDI at below 800 points since mid-July is way below profitable levels for operators.
“It is not normal for the BDI to be just above 700 points. A minimum of 1,500 points is required for operators to make a profit. It is therefore hard for shipyards to call for higher newbuilding prices even with those fuel-efficient bulkers,” he explained.
A newly-built capesize had commanded newbuilding prices of $47m and $49m in 2012 and 2013, respectively, before the newbuilding market firmed to $58m in June this year, according to data from DNB Markets. But as of 1 August, the newbuilding price has adjusted downward to $56m.
Similarly, a new panamax was priced at $27m and $26m in 2012 and 2013, respectively, before the market rebounded to around $30 today.
Meanwhile, newbuilding bulkers will continue to be in demand due to their higher energy efficiency and lower fuel consumption, which are essential to reducing operating costs, Ren said.
“We will be seeing more shipbuilding deals especially for the fuel-efficient 64,000 dwt and 82,000 dwt bulkers,” he said. “Moreover owners are continuing to phase out their older and less efficient tonnages.”
Singapore-listed Yangzijiang on Wednesday reported its highest quarterly net profit of RMB1.24bn ($200.86m) in the second quarter, a jump of 52% from a year ago.
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