S&P markets offering asset players ‘mouth-watering’ returns

This year could mark another record period for ships changing hands with owners willing to fork out immense sums for secondhand tonnage. 

Dry bulk carrier sales in the first seven months stood at 37m dwt, closing on the record set in 2021 when 60.9m dwt was sold for the full year according to data from Clarksons Research.

The sale and purchase scene remains an active market even though summer is in full swing in the northern hemisphere. Any slow down is coming from fewer ships for sale rather than fewer active buyers and there is healthy competition still on dry and wet. The imbalance between relatively few ships for sale versus the number of buyers out there is keeping prices high. High prices are also cemented by the extremely high newbuild prices.

Highlighting just how firm today’s ship prices are, Clarksons noted in its most recent weekly report that a 10-year-old VLCC or capesize can actually be sold for materially in excess of the price it would have commanded, as a five-year-old, five years ago.

A VLCC purchased in July 2019 as a five-year-old for $71m would sell for $85m as a 10-year-old today, and would have generated an additional $59m in spot earnings after opex, a total return of $73m, 103% of the original asset outlay, according to Clarksons calculations. A capesize purchased as a five-year-old in July 2019 for $37.5m would sell for $45m as a 10-year-old, and would have made an additional $27m in spot earnings after opex, a total of $34.5m, 91% of the original outlay. 

“Tanker and bulker S&P markets have not only been very active but have also offered asset players opportunities for some mouth-watering returns,” Clarksons noted.