Capesize second-hand ship prices rise amid Chinese economic recovery Ship’s crew

According to a new report from the Baltic and International Maritime Council (BIMCO), prices for used Capesize vessels saw a significant increase in March amid China’s economic recovery.

Filipe Gouveia, marine analyst at BIMCO, said prices for five-year-old used goods were up 22% month-on-month to reach $54 million by the end of the month.

Capesize spot rates, while still weaker than a year ago, tripled in March from February, according to the Baltic Exchange’s Capesize 5TC Index. Shipments of iron ore, coal and bauxite to China rose in the first quarter, bolstering the market’s belief that China’s economic recovery could be a strong driver of capesize demand this year.

China is an important market for capesizes, with two-thirds of capesizes discharging their cargo in the country. In terms of commodities, iron ore accounts for 75% of all cargo transported globally by Capesizes, while coal and bauxite make up most of the remaining 25%.

“At current prices, a five-year-old used Capesize vessel is selling for 87% of the price of a newbuild, nine percentage points above the 2022 average. It’s clear that buyers are hoping to benefit from an expected rate hike in the near term,” he said Gouveia.

However, there are still risks to the demand outlook. The Chinese government could order a steel production cut in 2023, which would weaken demand for iron ore. In addition, China’s real estate sector remains in a fragile state, which could dampen the recovery in iron ore demand. Nonetheless, March new home sales rose 56% mom, which could mark the start of a gradual recovery in the sector.

“To sustain high second-hand capesize prices, prices need to increase significantly in the coming quarters. While demand indicators for capesizes look promising, risks to demand remain,” Gouveia said.

Related Articles

Back to top button