Fred Cheng has sold one of his two remaining capesize bulkers at a time of renewed liquidity in the sale-and-purchase market.
Cheng’s Shinyo International was the seller of one-quarter of the limited number of capesize bulkers to change hands in the first half of this year and has again trimmed its fleet.
TradeWinds understands the 176,000-dwt Shinyo Diligence (built 2006) has been sold for $16.5m and will be handed over to its new owner in late 2019.
The buyer is Hong Kong-listed Xin Yuan Enterprises, which has confirmed the purchase in an exchange filing.
Xin Yuan said last year it would use $14.2m in proceeds from its initial public offering to part finance the acquisition, as well bank financing.
Sources suggested the Cheng deal shows a firming of asset values.
The Namura built 177,000-dwt Lowlands Phoenix (built 2004) was reported sold for $13.2m a couple of weeks ago.
Even taking the age difference into account, this shows an increase in price, they note.
Shinyo bought Shinyo Diligence as North Trader in July 2017 for $17.2m.
Cautious confidence
The deal has come to light at a time when capesize transactions are starting to crop up more regularly and spot rates have reached the highest level seen this decade.
But the capesize S&P market is proceeding with only "fragile confidence", as one broker told TradeWinds.
"The barometer of confidence is really the FFA [forward freight agreement] curve," he said, pointing to the bearish outlook for cape rates from 2020 onwards.
The Baltic Exchange's forward curve for its 5TC average of five capesize benchmarks shows FFA contracts for Q4 this year are trading at $22,658 per day.
This is well below the current 5TC assessment, which was estimated today at $32,078 daily.
Further ahead, paper contracts for the first two quarters of 2020 are trading at around $14,600 per day, and in the $13,000s for 2021 onwards, according to Baltic data.
"People are only really looking at what they can make in the fourth quarter and the first two quarters in 2020," the broker said.
This, he explained, accounts for the low level of capesize sales candidates in the market and the sluggish progress in asset values.
Reported sales
As TradeWinds reported on Friday, Stamatis Molaris-led Alma Maritime is believed to have sold the 170,000-dwt Cape Maria (built 2005) for $13.8m.
Sales speculation has also centered on the 180,200-dwt Nord Steel (built 2007) and the 175,100-dwt MSXT Vivienne (built 2004) in the past week.
The string of deals were taken as a further sign of growing buying appetite for dry bulk carriers amid a rising freight market.
Capesize rates have climbed to $33,000 per day this week, more than double the average level seen in the past 52 weeks, according to Clarksons Platou Securities.
Cheng in familiar territory
Shinyo will be left with just one vessel in its fleet, the 176,300-dwt Shinyo Alliance (built 2005), according to reference sources. That ship was also the subject of sales talk in the spring.
Cheng is no stranger to moving in and out of shipping markets during his storied career.
He targeted capesize bulkers from early 2016 to return to the industry, buying five of the vessels through until the end of 2017.
Sources believe Cheng will look to redeploy capital from the capesize sales to invest in more modern bulk carriers or target another shipping segment.
Cheng has previously been active in the VLCC market, in which he built a fleet from 2002 to 2007.
Those ships were sold to Angeliki Frangou's Navios Maritime Acquisition — complete with long term contracts — in 2010.
As TradeWinds has reported, just eight capesize sales were recorded in the first six months of this year, with two disposals from Shinyo breaking a deal drought that had lasted for several months.
