Owners of tankers, bulkers and boxships are seeing the busiest sale-and-purchase (S&P) markets for more than 10 years, according to Clarksons Platou Securities.
The investment bank, a division of shipbroking giant Clarksons, said in a report that deals have increased in recent months to levels way above those experienced during the pandemic, but also well beyond previous years.
"In fact, it has been over a decade since buying activity has been elevated and aligned across the three conventional shipping sectors of tankers, dry bulk and containers," said Clarksons Platou Securities analysts Frode Morkedal and Omar Nokta.
The containership sector has been buoyed by rising time charter rates and contract durations, while bulker earnings are off to their strongest start to a new year since 2010.
Clarksons Platou said public companies have become more acquisitive across both segments, especially given the improved return potential.
Tankers changing hands despite low rates
And the analysts added: "Interestingly tanker sale-and-purchase activity has been plentiful, despite the extremely low earnings currently prevalent in the sector, which indicates buyers are increasingly optimistic on the outlook given what has been witnessed in other segments."
This view was backed by Denmark's Torm, which announced a deal to acquire eight MR tankers from Team Tankers for $82.5m on Monday.
All the vessels were built in Croatia, with six of them built to IMO II standards, allowing for enhanced trading through chemical cargo options, Fearnley Securities said.
Other owners taking part in major S&P deals in recent weeks have been Adnoc Logistics & Shipping, Eagle Bulk Shipping, Star Bulk Carriers, Global Ship Lease, Euronav and DHT Holdings.
But it is not always plain sailing. BW LPG revealed on Monday a $40m sale of a VLGC fell through as it failed to clinch a final agreement.
Shipping stocks have been strong performers this year, Morkedal and Nokta added.
At the end of February, most sectors were sold off with the broader equity markets, however, although LNG carrier owner GasLog added 19% when it announced plans to take the company private.
Price rises for boxships are justifiable given that 10-year-old and 15-year-old narrow-beam panamaxes had been priced close to scrap for much of the past several years, Morkedal and Nokta said.
"With shipowners and liners both actively seeking to acquire tonnage, values have jumped materially," they added.
Boxship boost
A 2010-built, 4,500-teu panamax is now pegged at $25m, up $9.5m from July 2020.
Time-charter rates for that vessel class are now above $30,000 per day, against $28,000 per day in 2011, when the vessels were priced at $40m.
This suggests further upside potential, the investment bank argued.
Time charter activity remains quite active in the containership segment with no signs of slowing down, the company said.
Most new contracts being discussed in the conventional panamax segments are in the three-year range, while smaller segments are now seeing two-year charters more regularly.
Rates are up to $31,500 per day for 4,400-teu ships and $24,500 per day for 3,500-teu units.
More rises for bulkers?
On the bulker side, five-year-old ultramaxes are assessed at $20.5m, up a staggering $18m from the start of the year.
"While prices have increased, they have improved only to levels prevailing at the start of 2020, suggesting to us that further upside potential remains considering ultramax/supramax spot rates ended last week above $20,000 per day for the first time since 2010," the analysts said.
Back then, a five-year-old supramax cost more than $30m.
Opec+ meeting crucial for tankers
Clarksons Platou Securities expects an Opec+ meeting early in March to shed some light on the near-term outlook for tankers.
During the last meeting, Opec+ agreed to maintain the status quo for March, which effectively further deferred the previous plans to add 2m barrels per day (bpd) starting in January, and maintained Saudi Arabia's voluntary additional 1m bpd cut.
"We expect this week that Saudi Arabia will agree to end its 1m bpd cut and discuss adding more barrels, especially the delayed 2m bpd originally slated for the start of the year," the analysts said.
Seaborne tanker trade has declined by 5m bpd across 2020, but Clarksons Platou is expecting an additional 6m bpd of trade by year-end.
