Will capesize market to go down before going up in 2023?

Concerning low demand for iron ore due to a weak construction sector in China are affecting the situation of?the Capesize sector.

Moreover, with the approach of the?Chinese?New Year, the earnings of Capesize?are under pressure to some extent.

In December 2022, the Baltic Exchange 54-TCA index showed rents of US$12,188 per day,?and by?January?17?this year, the 54-TCA index showed rents had fallen to US$10,287 per day.

However, the?main Dry?Bulk?Cargo?demand is expected to gain positively in the third quarter of the year as China lifts its ban. Demand for coal is also expected to rise with the European energy crisis and the Russian coal ban, and increase demand for bulk carriers.

The current slowdown in demand for iron ore is also expected to strengthen in the second half of the year.

In addition to this, the number of bulk carriers being sent to scrapping yards is expected to increase this year, which, together with the historically low level of newbuilding orders, will benefit the supply side?of bulk carriers.

In terms of values, the value of Capesize?continued to soften in December 2022.

One of the largest value declines was for the 180,000 DWT, 15 year old Capesize, which fell by 3.4% from US$20.09 million to approximately US$19.34 million.?

Going into 2023, the value of the Capesize?rebounded from the market low in mid-December 2022.

From December 18, 2022 to January?15,?2023, the value of a fixed age 15 year old Capesize?increased by 2.9% to US$19.8 million.

Figure 1: Trend in the value of fixed age Capesize?of 5, 10 and 15 years to date in 2022

The following two second-hand transactions are indicative of recent trends in Capesize.

On December?16,?2022, Lowlands Sunrise (181,500DWT, built June 2011 by Koyo Shipyard, Japan) was sold to a Greek buyer for US$23.8 million at a pre-sale VV valuation of US$25.79 million.

?On?January?9,?2023, Aquasalwador (180,000 DWT, built in January 2012 by Korean Shipbuilding) was sold to a Greek buyer for US$27.0 million, at a pre-sale VV valuation of US$25.26 million.

It is worth noting that Greek buyers have been very active in the second-hand market for Capesize?since November 2022, purchasing a total of 11 Capesize, while a total of 22 Capesize?are known to have been sold during this period.

Source：SEACON-SHIPPING