Strong Investor Confidence Continues in Dry Bulk Market Through Q3 2024

Investors continue to show confidence in the dry bulk market, with strong activity in newbuilding and second-hand transactions persisting through the third quarter of 2024. Plamen Natzkoff of Maritime Strategies International (MSI) notes a recent softening in year-over-year comparisons for newbuild prices and vessel earnings, suggesting a potential shift in the second-hand market. Despite a slight decrease in sale and purchase volumes during August’s summer lull, second-hand bulker values remain firm.

MSI forecasts the delivery of just over 30 million deadweight tons (dwt) of dry bulk capacity in 2024, with the orderbook expected to increase further by year-end. Notably, there has been continued interest in Capesize vessels, with 4.4 million dwt ordered in Q2, the highest quarterly total since Q2 2021. In contrast, new Handysize vessel orders remain low, with just 0.16 million dwt in Q2.

The demand for dry bulk ships in the second-hand market remains strong, with prices for five-year-old Capesize vessels staying above $60 million, a level not seen in nearly 15 years. Older ships are also seeing high prices, with even 18-year-old Capesizes selling for over $20 million. Transaction volumes for younger vessels are up nearly 25% compared to the same period in 2023.

Looking ahead, Natzkoff suggests that the second-hand market may see a peak in asset prices around the end of 2024 and the beginning of 2025. While prices may continue to rise year-over-year in the near term, there could be a slowdown in the pace of increase followed by a potential decline within six months. This trend aligns with historical patterns where newbuild and second-hand price cycles have closely tracked each other, slightly adjusting older asset values compared to younger vessels.

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