23-03-2021 Bulker values rising by millions of dollars a week, analysts say, By Holly Birkett, TradeWinds
Bulker values are rising by several million dollars each week, according to analysts, due to surging time charter rates and sales concluded at ever-firmer prices. Clarksons Platou Securities said on Monday that sale-and-purchase (S&P) transactions for capesize, panamax and ultramax bulkers had prompted it to increase its asset-value estimates. Five-year-old capesizes are now assessed by Clarksons Research Services at $33m, up by 10% from $30m last week. Two weeks ago, they were $28m. It estimates that 10-year-old capesizes are worth $27.3m, up by nearly 8% from $25.3m last week. They were $21.5m a fortnight ago.
“Other vessel classes are seeing gains as well and our net asset value [NAV] assessments for the equities in our coverage continue to increase,” analysts Frode Morkedal and Omar Nokta said. “On average our NAV assessments have risen by 11% this week, which follows the 35% increase we had discussed last week.” Based on Clarksons’ revised estimates, the biggest gains in NAV this week will be for shipowners with the largest capesize exposure.
Navios Maritime Holdings shows the biggest hike among the companies within Clarksons’ coverage with a 31% gain in estimated NAV, which is currently assessed at $13.50 per share. The analysts said the huge upside is due to Navios’ “substantial” financial leverage. The Greek owner began 2021 with an implied net debt to fleet value of 99%, based on prevailing values three months ago, according to Clarksons Platou Securities’ analysis. “That ratio has since declined to 85% — this is still relatively high but further gains in asset prices, and much higher cash flow, are expected to lead that ratio to decline somewhat rapidly,” the analysts noted.
Clarksons Platou Securities is not the only investment bank to revise its estimates of bulker asset values. Earlier this month, Cleaves increased its assessments for the second time in four weeks. “The positive sentiment in dry bulk shipping is seemingly relentless, in line with our long-standing view given the lowest orderbook on record and strong demand growth,” Joakim Hannisdahl said in a research note on 8 March. Cleaves boosted its bulker value estimates on 15 February after a string of S&P deals were reported at higher levels.
Hannisdahl said rising period rates could support asset prices moving 20% to 53% higher than mid-February levels. “Given the continued strength of one-year TCs [time-charter rates], it thus comes as no surprise that the bid/ask spread for S&Ps has once again narrowed with bids approaching asks,” he wrote. “Thus, we have so far in March seen S&P activity increase at a higher level versus February transactions.” Cleaves estimates a price of $34.5m for a five-year-old capesize and $51m for a newbuilding, excluding scrubbers.
Fast-rising spot rates have stimulated increased interest in the period market, particularly in the panamax and post-panamax markets, which is now extending to capesizes too. Navios Maritime Partners’ 179,100-dwt Navios Luz (built 2010) was reported fixed on a 10 to 14-month time charter to Olam on 17 March. The deal was secured at an index-linked rate of 101% of the capesize 5TC assessment, equivalent to $19,948 per day as of Monday.