27-10-2022 TMI sees potential for handysize recovery when US grains start moving, By Gary Dixon, TradeWinds
London-listed Taylor Maritime Investments (TMI) believes handysize bulker markets could be set for an improvement towards the end of this year. The Edward Buttery-led owner said the recent softening of the market was triggered mainly by port de-congestion, which released previously constrained supply and coincided with the seasonal summer holiday lull. The market has since shown signs of recovery with the Baltic Handysize Index up about 16% at quarter-end since its early September lows.
This is despite the demand-limiting factors of slowing global GDP growth, China’s construction slowdown and the ongoing conflict in Ukraine, TMI added. “Driven by GDP-oriented demand and the supply of necessity goods, we expect a potential for improvement towards the end of the year once the US Gulf grains start moving, despite broader economic headwinds,” the owner said.
Asset values decreased during the quarter, with the Clarksons benchmark for a 10-year-old 32,000-dwt bulker falling to $18m on 30 September. But this is still up 6% when compared to the same period last year, and well above the long-term historical average of $15m. “Asset values appear to be gradually improving. We remain confident there is further upside to secondhand asset values with the handysize orderbook at multi-decade lows, a tightening supply outlook and steady minor bulk demand growth,” TMI added.
The 26 TMI handysizes and a supramax were worth $447m on 30 September, down 15% over the three months. The company noted “continued healthy earnings” through the quarter despite the softer market environment. There has been a firming of rates since September. The net asset value is 5% lower since 30 June, at $1.70 per share, but up 73% since the May 2021 initial public offering (IPO). At the end of the third quarter, the fleet’s average net time charter rate was $17,670 per day, with an average duration of six months. This generated an operating profit for the period of $28m.
Two vessels were fixed on time charters of about a year at the start of the quarter, before the onset of the expected summer slowdown. Period coverage increased to 32% of the fleet as a result. This month, six ships have started new short-term time charter fixtures, taking the portion of the fleet on charters of six months or less to 58%. This creates an opportunity to capture an expected rising charter market this quarter, TMI said.
The company has covered 55% of remaining fleet days for the financial year ending 31 March 2023 at an average net time charter rate of $18,638 per day. TMI has also carried out its first biofuel trial in the period, achieving a CO2 reduction of 25.74% on a well-to-wake basis. The B30 fuel contained cooking and other waste oils.