Capesize S&P deals poised to hit record levels in 2024

Capitalising on market momentum

The figures come as a something of a surprise, considering that Capesize asset values remain strong, with no significant corrections, unlike smaller-sized bulk carriers. Data from Allied Shipbroking reveals that Capesize bulk carriers aged five to ten years saw a 1% increase in value over the past month. However, values for older vessels (around 15 years old) dropped by 2% during the same period.

According to shipbroking sources, one key factor driving the increased activity is the cost advantage of buying a second-hand Capesize vessel, particularly middle-aged — the typical type sold this year — as compared to a newbuild. Newbuild orders have become rare in recent years due to high costs and lengthy delivery times.

Additionally, despite a recent correction, charter rates remain firm, with positive supply and demand fundamentals. As of October 7, the Baltic Capesize Index reported average daily spot rates of US$26,213.

"A number of Capesize bulkers have hit the second-hand market recently, as some owners are looking to cash in on the segment’s current liveliness," Doric Shipbrokers noted in its latest weekly report.

Chinese owners lead the surge

Chinese shipowners have been the driving force behind this surge in activity, outpacing their main competitors, the Greeks.

Weberseas reports that nearly 70% of the 100 Capesize bulk carriers sold in 2024 were bought by Chinese interests, while around 25% were purchased by Greek shipowners. The remaining deals were spread among shipping companies from Korea, Denmark, and the UK.

China is not only dominating the second-hand bulk carrier market but is also highly active in the newbuild market, especially in the sub-Capesize segments.

The Chinese "bulls" appear to have re-entered the dry bulk market, bolstered by recent government stimulus measures that could boost exports and charter rates. "There has been a bullish stock-market response to the recently announced stimulus of the Chinese economy," Allied Shipbroking noted last week. "While shipping has generally been skeptical of Chinese government efforts to support the economy, this time could be different” analysts added.

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