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Box ship sales slowing, timecharter rates still firming    16/05/2018
The secondhand market for container vessels is losing steam following a brisk 12-month period, with both the number of sales candidates and of buyers thinning out.

MPC Container Ships is reportedly close to buying E.R Sydney.

MPC Container Ships is reportedly close to buying ER Sydney. Credit: Dietmar Hasenpusch

Activity in terms of reported transactions decreased over the past two to four weeks, with prices levelling off or even falling back a bit, according to shipbrokers. There are not that many parties lining up for inspections of vessels any more in “the current pricing environment”, noted Hamburg’s Ernst Russ Shipbroker in its latest Maritime Overview report.

The slowdown brought the spectacular rise in vessel prices – up by about 60% year-on-year in some size and age classes – to a halt in some corners of the market. According to Ernst Russ Shipbroker, new benchmarks below last done were set in the geared 2,500 teu segment over the past weeks, with the sale of 2006-built 2,500 teu Hermes at USD10.2 million and the earlier sale of sister SITC Makassar at just under USD10 million.

Given the strength and continued firming in charter rates in this size class, such purchases could “prove very lucrative” for the buyers, though. Those who are still looking for secondhand tonnage may have an advantage now that competition has relaxed, as they can afford to spend more time on inspection to find the right vessel, Ernst Russ Shipbroker writes.

Fellow Hamburg shipbroker Toepfer Transport pointed out that key buyer groups that drove the market higher over the past year, have seen the withdrawal of players. “Buyers from China are rare these days, other opportunistic buyers have spent their funds, and liner companies are struggling with lower box rates,” it noted.

The number of ships up for sale has dropped sharply, too, illustrating that the increase in charter earnings has alleviated liquidity shortages and pressure to sell among shipping banks and shipowners. In fact, some owners may have decided to delay sales until prices increase further, although they now face the risk of price corrections.

Active buyers still out there include Oslo-listed MPC Container Ships, brokers say. The company is reported to be close to acquiring two 2005-built geared 1,100 vessels (ER Sydney and ER Hobart) at USD10-11 million en bloc. Reported sales may increase further this week following extended discussions about a few other ships, too, as one broker explained.

Generally, the container ship S&P market has gone through a very active period as investors and buyers with an operating background swamped the market in anticipation of a sustained recovery in global container shipping. According to Ernst Russ Shipbroker, S&P transactions on container vessels surged to 452 over the past 12 months, from just 298 in the previous 12-month period. Numerous ships have meanwhile been resold by buyers eager to take profits as prices kept rising.

Charter market rates are still pushing up in several sectors, with spot earnings now the highest they have been since 2015. Last week saw further rate improvements especially for 6,500–7,000 teu classic post-Panamax, Panamax, sub-Panamax, and modern eco 1,700 teu vessels.

 
 




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