Second-hand vessel sales for containerships has nosedived in the midst of the current Covid-19 crisis with just 46 ships having changed hands from 1 January to 30 April, compared to 125 in the first four months of last year, according to Athens-based broker Allied Shipping.
London-based broker Braemar says that “charter rates continue to be squeezed by the lack of fixing opportunities from liner companies”, and so it is no surprise that asset values are starting to soften.
Both the second-hand and charter markets are distinctly slow and that is a reaction to the lack of cargo available. Braemar pointed to the one deal which was thought to have been completed.
“After protracted discussions, a number of ships are now ostensibly committed, notably a 3,300TEU insolvent ship was thought to have been sold to Europe-based buyers, with dry dock freshly passed, at a circa 25% discount to the pricing seen in the previous round of offers just two months ago,” according to Braemar.
Nothing in the market place suggests that the cargo levels will see a boost any time soon, with lockdowns in Europe and the US only now being lifted, there is likely to be a wait and see period for consumers.
That is reflected in IHS Markit’s Manufacturing Purchasing Managers’ Index (PMI) for the euro zone which slumped to its lowest levels since the measure was introduced in 1997, at 33.4 from March’s 44.5.
Government stimulus within the Eurozone has failed to light the consumer candle and a pessimistic, or cautious, outlook appears to be the safest option.
China’s Caixin China General Manufacturing Purchasing Managers’ Index (PMI), which gives an independent snapshot of the country’s manufacturing sector, also fell to 49.4 in April from 50.1 the previous month. This fall in export orders seriously hindered China’s economic recovery in April, although businesses were gradually getting back to work, said Braemar.
In the US the PMI fell 7.6% to 41.5 points in April, its lowest since the financial crash in 2009.
Like elsewhere, the demolition sector remains extremely challenging, particularly on the Indian subcontinent where breakers yards remain closed. “The only real option is to leave a sellers’ crew on board until such time that the recycling yards reopen.”
However, Braemar adds that CMA CGM has sold the 4,800TEU APL China (built 1995 Howaldtswerke) for green recycling in Turkey at an undisclosed price.
