Erik Nikolai Stavseth of Arctic Securities said asset prices in the dry-bulk segment are tarting to slide as a result of lacklustre freight rates.
A leading equity analyst Erik Nikolai Stavseth of Arctic Securities said asset values continued to slide in the final leg of 2014 because a seasonal upturn in earnings failed to materialise.
The forecaster, who is based in Oslo, noted five-year-old capes are currently commanding around $41.2m, which is approximately 18% lower than levels seen back in May.
In the same period, panamaxes of the same vintage have declined 24% to $20.8m,” Stavseth continued, citing calculations performed by the Baltic Exchange.
“The current spot market offers no support for vessel values, as spot freight rates have dropped from to $26,100 per day to $14,500 per day over the last month.”
The analyst argued that the dry-bulk market will “remain challenging for owners” in the near-term and said he doesn’t believe a material rebound will take shape before year-end.
Earlier this month forecasters at Danish Ship Finance acknowledged that asset values have plummeted from the highs seen in early 2014 but noted they have improved year-on-year.
“Ships continue to trade at high premiums to the earnings they are generating,” they continued. “Between 2001 and 2008, a five-year-old cape had at an average price/earnings ratio of 5. This means paying $5.00 for a $1.00 dollar cash flow.
“Since 2009, this ratio has risen to 11. Such an increase emphasizes that the market maintains high expectations for future earnings but that a price reduction could occur if these expectations are not realized."
Going forward DSF’s analysts argued asset values will fall even further "sooner rather than later" and pointed out that China’s ongoing transition towards a consumption-driven economy has cast a dark cloud the dry-bulk market in general.
"When we look more closely at the actual amount of tonnage entering the fleet and the share of the fleet below the age of five (57%), the fleet growth becomes overwhelming and we find it hard to see an end to the oversupply,” they added.