Containers and LPG tankers are expected to be the market winners for the coming year, although the overall outlook for shipping asset prices remains bright, VesselsValue said in its latest forecast on shipping market for Q1 2019 to Q1 2020, presenting some of the reasons why it believes some ships are more likely to appreciate.
Container ships
- Container ships have dominated the buying opportunities over the past several quarters, and many have taken advantage of this trend to make carefully informed purchases in this space.
10 year old Panamax container vessels represent the strongest buying opportunity in the current outlook,
…notes Court Smith from VesselsValue.
- Even though recycling activity has slowed, the global container market balance has tightened in 2018.
- Declining speed has been an important factor this year and slower speeds are expected to be the new normal.
- Container secondhand values increased during the first half of the year, but have since shown a softer development for most sizes.
- Newbuilding prices have been increasing year to date for the feeder vessels and the recent ordering activity is slowly improving shipyards’ forward books.
- Despite the increase in new orders, the global orderbook for all shipping segments is still at low levels as deliveries from yards have outpaced new orders being placed.
LPG
- Third quarter earnings for VLGCs and Midsize tonnage have been improving on the base of higher LPG volumes out of the US and a more active ammonia market.
- Higher LPG imports to Europe and a strong Indian market have supported Medium Gas Carriers (MGCs) and Handysizes too.
- The pressurized market remains very strong. Petrochemical trades are active to Asia and supported by higher US trade, but import to Europe is down, as economic activity has slowed.
The supply and demand balance for VLGCs has been improving, and this will be reflected in higher numbers for vessels.
- Older units are priced more competitively, with an expected upside of about 30% on a 20 year old unit by the start of 2020.
- MGCs also represent a strong buying opportunity.
MGCs of 35,000 cubic meters are also an attractive option. A 15 year old vessel could see a boost of almost 50% over the next year.
