VV: Bulker Values Continue to Slide in 2019

One month into the new financial year VesselsValue has, together with Oslo-based shipping consultancy firm ViaMar, released forecasted asset values until 2022 for four major ship types, bulker, tanker, container and LPG.

Illustration. Source: Pixabay under CC0 Creative Commons license

It has been a tumultuous six months in the dry bulk sector, with China imposing quotas limiting coal imports during November and December 2018, the US China trade war providing uncertainty in the markets as well as the catastrophe of Vale’s dam collapse on January 25, 2019. These iron ore and coal developments have put downward pressure on dry bulk freight rates after a seasonal soft fourth quarter, according to VesselsValue.

Capesize freight rates have tumbled and dragged freight rates for all dry bulk segments with it. However, during the past weeks, the other segments have recovered, while rates for Capesize vessels remain depressed.

In response, values marginally weakened during the fourth quarter and continued to slide during the first quarter this year.

On the supply side, scrapping has increased substantially with just over 3 million dwt removed from the water during the first quarter of 2019, and ordering has remained very low.


The fourth quarter of 2018 returned tighter markets across the tanker segments. Asia’s demand for oil continued at a strong pace through a combination of consumer demand, strategic storage requirements and planned start up of new refineries. Continuously evolving trading patterns caused by OPEC production cuts and Iran sanctions, as well as the ongoing decline in Venezuelan production and exports, have further boosted crude and product flows out of the US Gulf.

Values strengthened during the fourth quarter and into the first quarter this year, though product tanker vessels have lagged behind the larger crude carriers. An asset value upside is still present during the projection period for both newbuild and second hand tanker vessels.

On the supply side, scrapping activity has come down from its second quarter 2018 high, but it was still the busiest fourth quarter since 2013. Ordering activity came down in the fourth quarter at 3  million dwt compared to 7 million dwt in the third.


Container trade volumes on the main trade lanes, Asia to North America and Asia to Europe, have shown diverging trends this winter. The main reason for the stronger growth rates to North America has been the ongoing trade war, where shippers were fast forwarding goods ahead of expected US tariff increases scheduled for March 1, 2019. However, while negotiations are progressing, the US administration has delayed additional tariffs.

Six to 12 month time charter rates reached a peak during the summer months last year before starting a long decline through the third and fourth quarters.

Fourth quarter scrapping activity increased, and removals of 50-60,000 TEU per quarter are expected in 2019.

The second quarter of 2018 marked the recent peak in Container vessel values, which have since been in decline.


After a firm fourth quarter of 2018, earnings for the VLGCs declined in the first quarter of 2019. Cold weather in the US contributed to higher domestic consumption and inventory levels, resulting in reduced export volumes.

Earnings for VLGCs are expected to improve over the next few years, as LPG trade demand is likely to outpace fleet growth. Growth in US exports of LPG, ethylene and propylene is expected to be a main contributor to the growth in trade, unless hindered by geopolitical tensions.

The outlook for continued improved earnings is likely to moderately stimulate values for the small sized vessels of pressurised and semi refrigerated types.

The improved earnings for VLGCs will also be reflected by a moderate appreciation in values for these ships, VesselsValue concluded.