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A once in a decade opportunity to invest in shipping has opened up for investors, RS Platou believes.
Shrinking fleet growth coupled with historically attractive asset prices has opened the door, the company says in its latest quarterly report.
RS Platou Markets says the dynamics of today occur possibly only once every 10 years and permit investing ahead of a cyclical upturn in the core shipping markets.
It said: “Over recent months, hope of a recovery has manifested through actual recovery in both asset value and freight rates.
“Dry-bulk second hand ship values are up about 20% year to date and newbuilding prices are in general up 10-15%,” the report read.
Given berths at most quality shipyards are filled well into 2016, newbuilding deliveries will remain lower than in recent years and the recovery thesis will be preserved for the next two to three years, Platou Markets says.
Wet past the worst
Bjorn Bodding of RS Platou Economic Research believes the crude market hit the bottom in the first half of 2013, with a slow recovery now beginning.
Platou counts just nine VLCCs and 11 suezmaxes for delivery in 2015, which marks the lowest figures since 1997.
“Strong demand for bulk carriers, containers, product carriers and offshore have booked up available capacity at quality yards until well into 2016,” Platou Markets’ report said.
“This means crude tanker fleet growth should come to a near complete halt in 2015 after having averaged 6% per annum since 2009.”
If the global economy and oil demand recover at the same time, VLCC rates in 2015 could rebound to $30,000 daily, the report said.
Dry run over
A sharp climb in bulker rates over the past months should put an end to discussions of structural oversupply in the market, Platou Markets says.
It admits capesize rates will come down in the short term after China replenishes stock piles of iron ore.
“However, with fleet growth of around 4% and an assumed demand growth of 6-7% per year, dry-bulk fundamentals are in general expected to improve over the next 12-18 months and thereby result in higher average earnings for all vessel sizes compared with average earnings this year,” the report said.
Platou’s report comes with around $1bn worth of fresh issues live in Oslo and the US capital markets live with follow-on offers and the IPO of Dynagas Partners.