Market Insight | Week 36

The past week closed with the Kamsarmax sector once again emerging as the most underperforming segment in terms of average time-charter equivalent (TCE) with the sector experiencing a further decline of 1.7%, settling at $11,645 per day on Friday 6th September. Notably, this marks the 13th consecutive business day, dating back to August 19, in which Kamsarmax average earnings (P5TC) have fallen below those of Handysize vessels (HS7TC), resulting in an average premium for Handysize ships of $1,198 per day over this period.

What stands out even more prominently is the widening disparity between the Ultramax (S11TC) and Kamsarmax (P5TC) earnings, with the current differential standing at $4,192 per day. The Ultramax market has consistently maintained higher earnings than Kamsarmax since June 20, further solidifying its dominance. Throughout 2024, we have observed the Ultramax S11TC outperforming the Kamsarmax P5TC, with the year-to-date average premium reaching $903 per day.

This trend is clearly reflected in the sale and purchase market, where the price of a 5-year-old Japanese Kamsarmax vessel now exceeds that of a similar-age Ultramax vessel by $1.5 to $1.75 million. This represents a significant reduction from the beginning of the year, when the price differential hovered around $3.5 million. In the case of vessels constructed in Chinese shipyards, the premium has compressed even further, narrowing close to $1.0 million.

To provide historical context, the average premium over the past five years for a 5-year-old Kamsarmax vessel compared to a 5-year-old Ultramax vessel has been approximately $2.7 million. Both vessel types reached their highest market prices last month before witnessing some softening over the past two weeks.

Given the current market dynamics, which indicate a sustained trend of Ultramax earnings outperforming their Kamsarmax counterparts, the secondhand market is expected to adjust accordingly. The price differential between these two vessel types is likely to remain at relatively low levels in the near future.