Why Cleaves is bullish on bulkers

Written by Nick Blenkey
chart of bulker earnings vs. values

Baltic Dry Index at 10 year high vs value of a 5 year old Capesize [Source: Cleaves Securities]

The latest weekly report from Oslo-headquartered Cleaves Securities makes some optimistic predictions for the dry bulk sector. Noting that the Baltic Dry Index reached 3,053 points on Friday, the highest level since June 2010, Cleaves says the new 10-year high comes on the back of strong demand for dry bulk commodities, especially from China.

A Capesize is now earning $41k/d (highest since September 2013), a Panamax reached $28k/d in March (highest since June 2010) and a Supramax is now earning $24k/d (highest since June 2010).

“Dry bulk asset prices have surged recently, and rightfully so,” says Cleaves, which says it now values a five year old Capesize at $36 million, up 26% since fo 2020, but still a massive 40% below the $60 million the last time the BDI showed similar strength in June 2010. “Similarly, for a five year old Panamax our current $23.5 million valuation compares with $41.5 million in June 2010 and a Supramax now at $20.8 million vs $33 million in 2010.”

Cleaves says that with the lowest orderbook vs fleet on record at 5.6%, dry bulk fleet growth will most likely be unprecedentedly low over the next two years.


“Against a very strong demand side, we expect that recent highs in dry bulk earnings is just the initial phase of a prolonged expansionary dry bulk cycle that could potentially be propelled into super-cycle territory, aided by new comprehensive regulations from 2023.”

The report also gives some timely insights into the tanker markets.

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