Sale of two Chinese kamsarmaxes spotlights falling bulker

Shandong Shipping is navigating challenging waters as it considers selling two of its five kamsarmax vessels at lower-than-expected prices. The company, facing a downturn in the dry bulk market, is reportedly in negotiations to sell the Shandong Fu Ze and Shandong Fu Yuan for $23.5 million each. These transactions highlight the ongoing struggles within the shipping industry, as the vessels were initially listed for higher prices in online auctions earlier this year.

Details of the Sale

Brokers have indicated that the two sister ships, built in 2017 and 2018, are being sold to undisclosed buyers, with one brokerage suggesting that the deal may involve a bareboat hire-purchase arrangement. Although the negotiations are ongoing, sources close to SDTR Marine, the Singapore-based operator affiliated with Shandong Shipping, confirmed that the vessels remain under their management for the time being.

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The decision to sell these kamsarmaxes is not surprising, as Shandong Shipping has been looking to offload its fleet. The Shandong Fu Yuan was the first of the five vessels to be auctioned on May 22, with an initial asking price of $26.43 million. Following that, the Shandong Fu Ren was scheduled for auction five days later, starting at $26.64 million, while the Shandong Fu Hui was auctioned on May 29, beginning at $26.18 million. The Shandong Fu Ze went up for auction on June 6, with a starting price of $25.97 million, and the Shandong Fu En followed on June 10, starting at $25.89 million.

Despite the growing trend of online auctions for vessel sales among Chinese owners, none of Shandong Shipping’s five kamsarmaxes received any bids during the auction process, according to data from the GSE auction platform. Market analysts believe that the reserve prices set by the company may have been too high, deterring potential buyers.

Market Conditions and Future Implications

As the dry bulk market continues to experience a downturn, the value of the Shandong Fu Yuan has dropped significantly. VesselsValue estimated its market value at $26 million when it was listed for auction, but a subsequent decline in market conditions has reduced its worth to approximately $24.7 million. The Shandong Fu Ze and Shandong Fu Yuan are believed to be sold through a tender process, as Shandong Shipping, being a state-owned entity, is restricted from engaging in private sales.

Currently, the GSE auction website does not list any upcoming online auctions for the remaining bulkers, indicating a potential shift in strategy for Shandong Shipping. The company’s efforts to maintain a modern fleet typically involve selling vessels when they reach six or seven years of age. As the shipping industry grapples with these economic challenges, Shandong Shipping’s decisions will be closely watched as they navigate the complexities of the market.