A report by Panos Makrinos of Piraeus-based Intermodal says that shipowners are looking at the possibility that the market may be close to bottoming out, and that it may soon be time to purchase ships. It warns though, that it may be better to wait for a while, since asset prices may drop further.
Catching the bottom is difficult in any market, and the stakes become abnormally high with high value assets like ships. As the report says, shipping is all about timing, and many shipowners would like to ‘sell high and buy low.’ However, this is extremely difficult, with asset prices continuing to plunge. “Next week, a vessel with similar specifications to the one purchased may have lost an additional few thousand dollars off its value,” Intermodal says.
“Despite the fact that most market pundits continually voice that second-hand and newbuilding prices have the potential to fall by as much as 20-30% in the next few months, there are always "Black Swan" events which catch everyone by surprise,” Makrinos says.
In the analysis, Intermodal's notes that a further drop in asset prices may be a good time for a serious prospective buyer, who can thus limit the downside to his investment. "According to current market anticipation, the right time to buy a second-hand vessel or a newbuilding will be some point in the first half of 2013”.
Makrinos feels that stronger demolition activity may be needed to ‘counterbalance’ all the new deliveries seen this year, and that buyers should factor in the fact that a new vessel is always preferred over an older one by charterers.