Greek Shipowners Play Russian Roulette With Dry Bulk Market

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Image (c) Shutterstock/Nuno Andre

(Bloomberg) — Greek ship owners, who control more vessels than those of any other country, are buying the most iron-ore carriers since before the global recession, seizing on plunging prices in anticipation of a market recovery.

Shipping companies in the Mediterranean country ordered 12 Capesizes able to hold 160,000 metric tons of cargo each last quarter, the most since the first three months of 2008, according to data from Golden Destiny SA, a Piraeus-based shipbroker. That’s almost twice as many as in all of last year, figures show.

Record orders in 2007 and 2008, when rates were more than 50 times higher than today, led to a glut that has persisted ever since. Prices rose in March for the first time since June 2010, according to Clarkson Plc, the world’s largest shipbroker. A new Capesize costs $47 million, up 2.2 percent from an almost- 10-year low and 53 percent below the 2008 peak, data show.

“Greek owners seem to follow the hungry appetite of listed foreign investors for Capesize vessels and exploiting the excessive low newbuilding costs for the expansion of their fleet, putting aside the threat of oversupply,” Maria Bertzeletou, an analyst at Golden Destiny, said by e-mail today. “There are hopes that upon delivery of their newbuildings, the imbalance between supply and demand would have been narrowed.”

Maintenance Costs

Daily rates for Capesizes fell 9.9 percent since the start of the year to $4,384, according to the Baltic Exchange, the London-based publisher of shipping costs. The vessels have earned less than the $7,758 they need to cover operating costs such as crew and maintenance for 66 out of 75 days so far this year, based on estimates from Moore Stephens LLP, a London-based consultant to the industry. Rates peaked at $234,000 in June 2008, according to the exchange.

Capesizes with record capacity of 87.3 million deadweight tons were ordered in 2007, and another 51.7 million tons followed in 2008, Clarkson data show. The fleet more than doubled since then and will expand another 6.5 percent this year, the shipbroker estimates. Outstanding orders at shipyards equal 15 percent of existing capacity, down from almost 100 percent at the end of 2008, according to IHS Fairplay, a Redhill, England-based research company.

Greeks own 16 percent of the global merchant fleet, according to the United Nations.

РIsaac Arnsdorf, Copyright 2013 Bloomberg.