The Capesize sale and purchase (S&P) market has seen a significant decline, with activities dropping approximately 48% year-on-year. So far this year, only 46 transactions have been reported, a stark contrast to the 89 sales during the same period in the previous year. This reduction in market activity highlights a vital trend: the average age of sold vessels has increased from 12 years last year to 16 years this year, indicating a slowdown in fleet renewal efforts.
As the Capesize fleet continues to age, demolition levels remain unusually low, with only two Capesize vessels scrapped this year. This minimal scrapping occurs despite the need for fleet modernization. Should Time Charter (TC) rates continue to decline, there may be room for an increase in vessel scrapping.
Currently, asset values are facing downward pressure; since the beginning of the second quarter of 2025, values for Capesize vessels have fallen across almost all age categories, with 20-year-old tonnage experiencing the most significant drop of approximately 3.62%. The current one-year TC rates for Capesize vessels sit just below $19,000 per day, which represents a 22% decrease year-on-year. Although there has been a slight increase in demand due to rerouting away from the Red Sea, overall market sentiment remains cautious amid economic uncertainties and tariff concerns.
Compounding this issue is a continuing decrease in new orders for Capesize vessels, which have fallen by about 33% year-on-year. Only 18 vessels have been ordered in 2025, with around 61% of these being constructed at Chinese shipyards. This decline in newbuilding activity, along with weak S&P and minimal scrapping, indicates a tightening in future supply.
In conclusion, the historical orderbook serves as a crucial indicator of future rate trends. Despite significant reductions in new orders, rates have not yet improved due to lackluster demand and limited vessel retirements. However, as the impact of reduced ordering and low fleet renewal evolves, supply-side pressures are likely to intensify, emphasizing the importance of analyzing historical orderbook trends in forecasting earnings and asset values.