Opportunities in Dry Bulk Prompt Norden to Expand Newbuilding Order
As a possible sign of recovery in the dry bulk segment, Norden announced that it is adding two vessels to its recently placed order for four 61,000 DWT dry cargo Ultramax ships. Norden also announced the acquisition of a secondhand 2014-built Supramax bulk carrier that it expects will join its fleet next month.
These moves come as the dry bulk market has been struggling to overcome a prolonged downturn. Recently dry bulk shippers have been reporting renewed interest and improving rates. However, in its recent analysis of the 2020 shipbuilding order book, BIMCO reported the strongest declines in new orders coming for dry bulk vessels. At just over 63 million DWT, BIMCO reported that orders for dry bulk vessels had fallen by a third in 2020 and were at their lowest point since April 2004.
In announcing the two additional construction orders, Norden CEO Jan Rindbo noted that the company sees attractive dry cargo asset opportunities after a long period of declining values. “These deals represent great tactical asset opportunities for Norden, which we are here acting on,” said Rindbo. “Tonnage prices are about 10-20 percent lower today than 2018/2019 levels, where Norden sold 10 vessels”.
Six weeks ago, Norden announced that it had entered into a newbuilding contract with Nantong Cosco Khi Ship Engineering Co. for four Ultramax dry cargo ships that it expected to deliver during 2022. In today’s announcement, the company noted that it has already sold two of the vessels on sale and leaseback terms, subject to completion of terms. They said they were “acting on attractive charter rates while securing good optionality from period and purchase options” and freeing up liquidity that was being used for the order of the two additional vessels.
Norden expects that the new vessels will join its core fleet of owned and long-term chartered tanker and dry cargo vessels in the company’s asset management business unit. In 2019, Norden reported that it had a total of 48 vessels owned and long-term chartered in the dry bulk segment.