Sales of second-hand ships reached a 10-year high on cautious optimism that one of the shipping industry's worst ever downturns is nearing an end.
An increase in cargo demand has helped revive confidence this year in a sector that is starting to emerge from a 10-year slump fueled by owners splurging on thousands of new ships.
"Second-hand purchases go up when optimism is thriving. 2017 has certainly been a year that has lent optimism a hand," said Peter Sand, chief analyst at shipping industry group Bimco.
Some 1,630 ships worth $19 billion were sold in the year up to Dec. 15, the highest since 2007 when sales hit a record 1,894, according to shipping services firm Clarkson. That compared with 1,276 ships sold in 2016 valued at $12.3 billion.
"The year is indeed ending with plenty of fizz," said Tim Huxley, managing director of Hong Kong's Mandarin Shipping.
Seaborne cargo demand is set to grow 4 percent to 11.6 billion tonnes this year from 2016, Clarkson said. Within that, dry-cargo volumes are set to grow 4 percent against fleet growth of 2.9 percent, Clarkson said.
In 2018, the World Trade Organisation sees trade growth of up to 4 percent, which should boost cargo demand further.
"Confidence levels were significantly up in Asia, their highest level since May 2014. Confidence was also up in Europe," according to a survey by accountancy firm Moore Stephens, published this week.
But Sand cautions that all is not well yet.
"The ongoing recovery in dry-cargo shipping is still in a fragile state. The return to permanent profitable freight rates is still way off," he said.
The oil tanker market also remains "fragile" while container shipping "is still very challenging", Sand said.
Shippers are also taking advantage of low prices.
Dry-bulk ships of 80,000 deadweight tonnes (DWT) are being offered on online trading platform Alibaba for $13-$14 million.
"Second-hand ships are still relatively cheap because traditional ship finance is mostly absent from the equation thus putting a brake on inflating values," said Martin Rowe, managing director of Clarksons Platou Asia in Hong Kong.
The average price of a five-year old 180,000 DWT ship used to haul iron ore or coal is $33 million. That's higher than the $24 million low of 2016, but still way below the record of almost $160 million reached in late 2007.
Despite improving second-hand sales, the market for new ships remains weak. "The big issue is finance. It's tougher than ever to raise bank debt," Huxley said.
The volume of global ship finance loans fell to $50.3 billion in 189 transactions last year, compared with around $120 billion worth of loans for about 550 deals at the 2007 peak, according to advisory firm Dealogic.