Recently, a transaction in the dry bulk secondhand market has drawn high attention to Ultramax asset prices. It is reported that the Dominator, a 64,000 dwt Ultramax bulk carrier built in 2021 at Shin Kasado in Japan, was reportedly sold for approximately $38 million.

However, its sister vessel, the CMB Bruegel, was sold for $32.5 million in October 2025. In just about 7 months, the price of a similar type, Japanese-built, modern Ultramax has increased by roughly $5.5 million, a rise of nearly 17%. Additionally, in March of this year, the Ability, another vessel of the same age and size built by Shin Kurushima, was also sold for about $37 million, further confirming that modern Japanese-built Ultramax asset prices are rapidly rising.

Analyst Liu Qingzhi from BRS pointed out in the latest weekly report that, according to Baltic Exchange valuation data, since February this year, secondhand prices for 5-year-old Ultramax vessels have surpassed the prices of newbuildings of the same type. As of the time of the report's writing, this premium had expanded to about 6% and continues to grow.

Second-hand Ships are More Expensive Than Newbuildings

BRS data shows that in the first four months of this year, the price of a 5-year-old Ultramax increased by 13.2%, reaching approximately $36.2 million; the price of a 10-year-old Ultramax increased by 15.8%, reaching approximately $28.6 million. Meanwhile, prices for Ultramax vessels aged 15 years and older remained firm, rising 9% in the first four months of this year.

Even more noteworthy, the price gap between 5-year-old and 10-year-old Ultramax vessels has narrowed from 26% in 2025 to 20%. This indicates that the price increase is not limited to a few of the newest, highest-quality vessels, but rather the entire secondhand Ultramax asset curve is being pushed higher.

Reasons for the Price Inversion Phenomenon

Faced with the inversion phenomenon where secondhand prices exceed newbuilding prices, Liu Qingzhi points out that buyers are currently willing to pay a premium for secondhand vessels that can be delivered quickly and immediately placed into the spot and time charter markets.

Regarding the reasons, she believes the following points are key:

First, shipyard and engine supply cannot keep pace with market speed.

Liu Qingzhi analyzes in the report that although new Ultramax buildings still have a longer economic life and higher technical specifications, the practical problem is that newbuilding delivery lead times have significantly lengthened. Berth slots at leading Chinese shipyards are extremely tight, making it difficult to secure delivery slots before 2029. Concurrently, shipyards are increasingly favoring higher value-added orders like tankers and gas carriers.

More importantly, the supply of main engines and generators has become a relatively hidden bottleneck. According to market sources cited in the report, main engine production capacity for the second half of 2028 is already largely booked; if buyers wish to secure engine supply for vessels delivering in 2029, they typically need to arrange it at least 18 months in advance.

This means that ordering a new Ultramax today, even with a nominal price lower than a 5-year-old secondhand vessel, makes it difficult to seize market opportunities in 2026 and 2027. New vessels delivered in the future cannot solve today's tonnage demand; whereas a modern secondhand vessel that can be delivered immediately can enter the market and generate cash flow right away.

Second, freight rates and the time charter market are supporting asset prices from the reverse side.

The BRS report indicates that the geared bulker market has remained strong recently, with the current uptrend supported by simultaneous strength in both the spot and time charter markets. As freight indices continue to rise, fuel oil prices stabilize following previous volatility, trade activity marginally recovers, and cargo volumes increase, overall market activity has markedly improved.

Looking at the time charter market, daily earnings for Ultramax vessels have risen rapidly, prompting more owners to lock in time charter business at higher levels. The report shows that recent fixture levels for 5-7 month time charters for Ultramax vessels have reached about $21,000 per day; simultaneously, fixtures related to the Indonesia to West Coast of India route are reported around $30,000 per day.

This illustrates that secondhand buyers willing to chase higher prices are not simply betting on continued asset price appreciation, but rather recognize real-time cash flow. A prompt-delivery 5-year-old Ultramax represents an asset that can immediately enter the spot or time charter market and lock in earnings opportunities.

Third, the flexibility of geared Ultramax vessels is being repriced.

However, Liu Qingzhi also notes in the report that while a strong time charter market is a surface-level explanation for the price inversion, deeper support comes from the broader commercial flexibility of geared bulk carriers.

Compared to larger vessels, the demand base for Ultramax vessels is notably diversified. These geared bulkers do not highly depend on a single cargo type nor solely on a few major deep-water ports. They can switch between various cargoes like coal, grains, steel products, cement clinker, nickel ore, manganese ore, salt, wood chips, and petroleum coke, and can also access more emerging market ports with relatively limited port conditions. This flexibility is becoming a crucial foundation for the market to assign higher valuations to Ultramax vessels.

BRS cites AXSMarine data showing that in the first four months of this year, among the top ten cargo types for Ultramax, most major categories saw growth, except for thermal coal and petroleum coke, which declined 11% and 16% year-on-year respectively. Wheat grew 18%, clinker 20%, corn 76%, manganese ore 20%, soybeans 42%, salt 10%, and wood chips 8%. Therefore, for owners, this cargo-switching ability means stronger counter-cyclical capacity; for charterers, Ultramax offers more flexible and easily deployable tonnage options.

Looking at specific cargo flows: cement and clinker cargoes from South China to Bangladesh have increased; nickel ore trade from Vietnam is within its seasonal export window from April to November; steel product exports remain healthy, supporting long-haul routes like China-Japan-Korea to the Mediterranean and China to West Africa; Indonesian coal exports are gradually recovering following the release of new quotas in April, also driving a rapid strengthening of coal trade from Indonesia to India.

Consequently, the current strength in the Ultramax market results from the concurrent recovery across multiple cargoes, regions, and trading directions. In a market with fragmented but overall active cargo demand, the scheduling flexibility of the Ultramax makes it one of the more benefited vessel types.

Fourth, effective supply on the supply side is further compressed.

Beyond demand and earnings, changes on the supply side are also pushing up secondhand Ultramax values. The BRS report notes that due to the Iran conflict, fuel supply shortages have forced some vessels to wait longer for bunkering, while others have had to divert to alternative bunkering ports. This has caused localized additional congestion, with Ultramax congestion levels notably higher than the five-year average.

Therefore, when cargo activity recovers and available vessels are further squeezed by congestion and waiting times, shipowners' bargaining power naturally strengthens.

Future Risk: Inversion May Not Persist Long-Term

However, Liu Qingzhi also cautions in the report that the current Ultramax market is not without risks.

The report notes that the average age of the current Ultramax fleet is approximately 13.5 years, still within the prime operating period of its lifecycle. However, the order book for this vessel type remains sizable, equivalent to about 25% of the existing Ultramax fleet. Furthermore, Ultramax deliveries in 2026 are expected to reach their highest level in nearly 11 years.

This implies that medium-term supply pressure has not disappeared. However, new vessels delivered in the future cannot replace the secondhand vessels operating in the market today that can generate immediate cash flow. Therefore, at this stage, the pressure from new supply is more of a medium-term variable rather than an immediate short-term factor suppressing the market.

Finally, the BRS report concludes that as long as time charter rates remain high and regional cargo demand continues to absorb available tonnage, modern secondhand Ultramax prices may continue to trade above newbuilding prices.

However, this premium heavily depends on the visibility of near-term earnings. If Persian Gulf risks normalize, cargo momentum weakens, or time charter rates correct, the price gap between 5-year-old Ultramax vessels and newbuildings could narrow rapidly.

Therefore, the current price inversion is not essentially about newbuildings losing value, but rather illustrates that the market is valuing the "usable now, profitable now" modern secondhand vessels at a higher level.

In one sentence: New ships win on lifecycle value, while second-hand ships win on timing opportunities.

Author:  Xinde Maritime News (https://mp.weixin.qq.com/s/QMDusN0k_5sD_2ED4EZl7g)