Analysis of market characteristics for capesize bulk carriers

Iron ore and coal play a key role in the global economy and their consumption per capita is indicative of a country's standard of living. Their vast majority is transported by sea, making many countries rely on the efficiency and cost of transportation by capes. The cape market has closely followed the dry bulk market since the introduction of capes in the late 1960s. It is highly cyclical, creating big investment opportunities with potential for high and fast returns. China's recent economic expansion has impacted capes in particular as they account for the vast majority of iron ore transportation. The rapid increase in demand combined with the short-run inelasticity of supply due to capacity constraints has led to a record-high market. This combined with lack of confidence has some very interesting implications. The price gap between newer and older vessels has narrowed significantly, while a modern cape is worth about 50% more than ordering a new building. Since 1986 when a 9-year-old cape was of scrap value, the market has moved to the opposite extreme with a 13-year-old cape worth as much as a newbuilding.

Department dc:contributor.department

Massachusetts Institute of Technology. Dept. of Civil and Environmental Engineering.

Grantor dc:publisher

Massachusetts Institute of Technology

Year dc:date.issued

2007

Author dc:creator

• Hadjiyiannis, Nicholas

Advisor dc:contributor.advisor

• Henry Marcus.

• Civil and Environmental Engineering.

Statement dc:rights

• M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission.

Licence dc:rights.uri

• http://dspace.mit.edu/handle/1721.1/7582

Language dc:language.iso

eng

Handle dc:identifier.uri

http://hdl.handle.net/1721.1/38952

OAI identifier oai:identifier

oai:dspace.mit.edu:1721.1/38952