Market outlook for the capesize sector from 2010 to 2015

• Main Author: Lim, Yuan Zheng.
• Other Authors: School of Civil and Environmental Engineering
• Format: Final Year Project
• Language: English
• Published: 2011
• Subjects: DRNTU::Engineering::Maritime studies
• Online Access: http://hdl.handle.net/10356/44346
• Institution: Nanyang Technological University

This research aims to provide a market outlook for the Capesize market from the period of 2010 and 2015. This would be performed through a fundamental analysis on the demand and supply drivers. This research study comprised of 3 volumes: Volume 1 focused on discussion of the Capesize demand drivers, Volume 2 on the Capsize supply drivers and Volume 3 on the financial evaluation of the profitability of investing in the Capesize market. This paper is Volume 3of the research and it seeks to investigate the profitability of investment into the Capesize market using the forecasted market outlook as concluded from the earlier volumes. The methodology involved the use of Net Present Value (NPV) to compare the profitability of the different options to invest in the Capesize market. The result of the investigation revealed that an investor would suffer losses from 2010 to 2015 if he chooses to acquire a newbuild or secondhand vessel and operate it in the spot market. Similarly, losses would also likely to materialize if he hires vessel on period charter and operate in the spot market. Only through embarking on the strategy of asset play can an investor generate profit from his investment within the five years. Recommendations to improve future researches will be to consider the individual risk appetite and investment horizon of an investor before advising on the profitability of investing in the Capesize market.