FEATURE-Dry bulk haulers wary of new ships at record prices

By Nick Carey and Edgar Ang

NEW YORK, March 30 (Reuters) - Stamatis Molaris says he'd happily buy new dry bulk ships since commodities companies are fighting to get their products on these fleets. Unfortunately, though, prices of the ships themselves have also skyrocketed.

"The hardest asset to buy right now is a bulk carrier," said Molaris, the CEO of dry bulk shipping company Quintana Maritime Ltd. QMAR.O. "Dry bulk rates are so strong right now that the prices for some (vessel) asset classes are double what they were a year ago."

Business is great for dry bulk shippers right now, as the rates they can charge customers to haul commodities like coal, iron ore, steel, cement or grain have never been higher.

The same, however, is also true for new ship prices.

"Demand has been so high that prices for some dry bulk ships have risen 50 percent in the past three to four months," said analyst Omar Nokta of investment bank Dahlman Rose.

Driving the need for these vessels is the hunger of fast-growing nations such China and India for vast quantities of the raw materials they haul.

Port congestion in Australia and Brazil has also played a role in keeping daily freight rates high, as it has taken ships out of circulation.

All this has tightened the spot market, which brings together available ships and customers looking to haul bulk goods by sea, with daily rates fluctuating depending on supply and demand.

In turn, the ticket price for new vessels at shipyards has jumped.

"Dry bulk rates have gone higher, but prices for vessels have gone much higher," said Aristides Pittas, CEO of Euroseas Ltd. (ESEA.O), whose fleet includes dry bulk ships.

The price tag on a Capesize ship, which with a carrying capacity of about 180,000 tons is by far the largest class of bulk carriers, recently reached a record-breaking $110 million.

To some dry bulk shipping companies, prices are just too high -- especially if dry bulk freight rates start to fall.

Analysts, however, say that with the right strategy -- in this case fixed, long-term charters -- shippers can still get good returns on new vessels even at today's high prices.

"If your timing is right and you know your customers, then there are good returns to be made from dry bulk ships," said Dahlman Rose's Nokta.

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