The decline in the market for secondhand ships that occurred during the fourth quarter of 1989 did not continue into 1990.

The market as a whole advanced in this year's first quarter, as measured by the value of the Shipping Intelligence Inc. index fleet. Tanker values increased at more than three times the rate of bulk carrier values. The index fleet consists of 15 vessels - nine bulk carriers and six tankers - of various sizes and ages that are representative of the world fleet. Increases and decreases in the value of the world fleets are mirrored in the index fleet.Both the bulk carrier and tanker components of the index fleet increased during the quarter ended March 31. At the end of the quarter, the value of the

bulk carrier component stood at $113.2 million, up 2.1 percent compared with Dec. 31, 1989, but down 5.2 percent from its peak value of $119.4 million reached last Sept. 15. At the end of the quarter, the value of the tanker component established a new high at $121.0 million, up 7.7 percent this year and slightly above the previous peak value of $120.7 million reached last Oct. 1.

The first quarter of 1990 was characterized by a great deal of volatility in ship prices, with several changes in price direction over the period. This phenomenon was most pronounced for bulk carriers, where price swings of over 8 percent occurred, although the total movement over the quarter was a much smaller 2.1 percent. For tankers, the price volatility was apparent at the beginning of the quarter, but the last half of the quarter showed a steady increase culminating in a new high as of March 31.

As usual, the movements in ship value over the quarter were not uniform across all vessel sizes. Larger tankers, in the 260,000-deadweight-ton range, increased in value by 3 percent, while smaller tankers of about 35,000 dwt. increased in value by 15 percent. For bulk carriers the increases in value were small and more uniform, but that was probably due to the lateral movement of that market over the quarter. Larger bulk carriers of about 120,000 dwt. increased in value by 3 percent during the quarter, while the value of smaller

bulk carriers in the 25,000-dwt. range increased by 4 percent.

The period of increasing ship values that started in 1987 lasted for 10 quarters for bulk carriers - from the second quarter of 1987 through the third quarter of 1989. For tankers, the market rise started a quarter later, in the third quarter of 1987, and has been sustained for 11 quarters through the first quarter of 1990.

In the bulk carrier market, the most recent two quarters may signal an equilibrium level. But the continued strength in tanker resale prices may indicate the tanker market has not yet reached that point.