Market insight By Katerina Ress Tanker Chartering Palm Oil originates from West Africa, and there is evidence of its use as far as back as 5,000 years in Egypan relics of Pharaohs me. Brish Industrial Revoluon urged its expansion of trade and thus can be considered one of the earliest traded commodies. A combinaon of European selers and entrepreneurs, seeing the opportunity for commercial palm oil producon to produce soaps, lubricants and edible oils lead to a dramac expansion of oil palm plantaons throughout Sub-Saharan Africa and Southeast Asia. Nowadays, Indonesia and Malaysia are the world’s major producers, corresponding to 85% of world producon, followed by exporters such as Thailand, Colombia, Nigeria, Brazil and other countries conquering a small market share. Palm Oil industry growth has been driven primarily by con- sumpon in China, India and Europe (EU-27) followed by other countries such as North and South Africa, Pakistan, Bangladesh, Egypt, Turkey, Mexi- co, Iran, Japan and Taiwan etc. The recent Palm & Lauric Oils Conference that was held in Kuala Lumpur, Malaysia saw interesng discussions being made as to the current/future demand/producon of palm oil, lauric oils, biodiesel & oleo-chemicals. Ma- jor driver of palm oil demand is said to be the ever growing world popula- on and in turn food demand growth which has outstripped output growth over the past decade. Growth in developing economies has pushed for in- crease per capita demand for oils and fats. Furthermore, higher crude oil prices have boosted greater use of vegetable oils in the producon of biofu- els. However, climate change causes weather variability and the impact could result in an inconsistent producon paern. It is forecasted that world palm oil producon for 2013/14 season will reach 58.5 mill tons (up 2.7% which is below average growth). Respecvely, global consumpon of oils and fats are to reach 195 mill tons of which China usage is 36.1 mill tons, EU 29.8 mill tons, India 20.4 mill tons, USA 18.5 mill tons & Indonesia 10.8 mill tons. Addionally, 13% (26 mill tons) of world consump- on accounts for biofuel use. Palm oil prices have a been driven upwards this season, as the previous season’s aracve price levels smulated de- mand and concerns of the stressed palms producing less as a result of se- vere dryness in many parts of Malaysia and Indonesia, lead to diminished stock surpluses. High palm oil prices now have started to result in reduced imports by China and India and consequenal exports are set to decline for the first me in 16 years (Malaysian Exports; January -11% & February - 2.1%). Tightness in palm oil availability sets the queson if producon should be countered by higher producon through soybeans, sunflower and rapeseed crushing. Hence, March concluded with Malaysian palm oil futures lower by 2.8%, seled at 2,655 and volume expanded to 289,213 contracts with trades being weaker than a month ago as significant consumers trimmed back buys and analysts arguing that prices may even fly to Rm 3,500 in view of a com- ing El Nino. TCTs have been steady compared to previous weeks. Less EU1 vessels were open in the Far East and cargoes are starng to materialize with faith that the 2nd quarter will boost against all odds based on historical seasonality. In comparison to last month, March concluded fixtures saw freight rates pmt for cargoes desned ECI, WCI, China, Middle East and WMED decrease on average by US $ 2.0 with Roerdam and USG desned cargoes holding stable in terms of rates. In conclusion, it is worth menoning that it is only the 3rd me in the last decade that palm oil prices have dropped to below mineral oil prices and if the dry spell prolongs, then forecasts will have to be revisited. Chartering (Wet: Soſter- / Dry: Soſter- ) The Dry Bulk Market was under pressure this week, with Capes leading the fall and negave performance across the board quickly taking its toll on market senment. The BDI closed today (01/04/2014) at 1,316 points, down by 46 points compared to yesterday’s levels (31/03/2014) and a decrease of 262 points compared to previous Tuesday’s closing (25/03/2014). With the sole excepon of the Suezmax sector that has found some short term comfort due to the presence of less ballasters in the WAF region, the rest of the crude carriers market has moved south. The BDTI Monday (31/03/2014), was at 700 points, a decrease of 12 points and the BCTI at 610, unchanged, compared to the previous Mon- day (24/03/2014). Sale & Purchase (Wet: Stable+ / Dry: Stable+ ) The focus of buyers on the SnP front was split equally across both tank- ers and dry bulkers this past week, while in both cases re-sales and mod- ern tonnage are gathering most preference. On the tankers side, we had the sale of the “KNOCK CLUNE” (164,028dwt-blt 10 China), which was picked by Singaporean buyer, Eastern Pacific for a price of $ 48.0m. On the dry bulker side, we had the sale of the “ORIENT SINGA- PORE” (33,688dwt-blt 11, Japan), which was picked by Greek buyers for a price of US$ 23.0m. Newbuilding (Wet: Stable+ / Dry: Stable+ ) During the past week we have seen an increased number of newbuilding orders coming through, with interest present across all segments, while prices have remained overall stable, with the excepon of VLs and MRs, which have moved slightly up and slightly down respecvely, following the trend of owners’ preference this year round, which has shiſted away from clean tonnage and towards the big crude carriers. Following a sig- nificant slowdown in China’s exports the Chinese government has reas- sured this week that it has the necessary policies in place to support the domesc economy, allowing for hopes that a further economic smulus might be close and consequently feeding hopes that as the country’s infrastructure will be supported, it will support both the shipping freight and newbuilding markets along the way. In terms of new orders, US based owner Chemical transport has placed an order for five firm plus five oponal stainless steel chemical tankers (25,000dwt) at AVIC Din- gheng in China, for a reported price of $ 40.0m each and delivery set between 2016 and 2017. Demolion (Wet: Firm+ / Dry: Firm+ ) The demolion market connues to be the only place where no disap- pointments exist, with India being the main source of strength behind the recent strong bids we have been witnessing across the Indian sub- Connent. On the back of very strong performance from the Indian Ru- pee, which moved to its 8-month highest level against the US Dollar, breakers in India appear to have found further reasons to offer even higher. As a maer of fact, some of the reported sales were done at levels around and well above 500 $/ldt, and as it usually happens every me the market finds itself at similar highs, skepcism emerges. Either or, while the freight market is leaving a bier sweet taste at the mo- ment, the opon to scrap at these levels is more than encing for some owners. Elsewhere, Bangladeshi breakers have sat on the sidelines, while Pakistan has snapped a couple of vessels aſter increasing bids. At the same me, no acon was reported by Chinese breakers, leaving price levels unchanged for yet another week. Average prices this week for wet tonnage were at around 330-485$/ldt and dry units received about 320-480$/ldt. Weekly Market Report Issue: Week 13| Tuesday 1 st April 2014
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
Market insight By Katerina Restis Tanker Chartering Palm Oil originates from West Africa, and there is evidence of its use as far as back as 5,000 years in Egyptian relics of Pharaohs time. British Industrial Revolution urged its expansion of trade and thus can be considered one of the earliest traded commodities. A combination of European settlers and entrepreneurs, seeing the opportunity for commercial palm oil production to produce soaps, lubricants and edible oils lead to a dramatic expansion of oil palm plantations throughout Sub-Saharan Africa and Southeast Asia. Nowadays, Indonesia and Malaysia are the world’s major producers, corresponding to 85% of world production, followed by exporters such as Thailand, Colombia, Nigeria, Brazil and other countries conquering a small market share. Palm Oil industry growth has been driven primarily by con-sumption in China, India and Europe (EU-27) followed by other countries such as North and South Africa, Pakistan, Bangladesh, Egypt, Turkey, Mexi-co, Iran, Japan and Taiwan etc.
The recent Palm & Lauric Oils Conference that was held in Kuala Lumpur, Malaysia saw interesting discussions being made as to the current/future demand/production of palm oil, lauric oils, biodiesel & oleo-chemicals. Ma-jor driver of palm oil demand is said to be the ever growing world popula-tion and in turn food demand growth which has outstripped output growth over the past decade. Growth in developing economies has pushed for in-crease per capita demand for oils and fats. Furthermore, higher crude oil prices have boosted greater use of vegetable oils in the production of biofu-els. However, climate change causes weather variability and the impact could result in an inconsistent production pattern.
It is forecasted that world palm oil production for 2013/14 season will reach 58.5 mill tons (up 2.7% which is below average growth). Respectively, global consumption of oils and fats are to reach 195 mill tons of which China usage is 36.1 mill tons, EU 29.8 mill tons, India 20.4 mill tons, USA 18.5 mill tons & Indonesia 10.8 mill tons. Additionally, 13% (26 mill tons) of world consump-tion accounts for biofuel use. Palm oil prices have a been driven upwards this season, as the previous season’s attractive price levels stimulated de-mand and concerns of the stressed palms producing less as a result of se-vere dryness in many parts of Malaysia and Indonesia, lead to diminished stock surpluses. High palm oil prices now have started to result in reduced imports by China and India and consequential exports are set to decline for the first time in 16 years (Malaysian Exports; January -11% & February -2.1%). Tightness in palm oil availability sets the question if production should be countered by higher production through soybeans, sunflower and rapeseed crushing.
Hence, March concluded with Malaysian palm oil futures lower by 2.8%, settled at 2,655 and volume expanded to 289,213 contracts with trades being weaker than a month ago as significant consumers trimmed back buys and analysts arguing that prices may even fly to Rm 3,500 in view of a com-ing El Nino. TCTs have been steady compared to previous weeks. Less EU1 vessels were open in the Far East and cargoes are starting to materialize with faith that the 2nd quarter will boost against all odds based on historical seasonality. In comparison to last month, March concluded fixtures saw freight rates pmt for cargoes destined ECI, WCI, China, Middle East and WMED decrease on average by US $ 2.0 with Rotterdam and USG destined cargoes holding stable in terms of rates.
In conclusion, it is worth mentioning that it is only the 3rd time in the last decade that palm oil prices have dropped to below mineral oil prices and if the dry spell prolongs, then forecasts will have to be revisited.
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk Market was under pressure this week, with Capes leading the fall and negative performance across the board quickly taking its toll on market sentiment. The BDI closed today (01/04/2014) at 1,316 points, down by 46 points compared to yesterday’s levels (31/03/2014) and a decrease of 262 points compared to previous Tuesday’s closing (25/03/2014). With the sole exception of the Suezmax sector that has found some short term comfort due to the presence of less ballasters in the WAF region, the rest of the crude carriers market has moved south. The BDTI Monday (31/03/2014), was at 700 points, a decrease of 12 points and the BCTI at 610, unchanged, compared to the previous Mon-day (24/03/2014).
Sale & Purchase (Wet: Stable+ / Dry: Stable+ )
The focus of buyers on the SnP front was split equally across both tank-ers and dry bulkers this past week, while in both cases re-sales and mod-ern tonnage are gathering most preference. On the tankers side, we had the sale of the “KNOCK CLUNE” (164,028dwt-blt 10 China), which was picked by Singaporean buyer, Eastern Pacific for a price of $ 48.0m. On the dry bulker side, we had the sale of the “ORIENT SINGA-PORE” (33,688dwt-blt 11, Japan), which was picked by Greek buyers for a price of US$ 23.0m.
Newbuilding (Wet: Stable+ / Dry: Stable+ )
During the past week we have seen an increased number of newbuilding orders coming through, with interest present across all segments, while prices have remained overall stable, with the exception of VLs and MRs, which have moved slightly up and slightly down respectively, following the trend of owners’ preference this year round, which has shifted away from clean tonnage and towards the big crude carriers. Following a sig-nificant slowdown in China’s exports the Chinese government has reas-sured this week that it has the necessary policies in place to support the domestic economy, allowing for hopes that a further economic stimulus might be close and consequently feeding hopes that as the country’s infrastructure will be supported, it will support both the shipping freight and newbuilding markets along the way. In terms of new orders, US based owner Chemical transport has placed an order for five firm plus five optional stainless steel chemical tankers (25,000dwt) at AVIC Din-gheng in China, for a reported price of $ 40.0m each and delivery set between 2016 and 2017.
Demolition (Wet: Firm+ / Dry: Firm+ )
The demolition market continues to be the only place where no disap-pointments exist, with India being the main source of strength behind the recent strong bids we have been witnessing across the Indian sub-Continent. On the back of very strong performance from the Indian Ru-pee, which moved to its 8-month highest level against the US Dollar, breakers in India appear to have found further reasons to offer even higher. As a matter of fact, some of the reported sales were done at levels around and well above 500 $/ldt, and as it usually happens every time the market finds itself at similar highs, skepticism emerges. Either or, while the freight market is leaving a bitter sweet taste at the mo-ment, the option to scrap at these levels is more than enticing for some owners. Elsewhere, Bangladeshi breakers have sat on the sidelines, while Pakistan has snapped a couple of vessels after increasing bids. At the same time, no action was reported by Chinese breakers, leaving price levels unchanged for yet another week. Average prices this week for wet tonnage were at around 330-485$/ldt and dry units received about 320-480$/ldt.
March ended with no major positive surprises for the crude carriers market, which witnessed further rate corrections this past week. The sole exception to an other wise uninspiring environment was the Suezmax market, but given the overall performance of the segment during the past couple of months there are no reasons to celebrate just yet. Rates for VLs lost further ground for yet another week, on the back of slower activity across both the MEG and the WAF regions, while at the same time charterers appear to be moving slow into April fixing, pushing the average rate for the segment to below US $ 14,000/day.
The balance between supply and demand came to save the Suezmax mar-ket from falling further this past week, as demand across the other side of the Atlantic managed to allow for healthier supply levels in the WAF region, while the Black Sea/Med Suezmax noted the biggest rate increase across the board. Despite this week’s performance, the segment is unlikely to wit-ness better days in the short term, should the VL market not improve soon in order to shift charterers preference towards Suez tonnage as a replace-ment and therefore deal with what appears to be a slow April.
Rates for Aframaxes moved sideways, with the exception of cross-UKC rates, which noted a substantial decline on the back of gathering ballasters and unimpressive inquiry levels, while the Caribs remained fairly stable.
Sale & Purchase
In the Suezmax sector, we had the sale of the “KNOCK CLUNE” (164,028dwt-blt 10 China), which was picked by Singaporean buyer, Eastern Pacific for a price of $ 48.0m.
In the MR sector we had the sale of the “HELLAS CONSTELLA-TION” (46,162dwt-blt 00, S. Korea), which was picked up for a price of $ 11.9m.
During the past week we have seen an increased number of newbuilding orders coming through, with interest present across all segments, while pric-es have remained overall stable, with the exception of VLs and MRs, which have moved slightly up and slightly down respectively, following the trend of owners’ preference this year round, which has shifted away from clean ton-nage and towards the big crude carriers. Following a significant slowdown in China’s exports the Chinese government has reassured this week that it has the necessary policies in place to support the domestic economy, allowing for hopes that a further economic stimulus might be close and consequently feeding hopes that as the country’s infrastructure will be supported, it will support both the shipping freight and newbuilding markets along the way. In terms of new orders, US based owner Chemical transport has placed an or-der for five firm plus five optional stainless steel chemical tankers (25,000dwt) at AVIC Dingheng in China, for a reported price of $ 40.0m each and delivery set between 2016 and 2017.
In terms of reported deals last week, US based owner Chemical transport has placed an order for five firm plus five optional stainless steel chemical tank-ers (25,000dwt) at AVIC Dingheng in China, for a reported price of $ 40.0m each and delivery set between 2016 and 2017.
Newbuilding Market
20
60
100
140
180
mil
lion
$
Tankers Newbuilding Prices (m$)
VLCC Suezmax Aframax LR1 MR
Week
13
Week
12±% 2014 2013 2012
Capesize 180k 56.5 56.5 0.0% 55.4 49 47
Kamsarmax 82k 30.8 30.8 0.0% 30.3 27 28
Panamax 77k 29.5 29.5 0.0% 28.9 26 27
Supramax 58k 27.5 27.5 0.0% 27 25 25
Handysize 35k 23.5 23.5 0.0% 23 21 22
VLCC 300k 99.5 99.0 0.5% 97.2 91 96
Suezmax 160k 65.0 65.0 0.0% 63 56 58
Aframax 115k 55.0 55.0 0.0% 54 48 50
LR1 75k 47.0 47.0 0.0% 45.2 41 42
MR 52k 37.0 37.3 -0.8% 36.7 34 34
LNG 150K 186.0 186.0 0.0% 185.3 185 186
LGC LPG 80k 77.0 77.0 0.0% 76.2 71 71
MGC LPG 52k 66.0 66.0 0.0% 65.3 63 62
Vessel
Indicative Newbuilding Prices (million$)
Gas
Bu
lke
rsTa
nke
rs
10
30
50
70
90
110
mil
lion
$Bulk Carriers Newbuilding Prices (m$)
Capesize Panamax Supramax Handysize
Units Type Yard Delivery Buyer Price Comments
2 Tanker 300,000 dwt Hyundai, S. Korea 2016 Singaporean (Navig8) undisclosed options
4 Tanker 112,700 dwtDaewoo Mangalia,
Romania2016-2017 Greek (Tsakos) $ 51.0m
2 Tanker 25,000 dwt Fukuoka, Japan 2017 Singaporean (Navig8) undisclosed
5+5 Tanker 25,000 dwt AVIC Dingheng, China 2016-2017US based (Chemical
Transport)$ 40.0m StSt
2 Bulker 84,000 dwt Sasebo, Japan 2016 Japanese (Santoku Senpaku) undisclosed
The demolition market continues to be the only place where no disappoint-ments exist, with India being the main source of strength behind the recent strong bids we have been witnessing across the Indian sub-Continent. On the back of very strong performance from the Indian Rupee, which moved to its 8-month highest level against the US Dollar, breakers in India appear to have found further reasons to offer even higher. As a matter of fact, some of the reported sales were done at levels around and well above 500 $/ldt, and as it usually happens every time the market finds itself at similar highs, skepticism emerges. Either or, while the freight market is leaving a bitter sweet taste at the moment, the option to scrap at these levels is more than enticing for some owners. Elsewhere, Bangladeshi breakers have sat on the sidelines, while Pakistan has snapped a couple of vessels after increasing bids. At the same time, no action was reported by Chinese breakers, leaving price levels unchanged for yet another week. Average prices this week for wet tonnage were at around 330-485$/ldt and dry units received about 320-480$/ldt.
The highest price amongst recently reported deals, was that paid by Indian breakers for the Container vessel ‘KOTA WIJAYA’ (24,689dwt-6,800ldt-blt 91), which received the impressive price of $ 525/ldt.
Demolition Market
Week
13
Week
12±% 2013 2012 2011
Bangladesh 470 460 2.2% 422 440 523
India 485 475 2.1% 426 445 511
Pakistan 470 455 3.3% 423 444 504
China 330 330 0.0% 365 384 451
Bangladesh 460 450 2.2% 402 414 498
India 480 470 2.1% 405 419 484
Pakistan 450 435 3.4% 401 416 477
China 320 320 0.0% 350 365 432
Dry
Indicative Demolition Prices ($/ldt)
Markets
We
t
250
300
350
400
450
500
550
$/l
dt
Wet Demolition Prices
Bangladesh India Pakistan China
250
300
350
400
450
500
550
$/l
dt
Dry Demolition Prices
Bangladesh India Pakistan China
Name Size Ldt Built Yard Type $/ldt Breakers Comments
EAGLE OTOME 95,663 15,898 1994KOYO MIHARA,
JapanTANKER $ 472/Ldt Pakistani
FINISTERRE 33,221 13,341 1991 FLENDER, Germany CONT $ 504/Ldt Indian
ATHENS TRADER 35,534 11,000 1995HYUNDAI HEAVY
INDS - U, S. KoreaCONT $ 495/Ldt Indian
ERMAR 39,982 8,653 1989HYUNDAI HEAVY
INDS - U, S. KoreaTANKER $ 492/Ldt Pakistani
KOTA WIJAYA 24,689 6,800 1991KANASASHI -
TOYOHASHI, JapanCONT $ 525/Ldt Indian incl 350 tons of bunkers ROB
AMIRA MARIAM 23,791 5,947 1982IMABARI IMABARI,
JapanBULKER $ 467/Ldt Indian
BALTIC MARINER 9,852 5,274 1979BOELWERF TEMSE,
BelgiumREEFER $ 470/Ldt Indian
AQUA LUNA 12,854 4,950 1992 MTW, Germany CONT $ 480/Ldt Indian
Demolition Sales
The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without mak-ing guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no re-producing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
Compiled by Intermodal Research & Valuations Department | [email protected]
Paragon Shipping says it has secured a firm commit-ment for a new $120m senior secured amortizing credit facility .
The Michael Bodouroglou-led owner said the funds were secured from a syndicate of European banks led by Nordea Bank Finland.
The money will finance up to 60% of the second pair of four ultramaxes under construction at China’s Yangzhou Dayang Shipbuilding for delivery in 2015.
The US-listed bulker owner said the remainder of the six year facility would go towards refinancing several of its existing vessels.
In January Paragon agreed a deal with HSH Nordbank to partially finance the first pair of 63,500-dwt bulk-ers on order at Yangzhou Dayang upon their delivery in the second and third quarters of 2014.
Paragon said its latest fund raiser leaves only three recently purchased kamsarmax newbuildings, that are due to be delivered between the second and fourth quarters of 2015, to be financed”. (Trade Winds)