Market insight By Stelios Kollintzas Tanker Chartering - Specialized Products In an overall view, the edible oil markets across the globe seem to be in the doldrums, with low demand of tonnage in the regional South East Asia mar- ket and the deep sea trade and a slightly steadier pace of acvity in South America and the Black Sea market. Although volumes to India were slightly advanced during the last weeks in view of the Ramadan, which starts this June, freight levels have remained steady. Ample tonnage halted any improvement on rates, and owners are sll waing to take advantage of the seasonal boost in demand for edible oil. The outlook on the long haul MR market is similar, if not worst. Whilst last month non-eco-ships could earn up to USD 17K per day and eco ships USD 19K, numbers have fallen to USD 16k and USD 18k respecvely. On the FOSFA and NB vessels the outlook is slightly beer, since the list is shorter and owners could be in the posion to earn something extra. Surprisingly, the Black Sea market has so far seen no impact arising from the polical unrest in Ukraine, however, the situaon is sll of great concern amongst the shipping community. Rates in the Black Sea have been fairly stable with long haul cargoes to India, China and Iran being quickly covered, especially on the larger parcels of 25,000mts – 35,000mts. The best earners in this range are the CIQ candidates, where the list is ghter. Smaller ship- ments on the Black Sea to Med and Connent are showing significant acvi- ty, steady rates and good tonnage/cargo balance. Delays in South America are sll making the life of traders difficult, forcing charterers to work on extended laycans or ending up working on replace- ment tonnage. Overall the region shows a posive pulse with stable acvity and a fair number of outstanding enquiries in the market to India and less for Korea and China. Freight rates to India from Upriver Argenna and Brazil to West Coast or East Coast India are in the USD 48-50pmt region basis 2:2 and 40,000mts quanty shipments, where WCI+ECI are on the USD 53- 54pmt range. Finally, CIQ candidates to China could earn up to USD 64-66 on the ton. The South American market has also been an alternave opon for several own- ers, who were looking to escape the prevailing poor CPP market in the Atlan- c during the last weeks. Even with the addion of these vessels on the list, demand remained steady. As far as the near future of the edible oil market is concerned, one should be cauous in making any forecasts. While meteorologists express an increased chance of an “El-Nino’’ around June or July, we wait to see how the shipping market will react on the impacts of the weather phenomenon. “El-Nino” can induce drought in some parts of the world while drench in others. Malaysia and Indonesia, the two biggest exporters of Palm Oil, expect 10% - 20% de- crease of output. Let’s hope that any effect on seaborne trade would be minor if the phenomenon occurs. Chartering (Wet: Stable+ / Dry: Stable - ) Uninspiring acvity for Capes has pushed the BDI to below 1,000 points once more, while things for the segment improved in the Pacific just before the weekend. The BDI closed today (27/05/2014) at 973 points, up by 9 points compared to Friday’s levels (23/05/2014) and a decrease of 37 points compared to previous Tuesday’s closing (27/05/2014). The comeback of the Suezmax market allowed for smiles to return in the crude carriers side, while rates for VL are expected to remain under pressure during June as well. The BDTI Friday (23/05/2014), was at 691 points, an increase of 39 points and the BCTI at 532, unchanged, com- pared to previous Friday (16/05/2014). Sale & Purchase (Wet: Stable+ / Dry: Stable -) This week’s increased SnP acvity was enrely due to Singaporean own- er, BW group, who was responsible for almost half of the vessels report- ed changing hands, while second-hand dry bulker prices connued to soſten. On the tanker side, we had the sale of the “RYUHO MARU” (281,050dwt-blt 99, Japan), which was picked up by Greek buy- ers for a price of $ 21.7m. On the dry bulker side, we had the sale of the “E WHALE” (319,869dwt-blt 10, S. Korea), which was picked up by Greek buyers for a price of US$ 61.0m. Newbuilding (Wet: Stable - / Dry: Stable - ) This was another week of stalling prices on the newbuilding front, while at the same acvity resumed the slow pace of the previous weeks. We are sll looking at only a handful of orders being report on both the tankers and dry bulkers side, with a big chunk of them being exercised opons rather than freshly inked deals. The course of the newbuilding market so far this year as well as since the beginning of the crisis has not allowed yards to enjoy long periods of sufficient business coming in, with the excepon of last year. In this spirit, consolidaon has been an unavoidable route for the industry and the recent announcement of another takeover in the Japanese front was no surprise. Namura Ship- building, probably one of the most financially sound Japanese yards, is taking over Sasebo Heavy Industries, in a deal that will result in the crea- on of the second largest shipbuilding group in the country and will allow Namura to beer deal with increasing compeon in the industry. We are set to see more similar deals going forward, as the degree of consolidaon needed under the current market environment is certainly higher especially if the pace of acvity remains at these levels for more a longer period. In terms of new orders, Japanese owner Santoku Senpaku has returned to Tsuneishi Zhoushan in Japan, to exercise opons for a pair of eco design Kamsarmaxes (81,500dwt), set to be delivered be- tween 2016 and 2017. Demolion (Wet: Stable - / Dry: Stable - ) India connues to monopolize both the headlines as well as any acon that is currently taking place in the Indian sub-Connent demolion scene. The waves of enthusiasm, sent across the market aſter the result of the recent naonal elecons in the country, connue to support sen- ment, which appears to be stronger than what it has been during the year so far. The monsoon season is expected to weigh down on Indian demand to some extent, but we expect breakers to return with an equally strong appete once this is over. At the same me, the compe- on remains fairly inacve in the light of the budget announcements in Pakistan and Bangladesh, where prices have also soſtened a bit this past week as breakers in both countries are not too eager to stock up on tonnage ahead of June. Average prices this week for wet tonnage were at around 325-510$/ldt and dry units received about 310-500$/ldt. Weekly Market Report Issue: Week 21| Tuesday 27 th May 2014
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Market insight By Stelios Kollintzas Tanker Chartering - Specialized Products In an overall view, the edible oil markets across the globe seem to be in the doldrums, with low demand of tonnage in the regional South East Asia mar-ket and the deep sea trade and a slightly steadier pace of activity in South America and the Black Sea market.
Although volumes to India were slightly advanced during the last weeks in view of the Ramadan, which starts this June, freight levels have remained steady. Ample tonnage halted any improvement on rates, and owners are still waiting to take advantage of the seasonal boost in demand for edible oil.
The outlook on the long haul MR market is similar, if not worst. Whilst last month non-eco-ships could earn up to USD 17K per day and eco ships USD 19K, numbers have fallen to USD 16k and USD 18k respectively. On the FOSFA and NB vessels the outlook is slightly better, since the list is shorter and owners could be in the position to earn something extra.
Surprisingly, the Black Sea market has so far seen no impact arising from the political unrest in Ukraine, however, the situation is still of great concern amongst the shipping community. Rates in the Black Sea have been fairly stable with long haul cargoes to India, China and Iran being quickly covered, especially on the larger parcels of 25,000mts – 35,000mts. The best earners in this range are the CIQ candidates, where the list is tighter. Smaller ship-ments on the Black Sea to Med and Continent are showing significant activi-ty, steady rates and good tonnage/cargo balance.
Delays in South America are still making the life of traders difficult, forcing charterers to work on extended laycans or ending up working on replace-ment tonnage. Overall the region shows a positive pulse with stable activity and a fair number of outstanding enquiries in the market to India and less for Korea and China. Freight rates to India from Upriver Argentina and Brazil to West Coast or East Coast India are in the USD 48-50pmt region basis 2:2 and 40,000mts quantity shipments, where WCI+ECI are on the USD 53-54pmt range.
Finally, CIQ candidates to China could earn up to USD 64-66 on the ton. The South American market has also been an alternative option for several own-ers, who were looking to escape the prevailing poor CPP market in the Atlan-tic during the last weeks. Even with the addition of these vessels on the list, demand remained steady.
As far as the near future of the edible oil market is concerned, one should be cautious in making any forecasts. While meteorologists express an increased chance of an “El-Nino’’ around June or July, we wait to see how the shipping market will react on the impacts of the weather phenomenon. “El-Nino” can induce drought in some parts of the world while drench in others. Malaysia and Indonesia, the two biggest exporters of Palm Oil, expect 10% - 20% de-crease of output. Let’s hope that any effect on seaborne trade would be minor if the phenomenon occurs.
Chartering (Wet: Stable+ / Dry: Stable - )
Uninspiring activity for Capes has pushed the BDI to below 1,000 points once more, while things for the segment improved in the Pacific just before the weekend. The BDI closed today (27/05/2014) at 973 points, up by 9 points compared to Friday’s levels (23/05/2014) and a decrease of 37 points compared to previous Tuesday’s closing (27/05/2014). The comeback of the Suezmax market allowed for smiles to return in the crude carriers side, while rates for VL are expected to remain under pressure during June as well. The BDTI Friday (23/05/2014), was at 691 points, an increase of 39 points and the BCTI at 532, unchanged, com-pared to previous Friday (16/05/2014).
Sale & Purchase (Wet: Stable+ / Dry: Stable -)
This week’s increased SnP activity was entirely due to Singaporean own-er, BW group, who was responsible for almost half of the vessels report-ed changing hands, while second-hand dry bulker prices continued to soften. On the tanker side, we had the sale of the “RYUHO MARU” (281,050dwt-blt 99, Japan), which was picked up by Greek buy-ers for a price of $ 21.7m. On the dry bulker side, we had the sale of the “E WHALE” (319,869dwt-blt 10, S. Korea), which was picked up by Greek buyers for a price of US$ 61.0m.
Newbuilding (Wet: Stable - / Dry: Stable - )
This was another week of stalling prices on the newbuilding front, while at the same activity resumed the slow pace of the previous weeks. We are still looking at only a handful of orders being report on both the tankers and dry bulkers side, with a big chunk of them being exercised options rather than freshly inked deals. The course of the newbuilding market so far this year as well as since the beginning of the crisis has not allowed yards to enjoy long periods of sufficient business coming in, with the exception of last year. In this spirit, consolidation has been an unavoidable route for the industry and the recent announcement of another takeover in the Japanese front was no surprise. Namura Ship-building, probably one of the most financially sound Japanese yards, is taking over Sasebo Heavy Industries, in a deal that will result in the crea-tion of the second largest shipbuilding group in the country and will allow Namura to better deal with increasing competition in the industry. We are set to see more similar deals going forward, as the degree of consolidation needed under the current market environment is certainly higher especially if the pace of activity remains at these levels for more a longer period. In terms of new orders, Japanese owner Santoku Senpaku has returned to Tsuneishi Zhoushan in Japan, to exercise options for a pair of eco design Kamsarmaxes (81,500dwt), set to be delivered be-tween 2016 and 2017.
Demolition (Wet: Stable - / Dry: Stable - )
India continues to monopolize both the headlines as well as any action that is currently taking place in the Indian sub-Continent demolition scene. The waves of enthusiasm, sent across the market after the result of the recent national elections in the country, continue to support sen-timent, which appears to be stronger than what it has been during the year so far. The monsoon season is expected to weigh down on Indian demand to some extent, but we expect breakers to return with an equally strong appetite once this is over. At the same time, the competi-tion remains fairly inactive in the light of the budget announcements in Pakistan and Bangladesh, where prices have also softened a bit this past week as breakers in both countries are not too eager to stock up on tonnage ahead of June. Average prices this week for wet tonnage were at around 325-510$/ldt and dry units received about 310-500$/ldt.
With the exception of the VL segment, the rest of the crude carriers market witnessed improved demand this week, which also finally translated to higher rates. Rates for VLs managed to hold on to their levels overall, de-spite the fact that the ballasters list in the MEG kept lengthening, as activity slightly improved compared to the first weeks of May. Nonetheless, rates for the segment are still under pressure, with no visible signs of a substan-tial upside taking place during next month, at least as far as MEG business is concerned. The West Africa VL is looking a bit stronger at the same time, on the back of rates for Suezmax tonnage continuing to gain strength in the region.
This past week has in fact closed off with great rate improvements across all of the Suez main routes. The absence of Libyan cargoes continues to sup-port West Africa business, which is being blessed by increased North Sea demand, allowing for the segment to achieve the best returns across the market and providing owners with a vital breather after having watched rates being battered for the greater part of the spring season.
The Aframax market has also seen some better numbers this past week, with both the cross-MED and cross-UKC Aframax almost doubling their TCE rates, while the Aframax Caribs has also gained on the back of slightly better activity.
Sale & Purchase
In the VLCC sector, we had the sale of the “RYUHO MARU” (281,050dwt-blt 99, Japan), which was picked up by Greek buyers for a price of $ 21.7m.
In the MR sector we had the sale of the “IVER EXPRESS” (46,825dwt-blt 07, S. Korea), which was picked up by Dutch buyers for a price of $ 22.0m.
This was another week of stalling prices on the newbuilding front, while at the same activity resumed the slow pace of the previous weeks. We are still looking at only a handful of orders being report on both the tankers and dry bulkers side, with a big chunk of them being exercised options rather than freshly inked deals. The course of the newbuilding market so far this year as well as since the beginning of the crisis has not allowed yards to enjoy long periods of sufficient business coming in, with the exception of last year. In this spirit, consolidation has been an unavoidable route for the industry and the recent announcement of another takeover in the Japanese front was no surprise. Namura Shipbuilding, probably one of the most financially sound Japanese yards, is taking over Sasebo Heavy Industries, in a deal that will result in the creation of the second largest shipbuilding group in the country and will allow Namura to better deal with increasing competition in the in-dustry. We are set to see more similar deals going forward, as the degree of consolidation needed under the current market environment is certainly higher especially if the pace of activity remains at these levels for more a longer period.
In terms of reported deals last week, Japanese owner Santoku Senpaku has returned to Tsuneishi Zhoushan in Japan, to exercise options for a pair of eco design Kamsarmaxes (81,500dwt), set to be delivered between 2016 and 2017.
Newbuilding Market
20
60
100
140
180
mil
lion
$
Tankers Newbuilding Prices (m$)
VLCC Suezmax Aframax LR1 MR
Week
21
Week
20±% 2014 2013 2012
Capesize 180k 57.5 57.5 0.0% 56.1 49 47
Kamsarmax 82k 30.8 30.8 0.0% 30.5 27 28
Panamax 77k 29.5 29.5 0.0% 29.1 26 27
Supramax 58k 27.5 27.5 0.0% 27 25 25
Handysize 35k 23.5 23.5 0.0% 23 21 22
VLCC 300k 101.0 101.0 0.0% 98.5 91 96
Suezmax 160k 66.0 66.0 0.0% 64 56 58
Aframax 115k 55.0 55.0 0.0% 54 48 50
LR1 75k 46.5 46.5 0.0% 45.8 41 42
MR 52k 37.0 37.0 0.0% 36.8 34 34
LNG 150K 186.0 186.0 0.0% 185.6 185 186
LGC LPG 80k 79.0 79.0 0.0% 77.0 71 71
MGC LPG 52k 67.0 67.0 0.0% 65.7 63 62Gas
Bu
lke
rsTa
nke
rs
Vessel
Indicative Newbuilding Prices (million$)
10
30
50
70
90
110
mil
lion
$
Bulk Carriers Newbuilding Prices (m$)
Capesize Panamax Supramax Handysize
Units Type Yard Delivery Buyer Price Comments
1 Tanker 19,950 dwt Kitanihon, Japan 2017 Belgian (CMB NV) undisclosed
3 Tanker 19,900 dwtFukuoka / Shitanoe,
Japan2016
Norwegian
(Stream Tankers )undisclosed
2 Bulker 250,000 dwt Qingdao Beihai, China -Singapore based (Cara
Shipping)undisclosed options
2 Bulker 180,000 dwt Qingdao Beihai, China -Singapore based (Cara
Shipping)undisclosed options
2 Bulker 81,500 dwtTsuneishi Zhoushan,
Japan2016-2017 Japanese (Santoku Senpaku) undisclosed options, eco design
India continues to monopolize both the headlines as well as any action that is currently taking place in the Indian sub-Continent demolition scene. The waves of enthusiasm, sent across the market after the result of the recent national elections in the country, continue to support sentiment, which ap-pears to be stronger than what it has been during the year so far. The mon-soon season is expected to weigh down on Indian demand to some extent, but we expect breakers to return with an equally strong appetite once this is over. At the same time, the competition remains fairly inactive in the light of the budget announcements in Pakistan and Bangladesh, where prices have also softened a bit this past week as breakers in both countries are not too eager to stock up on tonnage ahead of June. Average prices this week for wet tonnage were at around 325-510$/ldt and dry units received about 310-500$/ldt.
The highest prices amongst recently reported deals, was that paid by Indian breakers for the VLOC ‘PHYLLIS N’ (285,768dwt-40,839ldt-blt 90), which re-ceived a firm price of $ 500/ldt.
Demolition Market
Week
21
Week
20±% 2013 2012 2011
Bangladesh 485 490 -1.0% 422 440 523
India 510 510 0.0% 426 445 511
Pakistan 475 480 -1.0% 423 444 504
China 325 325 0.0% 365 384 451
Bangladesh 465 475 -2.1% 402 414 498
India 500 500 0.0% 405 419 484
Pakistan 455 460 -1.1% 401 416 477
China 310 310 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
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]
Overseas Shipholding Group (OSG) has won the back-ing of more creditors for its $1.5bn share sale as it seeks to complete its bankruptcy restructuring.
A group holding more than half of its 2024 7.5% notes had been opposed to the deal.
But now it has agreed to buy up to $190m of stock that is not sold in the offering, according to OSG law-yer Luke Barefoot, Bloomberg reported.
The US tanker owner this month revised its restruc-turing, ditching a previously favoured pact with its lenders in favour of a competing proposal from equi-ty holders.
The lender plan originally backed by OSG would have seen holders of the company’s senior debt - now mostly hedge funds - come away with 97% of the equity in the reorganised company.
Equity holders were relegated to a total recovery of $61m, which one analyst calculated to be worth about $2 per share.
The equity-holders plan features a larger commit-ment from US bank Jefferies: a $600m term loan secured by OSG’s US-flag fleet, a $600m term loan secured by its international fleet, and a $75m revolv-ing loan for each unit designed to provide working capital upon exit from Chapter 11.
A hearing on the matter has been delayed until Tues-day.” (Trade Winds)