Market insight By Eva Tzima Research Analyst Right when you think that you have all your facts straight, right when things are stabilizing again for the Dry Bulk market, which was badly baered for the first couple of months of the year but didn’t collapse, a day like last Wednesday comes and makes you reconsider. For most of us who were caught up in the latest news regarding the developments in the Black Sea, the sudden drop of the BDI on Wednesday, caused exclusively by Cape rates plummeng, came as a big slap on the face. And as the market has since shown a cauous yet stable behavior, the drop of last mid-week has some- what remained away from the spotlight, with some being quick to explain it as just a glitch, which has come and gone fast, probably based on the price performance of iron ore and other commodies. But what exactly caused such a drop in rates? For the past years, China, the world’s second largest economy, has been considered the pedestal upon which global shipping growth will find a stable foong. The outlook of the dry bulk trade itself, has been inextricably linked to the future of the country’s economy, and despite voices raising concerns every now and then regarding the sustainability of projected growth, formal figures provided by the Chinese government have been reassuring that the country would opt for growth at a slower gear in the coming years, yet a growth that would be more sustainable and at the same me sufficient to drag upwards with it a number of sectors leſt ailing post 2008. On Monday last week, news released over the weekend that China’s Febru- ary exports unexpectedly dropped, sent shockwaves across the markets. This was in fact the biggest drop noted since the financial crisis and an even bigger blow on confidence regarding the country’s growth stability. The data revealed a 18.1% year-on-year decline, while an increase was originally ex- pected. As imports connued growing simultaneously, the country’s trade balance has in fact switched from a surplus in January to a deficit at the end of February, the biggest deficit recorded in the Chinese economy in two years. The immediate effect, of what was the biggest fall on Chinese exports since August 2009, was the plummeng of the iron ore price for delivery to China, which touched a 17 month low. As the country imports around 2/3 of the global seaborne iron ore, the dry bulk market was desned to feel a big chunk of the pressure mounted. Confidence has dropped quickly especially aſter the paper market for Q2 2014 took a substanal hit. Talks that due to pressure on commodity prices the Chinese were looking to cancel a number of dry bulk COAs, quickly circulated the market, with rumors menoning up to forty April onwards soybeans cargoes from ECSA. At the same me, the Capesize Tubarao/Qingdao and Western Australia/China routes noted a sharp fall almost immediately and the domino effect pushed the BDI down. Currently the market is leſt a bit numb. The days following Wednesday saw the market nong small daily upcks across the board. It is very difficult at this stage to fully appreciate what the impact regarding Chinese growth will be. Between those who believe that the sharp fall was a correcon that just didn’t materialize in a smooth manner and those who see China’s weakening growth shadowing heavily on the long awaited bright days of the dry bulk market, the truth can be most probably found somewhere in the middle. Maybe China’s economy will not grow at the esmated rate, and maybe last week’s glitch was actually a warning sign that shouldn’t be ignored, but at the same me, the fact is that rates are much healthier now than what they were a year ago, so instead of deciding whether the glass is half full or half empty, I am currently glad there is water in the glass. Chartering (Wet: Soſter- / Dry: Soſter- ) The Dry Bulk Market moved south last week, following the sudden col- lapse of the Capesize market on Wednesday, with the unexpected vola- lity taking most by surprise. The BDI closed today (18/03/2014) at 1,518 points, up by 37 points compared to yesterday’s levels (17/03/2014) and a decrease of 62 points compared to previous Tues- day’s closing (11/03/2014). March is definitely not “treang” the crude carriers nice, as acvity has moved to even lower levels this week and we don’t see any major improvements being noted unl the end of the month. The BDTI Monday (17/03/2014), was at 682 points, a decrease of 10 points and the BCTI at 622, a decrease of 7 points compared to the previous Monday (10/03/2014). Sale & Purchase (Wet: Stable+ / Dry: Stable+ ) The love for the tanker sector has re-appeared this week on the SnP front, with Genmar adding another vote of confidence for the VL seg- ment, where eight resales changed hands this week alone. On the tank- ers side, we had the sale of the “MARE ITALICUM” (110,295dwt-blt 07 Japan), which was picked by Greek buyers for a price of $ 34.0m. On the dry bulker side, we had the sale of the “CONCHES” (180,000dwt-blt 11 S. Korea), which was picked by Greek buyer Dryships for a price of $ 53.5m including a T/C. Newbuilding (Wet: Firm+ / Dry: Firm+ ) Following the prior week’s jump in reported newbuilding orders, the market has quietened down substanally in terms of acvity, with bulk- ers connuing to gather a big chunk of the ordering interest for yet an- other week. At the same me prices connue to firm for both dry bulk- ers and tankers, with those for the larger units, in both sectors, relave- ly showing more strength. We menoned last week how iron ore de- mand from China has been blessing the Capesize segment and has al- lowed for the freight market and the overall prospects of the sector to become rosier. With a lot of debate in regards to whether China can sustain its growth targets this year, following the extremely disap- poinng export figures that came out last week weighing down on sen- ment, it is very interesng to see whether this latest development will feed through to owners, who are contemplang on placing an order, and ulmately to newbuilding prices. In terms of new orders, S. Korean owner Polaris Shipping has placed an order for two VLOCs (275,000dwt) in Hyundai in S. Korea, for a reported price of $ 80.0m each. Demolion (Wet: Firm+ / Dry: Firm+ ) The same story describes the demolion market for yet another week. Numbers are going higher, acvity remains limited and the enre mar- ket is sll waing for a downward correcon to the recent rally which has yet to materialize. Prices have even surpassed 500$/ldt, which is what happened in one instance so far but sll shows the strength and the momentum of the current market. Despite the small correcon of the Rupee against the US Dollar this past week, the Indian currency is sll trading at very good levels, fact that reassures local cash buyers and allows them to increase their bids even higher. Even though the overall market acvity is sll slow, Bangladesh appears to have secured one unit and therefore a piece of the acon, while breakers in Pakistan have remained fairly quiet this week, holding their offers stable despite some good performance of the local currency. Further to the East, there was finally some acon in China, but local prices are sll stalling at the low 300 $/ldt with no big chance of offers increasing anyme soon. Average prices this week for wet tonnage were at around 330-475$/ldt and dry units received about 320-470$/ldt. Weekly Market Report Issue: Week 11| Tuesday 18 th March 2014
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Market insight By Eva Tzima Research Analyst Right when you think that you have all your facts straight, right when things are stabilizing again for the Dry Bulk market, which was badly battered for the first couple of months of the year but didn’t collapse, a day like last Wednesday comes and makes you reconsider. For most of us who were caught up in the latest news regarding the developments in the Black Sea, the sudden drop of the BDI on Wednesday, caused exclusively by Cape rates plummeting, came as a big slap on the face. And as the market has since shown a cautious yet stable behavior, the drop of last mid-week has some-what remained away from the spotlight, with some being quick to explain it as just a glitch, which has come and gone fast, probably based on the price performance of iron ore and other commodities. But what exactly caused such a drop in rates?
For the past years, China, the world’s second largest economy, has been considered the pedestal upon which global shipping growth will find a stable footing. The outlook of the dry bulk trade itself, has been inextricably linked to the future of the country’s economy, and despite voices raising concerns every now and then regarding the sustainability of projected growth, formal figures provided by the Chinese government have been reassuring that the country would opt for growth at a slower gear in the coming years, yet a growth that would be more sustainable and at the same time sufficient to drag upwards with it a number of sectors left ailing post 2008.
On Monday last week, news released over the weekend that China’s Febru-ary exports unexpectedly dropped, sent shockwaves across the markets. This was in fact the biggest drop noted since the financial crisis and an even bigger blow on confidence regarding the country’s growth stability. The data revealed a 18.1% year-on-year decline, while an increase was originally ex-pected. As imports continued growing simultaneously, the country’s trade balance has in fact switched from a surplus in January to a deficit at the end of February, the biggest deficit recorded in the Chinese economy in two years.
The immediate effect, of what was the biggest fall on Chinese exports since August 2009, was the plummeting of the iron ore price for delivery to China, which touched a 17 month low. As the country imports around 2/3 of the global seaborne iron ore, the dry bulk market was destined to feel a big chunk of the pressure mounted. Confidence has dropped quickly especially after the paper market for Q2 2014 took a substantial hit. Talks that due to pressure on commodity prices the Chinese were looking to cancel a number of dry bulk COAs, quickly circulated the market, with rumors mentioning up to forty April onwards soybeans cargoes from ECSA. At the same time, the Capesize Tubarao/Qingdao and Western Australia/China routes noted a sharp fall almost immediately and the domino effect pushed the BDI down.
Currently the market is left a bit numb. The days following Wednesday saw the market noting small daily upticks across the board. It is very difficult at this stage to fully appreciate what the impact regarding Chinese growth will be. Between those who believe that the sharp fall was a correction that just didn’t materialize in a smooth manner and those who see China’s weakening growth shadowing heavily on the long awaited bright days of the dry bulk market, the truth can be most probably found somewhere in the middle. Maybe China’s economy will not grow at the estimated rate, and maybe last week’s glitch was actually a warning sign that shouldn’t be ignored, but at the same time, the fact is that rates are much healthier now than what they were a year ago, so instead of deciding whether the glass is half full or half empty, I am currently glad there is water in the glass.
Chartering (Wet: Softer- / Dry: Softer- )
The Dry Bulk Market moved south last week, following the sudden col-lapse of the Capesize market on Wednesday, with the unexpected vola-tility taking most by surprise. The BDI closed today (18/03/2014) at 1,518 points, up by 37 points compared to yesterday’s levels (17/03/2014) and a decrease of 62 points compared to previous Tues-day’s closing (11/03/2014). March is definitely not “treating” the crude carriers nice, as activity has moved to even lower levels this week and we don’t see any major improvements being noted until the end of the month. The BDTI Monday (17/03/2014), was at 682 points, a decrease of 10 points and the BCTI at 622, a decrease of 7 points compared to the previous Monday (10/03/2014).
Sale & Purchase (Wet: Stable+ / Dry: Stable+ )
The love for the tanker sector has re-appeared this week on the SnP front, with Genmar adding another vote of confidence for the VL seg-ment, where eight resales changed hands this week alone. On the tank-ers side, we had the sale of the “MARE ITALICUM” (110,295dwt-blt 07 Japan), which was picked by Greek buyers for a price of $ 34.0m. On the dry bulker side, we had the sale of the “CONCHES” (180,000dwt-blt 11 S. Korea), which was picked by Greek buyer Dryships for a price of $ 53.5m including a T/C.
Newbuilding (Wet: Firm+ / Dry: Firm+ )
Following the prior week’s jump in reported newbuilding orders, the market has quietened down substantially in terms of activity, with bulk-ers continuing to gather a big chunk of the ordering interest for yet an-other week. At the same time prices continue to firm for both dry bulk-ers and tankers, with those for the larger units, in both sectors, relative-ly showing more strength. We mentioned last week how iron ore de-mand from China has been blessing the Capesize segment and has al-lowed for the freight market and the overall prospects of the sector to become rosier. With a lot of debate in regards to whether China can sustain its growth targets this year, following the extremely disap-pointing export figures that came out last week weighing down on senti-ment, it is very interesting to see whether this latest development will feed through to owners, who are contemplating on placing an order, and ultimately to newbuilding prices. In terms of new orders, S. Korean owner Polaris Shipping has placed an order for two VLOCs (275,000dwt) in Hyundai in S. Korea, for a reported price of $ 80.0m each.
Demolition (Wet: Firm+ / Dry: Firm+ )
The same story describes the demolition market for yet another week. Numbers are going higher, activity remains limited and the entire mar-ket is still waiting for a downward correction to the recent rally which has yet to materialize. Prices have even surpassed 500$/ldt, which is what happened in one instance so far but still shows the strength and the momentum of the current market. Despite the small correction of the Rupee against the US Dollar this past week, the Indian currency is still trading at very good levels, fact that reassures local cash buyers and allows them to increase their bids even higher. Even though the overall market activity is still slow, Bangladesh appears to have secured one unit and therefore a piece of the action, while breakers in Pakistan have remained fairly quiet this week, holding their offers stable despite some good performance of the local currency. Further to the East, there was finally some action in China, but local prices are still stalling at the low 300 $/ldt with no big chance of offers increasing anytime soon. Average prices this week for wet tonnage were at around 330-475$/ldt and dry units received about 320-470$/ldt.
The anticipated market improvement has yet to materialize and as we are now well into the last decade of March it seems that the market will remain under pressure, as from the activity so far we can’t see any significant num-ber of fixtures during the final days of the month. VLs are usually the ones setting the tone in the crude carriers market and this past week was no different. Rates for both the eastbound and westbound voyage remained under pressure until the weekend, with a substantial number of offers weighing down on owners’ ideas, while fixtures ex-WAF were also tainted by the uninspiring MEG region.
Staying in the West Africa region, the Suezmax segment didn't have any better luck either. As activity fell substantially to the week before and with ballasters continuing to gather at the same time, there was only one direc-tion the market could go and down it went. With no positive spill-overs from VLs seen in the horizon, Suezmax rates in the region could soon ap-proach OPEX levels in the absence of other positive catalysts.
Rates for Aframaxes displayed a mixed picture overall this past week, alt-hough the one substantial increase noted for cross-UKC voyages could hardly be considered a success, as rates for the route have been pushed down to dismal levels. Cross-Med rates on the other hand managed to climb further up while the Caribs witnessed slight pressure.
Sale & Purchase
In the Aframax sector, we had the sale of the “MARE ITALI-CUM” (110,295dwt-blt 07 Japan), which was picked by Greek buyers for a price of $ 34.0m.
In the VLCC sector we had the sale of the “BW NYSA” (299,543dwt-blt 00, S. Korea), which was picked up for a price of $ 30.0m.
Following the prior week’s jump in reported newbuilding orders, the market has quietened down substantially in terms of activity, with bulkers continu-ing to gather a big chunk of the ordering interest for yet another week. At the same time prices continue to firm for both dry bulkers and tankers, with those for the larger units, in both sectors, relatively showing more strength. We mentioned last week how iron ore demand from China has been blessing the Capesize segment and has allowed for the freight market and the overall prospects of the sector to become rosier. With a lot of debate in regards to whether China can sustain its growth targets this year, following the ex-tremely disappointing export figures that came out last week weighing down on sentiment, it is very interesting to see whether this latest development will feed through to owners, who are contemplating on placing an order, and ultimately to newbuilding prices. In terms of new orders, S. Korean owner Polaris Shipping has placed an order for two VLOCs (275,000dwt) in Hyundai in S. Korea, for a reported price of $ 80.0m each.
In terms of reported deals last week, S. Korean owner Polaris Shipping has placed an order for two VLOCs (275,000dwt) at Hyundai in S. Korea, for a reported price of $ 80.0m each.
Newbuilding Market
20
60
100
140
180
mil
lion
$
Tankers Newbuilding Prices (m$)
VLCC Suezmax Aframax LR1 MR
Week
11
Week
10±% 2014 2013 2012
Capesize 180k 56.5 56.0 0.9% 55.2 49 47
Kamsarmax 82k 30.5 30.5 0.0% 30.2 27 28
Panamax 77k 29.5 29.3 0.7% 28.8 26 27
Supramax 58k 27.5 27.5 0.0% 27 25 25
Handysize 35k 23.5 23.5 0.0% 23 21 22
VLCC 300k 99.0 98.5 0.5% 96.9 91 96
Suezmax 160k 65.0 64.5 0.8% 63 56 58
Aframax 115k 55.0 54.5 0.9% 54 48 50
LR1 75k 47.0 45.5 3.3% 44.9 41 42
MR 52k 37.3 37.3 0.0% 36.7 34 34
LNG 150K 186.0 186.0 0.0% 185.2 185 186
LGC LPG 80k 77.0 77.0 0.0% 76.0 71 71
MGC LPG 52k 66.0 66.0 0.0% 65.2 63 62
Vessel
Indicative Newbuilding Prices (million$)
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 Bulker 275,000 dwt Hyundai, S. Korea 2017 S. Korean (Polaris Shipping) $ 80.0m
4 Bulker 208,000 dwt Jiangsu Eastern, China 2016 German (Oldendorff) $ 60.0m options
The same story describes the demolition market for yet another week. Num-bers are going higher, activity remains limited and the entire market is still waiting for a downward correction to the recent rally which has yet to mate-rialize. Prices have even surpassed 500$/ldt, which is what happened in one instance so far but still shows the strength and the momentum of the current market. Despite the small correction of the Rupee against the US Dollar this past week, the Indian currency is still trading at very good levels, fact that reassures local cash buyers and allows them to increase their bids even high-er. Even though the overall market activity is still slow, Bangladesh appears to have secured one unit and therefore a piece of the action, while breakers in Pakistan have remained fairly quiet this week, holding their offers stable despite some good performance of the local currency. Further to the East, there was finally some action in China, but local prices are still stalling at the low 300 $/ldt with no big chance of offers increasing anytime soon. Average prices this week for wet tonnage were at around 330-475$/ldt and dry units received about 320-470$/ldt.
The highest price amongst recently reported deals, was that paid by Indian breakers for the Container vessel ‘ASIA STAR’ (20,194dwt-7,076ldt-blt 94), which received a very high price of $ 504/ldt.
Demolition Market
Week
11
Week
10±% 2013 2012 2011
Bangladesh 460 450 2.2% 422 440 523
India 475 470 1.1% 426 445 511
Pakistan 455 455 0.0% 423 444 504
China 330 330 0.0% 365 384 451
Bangladesh 450 445 1.1% 402 414 498
India 470 465 1.1% 405 419 484
Pakistan 435 435 0.0% 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
OVERSEAS BERYL 94,797 17,096 1994HYUNDAI HEAVY
INDS - U, S. KoreaTANKER $ 453/Ldt undisclosed
as-is Singapore including bunkers
for final trip
FULL STRONG 70,171 9,323 1994SANOYAS HISHINO
MIZ'MA, JapanBULKER $ 302/Ldt Chinese
ACHILLEAS 35,458 8,593 1985KOREA SHBLDG &
ENG - B, S. KoreaBULKER $ 310/Ldt Turkish auction in Cyprus
ORANGE BREEZE 23,242 8,126 1984MATHIAS-THESEN,
GermanyGC $ 483/Ldt Indian
INCA MAIDEN 22,133 7,786 1986
MITSUBISHI
SHIMONOSEKI,
Japan
GC $ 472/Ldt Bangladeshi
ASIA STAR 20,194 7,076 1994 THYSSEN, Germany CONT $ 504/Ldt Indian
LAGAS RAINBOW 1,160 1,320 1980 KEGOYA, Japan BULKER $ 320/Ldt Chinese
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]
Tsakos Energy Navigation has recorded a stronger fourth quarter result in line with Wall Street fore-casts. New York-listed Tsakos booked an adjusted loss of $5.3m in the three months to the close of 2013, an improvement on the $9.0m red number of a year earlier. Its loss per share of $0.09 was exactly as ana-lysts tracking the company had expected.
Nikolas P. Tsakos, chief executive of TEN, said in a statement: "TEN has once more demonstrated its ability to navigate through the rough shipping cycles and arrive at the other end stronger and bigger.
“Our successful chartering strategy together with our large operational capacity, places us on the top of companies with the ability to take advantage of mar-ket improvements.”
Tsakos says the introduction of two new suezmaxes and an LNG carrier during the year continued to boost its top line, with revenue up 4.5% to $70.6m in the final quarter.
“The crude charter market improved significantly, albeit too late to have a major impact on the fourth quarter 2013,” the owner said. “It benefitted TEN's spot and profit-share time-chartered suezmaxes, but aframaxes were not to reap the real benefits until the start of 2014.”
TEN, which today revealed it has added four addition-al aframax newbuildings at DSME against contracts with Statoil, booked an adjusted loss of $7.2m in 2013.
This marked an improvement on the $33.8m deficit seen in 2012 ”. (Trade Winds)