trend of Chinese steel exports - 0.5 1.0 1.5 2.0 2.5 - 20 40 60 80 100 120 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 iron ore port inv. / steel production 5-yr average iron ore port inventory in mil. tonnes 5-yr average Source: Bloomberg L.P., World Steel Association (mil. tonnes) Market insight By Eva Tzima Research Analyst Dry Bulk owners, always look at September as the me that the market “signals” what lies ahead for the remainder of the year. The Chinese iron ore restocking that tradionally picks up during Q4, is currently stealing the spotlight. The Capesize summer rally proved to be short-lived, with the aver- age rate for the segment losing most of its gains and seling around $8,000/ day. Spot rates have nonetheless increased more than 70% during last week. Looking at the short term momentum, this appears to be favoring another boost for the big bulkers. Iron ore stockpiles at Chinese ports are currently well below the five year average. The 14% drop in imports that took place in August, has at the same me created an addional “gap” to be filled. The rao of the present inventory of iron ore over steel producon, which is also well below the five-year average, points out to a bigger than usual poron of iron ore stockpiles being consumed by Chinese mills and turned into steel. Despite the fact that domesc steel consumpon has been faltering as of last year, producon has found support in exports, which are up a whopping 27% in the first 8 months of the year. With low inventories of iron ore, steel producon inching up last month, and a very strong trend of steel exports year to date, everything points out to another round of stockpiling and pos- sibly another mini Capesize rally in the way, “mini” being the operave word here. Although rates appear set to advance further in the following days, I am skepc in regards to how long posive momentum can be sustained. The reality is that despite the decrease in Chinese iron ore producon levels, these are sll considerable given the current steel output in the country, seng a limit in imports and consequently the spikes Cape rates enjoy. As steel producers in China turn to higher quality imported iron ore and local iron ore producers exit the market amidst low prices, things certainly move towards the “right” direcon but we are hardly there yet. Addionally and even most importantly, China remains the top steel con- suming market worldwide and despite the fact that shipping its steel to India and other SE Asian countries might be offseng part of the gap created by the domesc consumpon slowdown, it doesn’t even get close to filling it. With Chinese steel consumpon and producon expected to shi into an even lower gear, the amount of iron ore required by Chinese producers going forward is set to keep less and less dwt busy. Muddy waters for Capes. Chartering (Wet: Firm + / Dry: Firm + ) The Dry Bulk market gained significant ground supported by Capesize performance, which resulted in rates for the big bulkers surging during the second half of the week. The BDI closed today (22/09/2015) at 923 points, down by 55 points compared to Monday’s levels (21/09/2015) and an increase of 121 points when compared to previous Tuesday’s closing (15/09/2015). Rates for VLs kept overperforming the crude carri- ers market, which is connuing to enjoy improved senment. The BDTI Monday (21/09/2015) was at 671 points, an increase of 42 points and the BCTI at 514, a decrease of 21 points compared to previous Tuesday’s (14/09/2015) levels. Sale & Purchase (Wet: So - / Dry: Stable + ) SnP acvity in the tanker sector eased off, while buying interest was for another week concentrated around MR candidates. At the same me Greek owners connued showing interest in second hand Dry Bulk ton- nage <84,000dwt. On the tanker side, we had the en-bloc sale of the “CENITO” (53,116dwt-blt 09, China) and the “POSILLIPO” (53,116dwt-blt 10, China) which were sold for a price in the region of $54.0m. On the dry bulker side, we had the sale of the “MARATHA PROVIDENCE” (47,574dwt-blt 95, Japan), which was sold to Kuwai owners, Jawhrt Berlin, for a price in the region of $3.8m. Newbuilding (Wet: Firm + / Dry: Stable - ) Bring on the Tankers! The newbuilding market, which has been witness- ing unexpectedly high levels of acvity in the past couple of months, was nearly monopolised by tanker orders last week. The tanker bonanza covered a wide range of sizes, from small bitumen carriers to VLs, while the presence of crude carriers was definitely standing out in the list of freshly inked deals. The outstanding volume of this recent ordering, which coincides with the revival of rates in the crude carriers sector, reaffirms the faith owners are sll placing on the sector, which opposite to dry bulk seems to have convinced the market of its strong fundamen- tals. As far as the newbuilding industry is concerned, this recent firming in ordering is certainly more than welcome, but when it comes to prices we don’t see yards “experimenng” anyme soon with higher levels even if this trend of strong ordering persists. In terms of recently report- ed deals Greek owner, Maran Tankers, has placed an order for two firm Suezmaxes (156,000dwt) at DSME, in S.Korea, with delivery set in 2017. Demolion (Wet: Firm + / Dry: Firm + ) It was refreshing to see a meaningful improvement in the Chinese demo market last week that was stuck at dismal levels for quite some me now, while following a month of prices advancing in the Indian subcon- nent demo market, things quiet down a bit last week in the region. This hardly affected the number of deals concluded though, with a significant number of dry deals being reported for scrap in the region. Most noce- ably, vintage Capesize bulkers remained prominent demo candidates last week, fact which allowed for renewed hopes of an even less con- gested Capesize market by the end of the year. At the same me, the fact that we are sll seeing post 2000 built vessels heading for scrap, is an obvious sign of how big the will to scrap remains on behalf of some owners, who are keen to take advantage of the recent improvement in demo prices, despite the fact that their vessels are not close to what is tradionally considered their scrapping age. Prices this week for wet tonnage were at around 160-350 $/ldt and dry units received about 140- 330 $/ldt. Weekly Market Report Issue: Week 38 | Tuesday 22 nd September 2015
9
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Weekly Market Rep%rt · trend of Chinese steel exports-0.5 1.0 1.5 2.0 2.5-20 40 60 80 100 120 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 iron ore port inv. / steel production iron
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trend of Chinese steel exports
-
0.5
1.0
1.5
2.0
2.5
-
20
40
60
80
100
120
Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15
iron
ore
po
rt inv. / ste
el p
rod
uctio
n
5-yr a
vera
ge
iro
n
ore
po
rt i
nve
nto
ry
in m
il. t
on
ne
s
5-y
r a
vera
ge
Source: Bloomberg L.P., World Steel Association
(mil. tonnes)
Market insight
By Eva Tzima
Research Analyst
Dry Bulk owners, always look at September as the 0me that the market
“signals” what lies ahead for the remainder of the year. The Chinese iron ore
restocking that tradi0onally picks up during Q4, is currently stealing the
spotlight. The Capesize summer rally proved to be short-lived, with the aver-
age rate for the segment losing most of its gains and se6ling around $8,000/
day. Spot rates have nonetheless increased more than 70% during last week.
Looking at the short term momentum, this appears to be favoring another
boost for the big bulkers. Iron ore stockpiles at Chinese ports are currently
well below the five year average. The 14% drop in imports that took place in
August, has at the same 0me created an addi0onal “gap” to be filled. The
ra0o of the present inventory of iron ore over steel produc0on, which is also
well below the five-year average, points out to a bigger than usual por0on of
iron ore stockpiles being consumed by Chinese mills and turned into steel.
Despite the fact that domes0c steel consump0on has been faltering as of
last year, produc0on has found support in exports, which are up a whopping
27% in the first 8 months of the year. With low inventories of iron ore, steel
produc0on inching up last month, and a very strong trend of steel exports
year to date, everything points out to another round of stockpiling and pos-
sibly another mini Capesize rally in the way, “mini” being the opera0ve word
here.
Although rates appear set to advance further in the following days, I am
skep0c in regards to how long posi0ve momentum can be sustained. The
reality is that despite the decrease in Chinese iron ore produc0on levels,
these are s0ll considerable given the current steel output in the country,
se<ng a limit in imports and consequently the spikes Cape rates enjoy. As
steel producers in China turn to higher quality imported iron ore and local
iron ore producers exit the market amidst low prices, things certainly move
towards the “right” direc0on but we are hardly there yet.
Addi0onally and even most importantly, China remains the top steel con-
suming market worldwide and despite the fact that shipping its steel to India
and other SE Asian countries might be offse<ng part of the gap created by
the domes0c consump0on slowdown, it doesn’t even get close to filling it.
With Chinese steel consump0on and produc0on expected to shiB into an
even lower gear, the amount of iron ore required by Chinese producers
going forward is set to keep less and less dwt busy. Muddy waters for Capes.
Chartering (Wet: Firm + / Dry: Firm + )
The Dry Bulk market gained significant ground supported by Capesize
performance, which resulted in rates for the big bulkers surging during
the second half of the week. The BDI closed today (22/09/2015) at 923
points, down by 55 points compared to Monday’s levels (21/09/2015)
and an increase of 121 points when compared to previous Tuesday’s
closing (15/09/2015). Rates for VLs kept overperforming the crude carri-
ers market, which is con0nuing to enjoy improved sen0ment. The BDTI
Monday (21/09/2015) was at 671 points, an increase of 42 points and
the BCTI at 514, a decrease of 21 points compared to previous Tuesday’s
(14/09/2015) levels.
Sale & Purchase (Wet: So& - / Dry: Stable + )
SnP ac0vity in the tanker sector eased off, while buying interest was for
another week concentrated around MR candidates. At the same 0me
Greek owners con0nued showing interest in second hand Dry Bulk ton-
nage <84,000dwt. On the tanker side, we had the en-bloc sale of the
“CENITO” (53,116dwt-blt 09, China) and the “POSILLIPO” (53,116dwt-blt
10, China) which were sold for a price in the region of $54.0m. On the
dry bulker side, we had the sale of the “MARATHA PROVIDENCE”
(47,574dwt-blt 95, Japan), which was sold to Kuwai0 owners, Jawhrt
Berlin, for a price in the region of $3.8m.
Newbuilding (Wet: Firm + / Dry: Stable - )
Bring on the Tankers! The newbuilding market, which has been witness-
ing unexpectedly high levels of ac0vity in the past couple of months,
was nearly monopolised by tanker orders last week. The tanker bonanza
covered a wide range of sizes, from small bitumen carriers to VLs, while
the presence of crude carriers was definitely standing out in the list of
freshly inked deals. The outstanding volume of this recent ordering,
which coincides with the revival of rates in the crude carriers sector,
reaffirms the faith owners are s0ll placing on the sector, which opposite
to dry bulk seems to have convinced the market of its strong fundamen-
tals. As far as the newbuilding industry is concerned, this recent firming
in ordering is certainly more than welcome, but when it comes to prices
we don’t see yards “experimen0ng” any0me soon with higher levels
even if this trend of strong ordering persists. In terms of recently report-
ed deals Greek owner, Maran Tankers, has placed an order for two firm
Suezmaxes (156,000dwt) at DSME, in S.Korea, with delivery set in 2017.
Demoli,on (Wet: Firm + / Dry: Firm + )
It was refreshing to see a meaningful improvement in the Chinese demo
market last week that was stuck at dismal levels for quite some 0me
now, while following a month of prices advancing in the Indian subcon0-
nent demo market, things quiet down a bit last week in the region. This
hardly affected the number of deals concluded though, with a significant
number of dry deals being reported for scrap in the region. Most no0ce-
ably, vintage Capesize bulkers remained prominent demo candidates
last week, fact which allowed for renewed hopes of an even less con-
gested Capesize market by the end of the year. At the same 0me, the
fact that we are s0ll seeing post 2000 built vessels heading for scrap, is
an obvious sign of how big the will to scrap remains on behalf of some
owners, who are keen to take advantage of the recent improvement in
demo prices, despite the fact that their vessels are not close to what is
tradi0onally considered their scrapping age. Prices this week for wet
tonnage were at around 160-350 $/ldt and dry units received about 140-
It was refreshing to see a meaningful improvement in the Chinese demo
market last week that was stuck at dismal levels for quite some 0me now,
while following a month of prices advancing in the Indian subcon0nent demo
market, things quiet down a bit last week in the region. This hardly affected
the number of deals concluded though, with a significant number of dry
deals being reported for scrap in the region. Most no0ceably, vintage
Capesize bulkers remained prominent demo candidates last week, fact which
allowed for renewed hopes of an even less congested Capesize market by the
end of the year. At the same 0me, the fact that we are s0ll seeing post 2000
built vessels heading for scrap, is an obvious sign of how big the will to scrap
remains on behalf of some owners, who are keen to take advantage of the
recent improvement in demo prices, despite the fact that their vessels are
not close to what is tradi0onally considered their scrapping age. Prices this
week for wet tonnage were at around 160-350 $/ldt and dry units received
about 140-330 $/ldt.
The highest price amongst recently reported deals, was that paid by Bangla-
deshi breakers for the Container vessel “APL GARNET” (66,618dwt-21,468ldt-
blt 95), which received $368/ldt including 150T ROB.
Demoli,on Market
Week
38
Week
37±% 2014 2013 2012
Bangladesh 335 330 1.5% 469 422 441
India 350 350 0.0% 478 426 445
Pakistan 340 340 0.0% 471 423 444
China 160 145 10.3% 313 365 384
Bangladesh 305 300 1.7% 451 402 415
India 330 330 0.0% 459 405 419
Pakistan 310 310 0.0% 449 401 416
China 140 125 12.0% 297 350 365
Dry
Indicative Demolition Prices ($/ldt)
Markets
We
t
120
220
320
420
520
$/l
dt
Wet Demolition Prices
Bangladesh India Pakistan China
50
150
250
350
450
550
$/l
dt
Dry Demolition Prices
Bangladesh India Pakistan China
Name Size Ldt Built Yard Type $/ldt Breakers Comments
AQUAGRACE 167,105 22,092 1997HALLA ENG & HI -
SAMHO, S. KoreaBULKER $ 334/Ldt undisclosed as-is Singapore
APL GARNET 66,618 21,468 1995SAMSUNG HEAVY
INDUSTRI, S. KoreaCONT $ 368/Ldt Bangladeshi incl. 150T ROB
EVER RESULT 58,912 19,924 1995MITSUBISHI KOBE,
JapanCONT $ 352/Ldt undisclosed as-is Thailand
DUNFENG MANILA 154,249 19,822 1994NAMURA IMARI,
JapanBULKER $ 330/Ldt Pakistani
TSUNOMINE 156,818 19,701 2000TSUNEISHI SHBLDG -
TAD, JapanBULKER $ 340/Ldt Indian green recycling
ARCA EMERALD 13,208 10,743 1984TSUNEISHI SHBLDG -
FUK, JapanRORO $ 357/Ldt undisclosed option Indian subcontinent
Demolition Sales
The informa0on contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such informa0on to be factual and reliable without mak-
ing guarantees regarding its accuracy or completeness. Whilst every care has been taken in the produc0on 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 informa0on 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 wri6en authoriza0on of Intermodal Shipbrokers Co.
Compiled by Intermodal Research & Valua0ons Department | [email protected]