WEEKLY SHIPPING MARKET REPORT WEEK 20 - 16 TH to 20 th April 2011 - Legal Disclamer The information contained herein has been obtained by various sources. Although every effort has been made to ensure that this information is accurate, complete and up to date, Shiptrade Services S.A. does not accept any responsibility whatsoever for any loss or damage occasioned or claimed, upon reliance on the information, opinions and analysis contained in this report. Researched and compiled by: Shiptrade Services SA, Market Research on behalf of the Sale & Purchase, Dry Cargo Chartering and Tanker Chartering Departments. For any questions please contact: [email protected]Shiptrade Services SA Tel +30 210 4181814 [email protected]1st Floor, 110/112 Notara Street Fax +30 210 4181142 [email protected]185 35 Piraeus, Greece www.shiptrade.gr [email protected]
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WEEKLY SHIPPING
MARKET REPORT WEEK 20
- 16TH to 20th April 2011 -
Legal Disclamer
The information contained herein has been obtained by various sources. Although every effort has been made to ensure that this information is accurate, complete and up to date, Shiptrade Services S.A. does not accept any responsibility whatsoever for any loss or damage occasioned or claimed, upon reliance on the information, opinions and analysis contained in this report.
Researched and compiled by: Shiptrade Services SA, Market Research on behalf of the Sale & Purchase, Dry Cargo Chartering and Tanker Chartering Departments. For any questions please contact: [email protected]
ConocoPhillips Outlines Proposal for Gas Exploration Off Australian Coast
ConocoPhillips and partner Karoon Gas Australia Ltd. (KAR) aim to start drilling in the Browse Basin off the coast of northwest Australia in the second or third quarter to evaluate the potential of a natural gas discovery. Conoco seeks government approval to drill as many as eight wells and expects the exploration campaign to last about two years, the third-largest U.S. oil company said in a proposal submitted to the Australian Environment Department today. The partners previously expected to begin drilling in March, according to documents lodged with the environment department last year. The 2009 Montara oil spill in the Timor Sea and last year’s BP Plc disaster in the U.S. Gulf of Mexico have prompted calls for tougher controls of the oil and gas industry. In response to the two incidents, ConocoPhillips (COP) has “undertaken a comprehensive review of its drilling and well- control practices and procedures, as well as its global oil spill contingency plans, to ensure any lessons learned are well understood and incorporated,” the documents show. The Australian government expects to decide by June 15 whether the latest drilling proposal requires further evaluation, the environment department said today. If the government decides that the new plan doesn’t require further review, the campaign can begin, the department said. Conoco withdrew the prior proposal after the government provided feedback on ways of minimizing the environmental impact, according to the department. Possible Delays Karoon fell 4.4 percent to A$6.09 at the 4:10 p.m. close in Sydney, while the benchmark S&P/ASX 200 Index rose 0.7 percent. Conoco and Karoon plan to drill in an area about 7 kilometers (4.4 miles) east of the Seringapatam Reef and 12 kilometers northeast of Scott Reef, the documents lodged with the government today show. The drilling is unlikely to “have significant impacts” on the reefs, the companies said. In the original proposal, Conoco planned to drill in an area about 2.9 kilometers from the Seringapatam Reef, the documents show. The companies asked the federal government earlier this year to reconsider a decision to subject the drilling plan to a more detailed review that would likely lead to delays, Mount Martha, Victoria-based Karoon said on Jan. 21. Karoon may spend A$450 million ($477 million) drilling exploration wells in Australia and South America in the next two years, Executive Chairman Robert Hosking said in April.
Chemoil back in the black
Chemoil Energy, the Singapore-listed bunker supplier, has made a strong start to 2011 with a return to profit. Chemoil returned to profit in the first quarter of 2011. The company, 51% owned by commodities giant Glencore, reported a net profit of $23.2m versus the loss of $13.5m seen a year ago. Revenues for the three months ended 31 March 2011 were just under $2.6bn, a 48% increase on the corresponding period last year. Chemoil saw sales volume reach 4.6mt during the quarter, a year-on-year increase of 25% on the 3.7mt seen at the start of 2010. The volume expansion was generated in part by the acquisition of OceanConnect Marine in 2011, coupled with increased ex-wharf and cargo sales in Europe and Asia.
The average sales value per metric ton realised during the first quarter of 2011 was up by 19% at $552 per metric ton against $465 in 2010. Barging and pipeline costs fell by 14% mainly due to reduced retail volumes in the Americas, while chartering costs were down 28% due to reduced third party chartering. “The positive operating results achieved in the fourth quarter of last year not only continued into 2011, but also accelerated in the first quarter of the year,” Chemoil said. “The company’s performance is strongly influenced by improving market conditions coupled with restructuring initiatives which have allowed us to record the best quarterly profits in the company’s history since IPO in 2006,” said Chemoil chief financial officer Mats Berglund. On the industry outlook this year, Chemoil said that “margins as well as the demand for marine fuel have improved.” But it warned that future trends may be affected by geopolitical factors as well as effects of natural calamities and remains uncertain.
NSA insider sees upside Today’s challenging markets are not all bad news for Norwegian shipping companies, Sturla Henriksen says. Henriksen, director general of the Norwegian Shipowners’ Association (NSA), believes strong companies that ride out the crisis will come out the other end in a better position. “These are difficult times for everybody, but this is also a time for opportunities,” he told TradeWinds WebTV. Henriksen was speaking at the opening of the Nor Shipping exhibition in Oslo, where youth will take centre stage this week. He says the emerging generation’s ability “to cope with the great challenges of our time”, including climate change, will determine their legacy.
Stena confirms LNG move Swedish shipowner Stena Bulk has confirmed that it is the buyer of three LNG carriers from Nobu Su’s TMT. It is paying $700m for the 145,000-cbm Stena Blue Sky (built 2006) and two 174,000-cbm newbuildings. All three ships are ice-classed. The newbuildings are not fixed whilst the Stena Blue Sky has another 22 months left of a charter to Gazprom of Russia. TradeWinds reported on the deal last week, but could not obtain comments. This is Stena Bulk's first move into LNG. Managing director Ulf Ryder has great faith in the investment and believes the newbuildings will earn “in excess of $100,000 per day.” “We believe this to be a very good investment. LNG accounts for a significant part of the growth in the global energy supply and there is currently a shortage of LNG tankers,” he said. Capacity utilisation of the 320 large LNG tankers in operation is nearly 90%. In addition, the demand for transportation of LNG is expected to rise about 8% per year over the next decade. “In addition to the shipyards’ full order books, there is a need for 60-70 new LNG tankers to satisfy the rising demand up until 2014,” Ryder said. “Having the liquidity and operational know-how to be able to purchase these three vessels so quickly gives our LNG investment an excellent starting point.” Stena said it expects the two newly built vessels to be delivered from Daewoo Shipbuilding & Marine Engineering in June 2011. They will then be fitted out with supplementary equipment after which they will be ready to load their first cargo of LNG at the end of July.
In Brief: Last week we experienced a fluctuating market, leaving a positive feeling at the weeks’ closing. The week began with a downward trend, but recovered during Thursday and Friday, with the BDI gaining 58 points. On the other indices, BCI gained 158 points, BPI lost 9 points, BSI gained 20 points and BHSI lost only 2 points.
Capesize: After several weeks of declining, we saw BCI increasing again with a strong push during Thursday and Friday. Many Owners though, keep a low profile, considering how long this rise will last. In the Atlantic region we saw higher fixtures, with vessels reported fixed at USD 8.500 per day for Transatlantic round, while levels for the same route were at USD 4.500 per day just the week before. In the same spirit, fronthaul trade levels increased, with the Tubarao – Qingdao route concluding at USD 19.50 pmt, USD 0.50 pmt higher than previous week’s closing. In the Pacific, things did not follow the same trend. We witnessed around 9 vessels fixed to load from Australia, but rates decreased at USD 7.15 - 7.30 pmt, less USD 0.15 pmt since closing of previous week. Panamax: The week began quietly, with rates decreasing softly, but approaching towards midweek we saw activity raising. In the Atlantic, Charterers were bidding around USD 13.500 - 14.000 per day for Transatlantic round, but eventually rates moved closer to USD 15.000 per day. Fronthaul trips though, still kept leading. Vessels opening in Continent or Mediterranean were fixed at USD low 20’s, while levels for vessels opening in ECSA were around USD 25.000 + 550 / 600.000 ballast bonus. In the Pacific, there were many vessels available, so Owners had to lower their ideas in order to cover their tonnage. Many vessels opening in S.E.Asia were fixed for coal ex Australia/Indonesia/Philippines with destination India at levels around USD 13.000 per day. N. China positions were fixed at USD 11.000 per day for trips ex NOPAC during the first days, while towards the end, Owners could get even more than USD 13.000 per day. Supramax: In general, market remained in the same levels like the week before. A small change in the Atlantic was the lack of scrap cargoes from continent to Mediterranean, which were soon replaced from scrap and petcoke ex U.S.A origin. On fronthaul trade, vessels opening in Continent/Mediterranean could get USD low 20’s per day. Vessels opening in W. Africa concluded at around USD low 20’s per day for trips via ECSA to F. East, while positions in ECSA itself could see around USD 20.000 + 350 / 400.000 ballast bonus. In the Pacific, rates began moving downwards. Many Owners tried to fix their vessels on short period talking around USD 15 - 16.000 per day, but Charterers were aiming around USD 13 - 14.000 per day. Indonesian nickel ore is still very active, with Charterers trying to pull levels down, and Owners resisting in all their efforts. A trip to India is not a preferable destination any more, since the monsoon season has already started. Handysize: Handies had a very steady week with almost no change on the rates. In the Atlantic, we noticed a decrease on the cargo volume ex ECSA due to heavy port congestion. Some grain majors preferred not to enter in the market with new stems, until prospects become clearer. Also many parcels from/to USG have been postponed as an effect of the Mississippi flooding. Vessels in Continent/Baltic had an option out of local coal trade, fertilizers to ECSA, and grains to Mediterranean. In the Pacific there was a steady flow of steel parcels ex N. China, and coal ex CIS. Vessels in S.E. Asia could find easily coal and ores.
Dry Bulk - Chartering
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Baltic Indices – Dry Market (*Friday’s closing values)
In Brief: Oil prices continued to decline while the International Energy Agency asked oil producers to increase production over concerns that high oil prices will hinder economic recovery around the world. In addition, IEA announced that demand for diesel may increase in China for this year as electricity production will need to rely more on fuel and less on coal or water, due to rising costs for the first and low levels for the latter that incommode hydropower.
VLCC: In the Middle East Gulf, demand remained strong but not as much as needed in order to push rates up, which were
ultimately kept at same levels. In West Africa owners could not longer take advantage of any freight differential from Suezmaxes
and as a result a small decline was observed for Western rounds.
Suezmax: Competition from VLCC owners worked against Suezmax owners in West Africa and rates for Atlantic runs dropped
slightly, while the picture hasn’t changed in the Black Sea since the previous week for Mediterranean runs and rates still hover
around low WS 80s.
Aframax: Last week in the Mediterranean, Aframaxes started pretty strongly but as days passed enquiries got fewer and fewer.
As a result, although rates increased spectacularly in the beginning, eventually they dropped back at around same levels as last
week. To make matters worse, new tonnage is expected as May is coming to an end. Things didn’t change much in the North Sea
while the holiday in Singapore didn’t help trades in the Middle East and rates kept their low levels. On the contrary, in the
Caribbean activity picked up after the Morganza Spillway opened to redirect flood, though there are still quite many units in the
area that will possibly not allow rates to increase dramatically.
Products: Last week was bad news for both LR1 and LR2 trading AG-Japan whereas things were even worse in the Caribbean
where demand remained weak for upcoast movements for both Panamaxes and MRs as well. The “shining light of hope” that
was the TC2 market a couple of weeks ago, was extinguished abruptly as more and more vessels were attracted by earnings not
seen since before the crisis. Panamaxes for Transatlantic options witnessed a drop in rates as well while more tonnage is
expected to be added in the area.
Baltic Indices – Wet Market (*Thursday’s closing values)