bms arcadia gac17



Allied Shipbroking - Weekly Shipping

15 Απριλίου 2018.

shipyardploiMarket Analysis

2nd-6th April 2018, Week 14

Round two of the US-China trade spat continued this past week, leaving a bitter after taste for most in the dry bulk market as they see their market recovery slowly being eroded by the recent geopolitical frictions being expressed on the global trade scene. Last week witnessed one of the most worrying and direct hits on the bulk shipping markets, with China’s announcement to extend its tariffs on imports from the US to several more agricultural products including soybeans. With the US holding a fair share of China’s soybeans imports of just over 94 million tons, this is a direct hit on a trade primarily served by dry bulkers and a significant one at that given that most wait for the seasonal peaks this soft commodity brings on to freight rates during the US harvest seasons. The largest majority of this takes place between October and March each year, at which point the US becomes the main source of soybeans for China, with the largest portion of the 35.7 million tons in total that it ships there annually being imported during this period. In comparison Brazil which holds the lion share of China’s soybean imports, tends to provide its volumes during the remaining months, making it an unlikely candidate as a source to displace the lost imports from the US. Canada and Russia share similar harvest seasons and could as such help alleviate some of the issue, but they are nowhere close to be able to cover the total volume needed.

Given that we are only talking about a 25 percent tariff, it is not a measure that can completely stop the trade in its tracks. The reasonable fear is that it will likely affect the trade growth that has been noted during the past couple of years, with the just over 10 percent average growth in traded volumes likely to stall and even reverse in its tracks. At the same time, we have the indirect effects that will be brought about by the proposed US tariffs on a large list of Chinese products, which could well lead to a deterioration in the global trade of dry bulk goods moving forward, taking into consideration that most of these goods rely on raw resources for their manufacturing in one way or another. All this leads to indications of a downward correction on the demand forecasts for this sector, something that will surely shake up the balance and lead to a more modest performance in the freight market.

The hope is that all this geopolitical tension being noted will subside, with an eventual deal being struck before things intensify further and hopefully with most of the measures that have already been taken, reversed thereafter before any significant effect has been felt on the market. It the case that this takes longer than what would be ideal, there is little to worry about given the fact that the expected fleet growth is hovering at relatively low levels, while the orderbook for the next two years is at historical lows. The biggest fear is the combined effects that could be felt by the continues efforts being made in China to curb pollution by scaling back steel production and other industrial activities in several major cities and regions. All this leaves for a cap on coal consumption, another vital commodity for the dry bulk trade, which in combination to the downward pressure on the rest of the commodities described above and in our previous report, could lead the total dry bulk into a perpetual limbo state. Let’s hope reason does prevail and a deal is struck sooner rather than later.


George Lazaridis

Head of Research & Valuations



Freight Market

Dry Bulkers-Spot Market

2nd-6th April 2018


Capesize - With the holidays both in the West and East, coupled with bad weather and force majeure taking out further steam and momentum, the market witnessed a notable drop across the board. The Pacific basin was leading this most recent drop, with rates tumbling out of West Australia. Things were not looking to be much better in Brazil, leading to a fair drop to be noted in the Atlantic as well. Having said that, it looks as though some resistance is starting to be felt now.

Panamax - Similar disruptions were to be noted here as well, with fresh interest almost evaporating and the tonnage lists piling on in most areas. Here too however it looks as though we may have touched bottom, with the latter half of the week showing some slight promise of a better balance being slowly reached.

Supramax - Drops were to be seen here too, though not as sharp as what we witnessed in the larger size segments. In contrast to the larger sizes, it was the North Atlantic that was the main let down, with the holiday season making its presence clearly felt. Concern has started to rise with regards to the escalating trade disputes being raised with the US, while the weaker levels of fresh interest out of US Gulf has already started to push for a swell in position lists there.

Handysize - Things were looking to be better balanced here, with the main drops in rates in the US Gulf and Pacific being countered to some degree by slightly better activity noted out of Continent and ECSA. Things were fairly quiet in the Far East due to the Chines holidays in the latter half of the week, though given that most market disruptions are subsiding now, we may well see things improve.


Freight Market

Tankers - Spot Market

2nd-6th April 2018


Crude Oil Carriers - It looked as though things were still holding at subdued levels in terms of activity in the MEG for VLCCs, with rates noting further corrections. Things were not looking to be much better in the WAF, despite the fact that rates have held relatively stable for the time being. Similar picture was to emerge for Suemzxes in the WAF with a bare minimum of fresh interest helping keep things steady for now. Things were not looking to be as promising in the Black Sea/Med were we witnessed another drop this past week. Things were more mix and match for Aframaxes, with the Baltic/North Sea and Far East showing some positive movements after a week of relative inactivity, while elsewhere the week closed once again in the red.

Oil Products - A fairly bleak week for product tankers, with the overall trend being a downward one. The majority of DPP routes were showing appetite for downward corrections, while things were equally under pressure on the CPP front, with some of the biggest drops being seen on the North Atlantic routes.


Sale & Purchase

Newbuilding Orders

2nd-6th April 2018


We continued to see a series of new deals emerge this week, with the tanker sector still seeing interest amongst buyers, despite the picture that is being painted on the earnings side. It looks as though there are many that see an opportunity emerge thanks to the increasing regulatory requirements and the relatively low prices that are still being quoted. All this however has started to create a net effect on prices, with shipbuilders finding an opportunity to raise their ideas hoping to find some cover from the recent positive trend that is being noted. At the same time, we see an exact opposite development on the dry bulk side, with activity holding still at minimal levels despite the optimism that is being held in terms of the freight market prospects moving forward. This may well be in part a reflection as to the recent pause that has been noted in both the secondhand market as well as the temporary stall seen in terms of freight rates. Overall however the prevailing attitude might be influenced by deeper routed reasoning, one would hope, with most seeing that the balance that has been struck being still fragile and trade not showing any prospects for an exceptional ride to be developed over the next couple of years.


Sale & Purchase

Secondhand Sales

2nd-6th April 2018


On the dry bulk side, it looks as though the market showed a bit more spark this week, with activity levels increasing considerably compared to what we were seeing one week prior. The focus however in terms of size and age profiles sought out by buyers seems to still be relatively unchanged, with the large majority of concluded deals centring around the Supramax and Panamax size segments. We have yet to see any interesting moves in terms of pricing, though the upward pressure is still very much present.

On the tanker side, things continue to remain at bare minimal levels in terms of activity. This week the main focus seems to have centered around product tankers, with no crude oil carriers having changed hands. This as always remains as a pure reflection to the market gap that has emerged amongst buyers and sellers and given the prevailing earnings and mixed messages still being given by the crude and oi products trade, this trend will likely continue to prevail.


Sale & Purchase

Demolition Sales

2nd-6th April 2018


The market seems to have taken a step back this week, with the excessive speculative buying that was taking place a couple of weeks back having seemingly backfired for some cash buyers. There are rumors now that many in the market have a considerable backlog of purchase still in their hands and as such have stepped back from excessively competing on any new demo candidates that do emerge in the market. At the same time we are still seeing a fair amount of volume reported each week, with the tanker sector still remaining the main source for most, especially in the larger sizes. The prospects of a re-opening of Pakistan still hangs over the market, tempting most to stockpile now before Pakistan end buyers move to push up prices. This however has been something that has been discussed for some time now and it looks as though the consecutive delays in terms of a final decision being struck by authorities has now started to harm the market and put many cash buyers at risk. At the same time the recent geopolitical events that have unfolded with regards to trade tariffs may well start to trickle through to the demo market, leaving for weaker fundamentals as a repercussion of the lower steel product prices that may well follow.










«  Μάρτιος 2019  »