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Allied Shipbroking - Weekly Shipping

13 Σεπτεμβρίου 2018.

plori17Market Analysis

3rd -7th September 2018, Week 36


It has been a rather turbulent week, with emerging markets having taken a considerable hit in the midst of the recent strength noted in US Dollar and the still bleakish view noted on trade (something emerging markets rely heavily on). Despite all this, the performance of the dry bulk market has managed to hold its ground relatively well and given the current freight rate levels being noted, we could well be on the verge of further improvements in sight. It is worth pointing out that Australia’s Port Hedland noted a nearly 10 percent monthly increase in its shipments of iron ore to China during the month of August, showing that despite the negative influence that has been noted by the trade disputes, demand is still there and showing positive signs thanks to the firm steel production. A trade that has really shown considerable shifts over the past months has been that of grains and more specifically that of soybeans. During the past month China increased its soybean imports by an impressive 14 percent from a month earlier. This drive has in part been driven by the damage caused to crops in China’s Northeastern region, something that will surely help push the market further over the coming weeks as they seek to partly cover the gap in demand with imports.The tariffs that China has imposed on soybean imports from the US have also played their part, essentially pushing most traders to seek to increase their reliance on imports from Brazil. Given that the harvest seasons for these two countries don’t completely coincide, it has lead to bigger seasonal shifts in trade volumes. Adding to this mix the continued support being handed to the dry bulk market from the bullish coal trade noted this year and you have a recipe for further freight rate gains. In terms of coal, things are likely set to continue to hold firm for the medium term, given that both China and India are still showing strong demand trends for the time being.

Putting these trends in trade against the trends noted in terms of fleet and you can see how there is still a fair balance being kept in the market. The overall dry bulk fleet has increased by a fairly moderate 1.46% over the past 8 months. Given that we are expected to close off the year with a 2.6% net increase in the dry bulk trade, this still leaves for a fair positive margin to be gained despite all the developments that have taken place this year. Comparing were the Baltic Index stands now against past years and looking at the typical trends noted in the final quarter of each year for the past 5 years, you can’t help but keep a more optimistic view despite all the political commotion taking place.


George Lazaridis

Head of Research & Valuations



Freight Market

Dry Bulkers-Spot Market

3rd -7th September 2018


Capesize - For yet another week market rates were under pressure, with the BCI falling by around 13.31% and closing at 2,411. The slowing activity that was seen in the Australia/China trade affected the market in favor of charterers. Meanwhile, rates in the Atlantic basin seem to lack momentum for a rebound adding more pressure on Capes. However, losses were capped in the final days of the week, with many investors believing that the market softening observed in the last couple of weeks is part of the summer lull and things may well be set for a reversal. Given this, we may well be set for some improvement now.

Panamax - Uncertainty in both the Atlantic and Pacific basins led rates to fall across most routes, with BPI losing around 2.80%. The decline, however, was limited during the week due to the typhoon winds that hit Japan, disrupting trade and minimizing available ships in the region. All in all, the transatlantic market is expected to remain relatively under pressure, whilst the East coast trade should continue to show a fair amount of support in the market.

Supramax - A quiet week for the Supramax market, with minimal fixtures coming into the spotlight. Meanwhile, market rate movements were mixed this past week, with some gains being seen on some routes, such as NWE to Far East, while other trades were pressured by the limited availability of cargoes.

Handysize - A little change was seen in the Handy market during the last week, with the most notable gains being observed in the ECSA trades thanks to a renewed flow of fresh enquiries that popped up during the week.


Freight Market

Tankers - Spot Market

3rd -7th September 2018


Crude Oil Carriers - The tonnage oversupply is currently dominating the VL market, with available vessels overshadowing the available cargoes and charterers being keen on retaining the market at these levels. However, the increased activity in the USG limited the overall losses, leading the BDTI to close the week at 785, 1 point lower than the previous week. In the WAF, Suezmax rates found support from increasing demand from charterers, with market sentiment remaining strong for the next couple of weeks. On the Aframax side, things remained quiet for yet another week, though some strong gains were being seen in the North Sea/Baltic region thanks to a clearing of tonnage and fresh demand.

Oil Products - On the DPP side, rates felt a considerable increase on US bound routes, while trade inside the Black Sea/Med was still under pressure, closing at a level roughly 13% lower. On the CPP side, all main routes witnessed a considerable improvement, with USG-CONT showing the main improvement and closing 95% higher than the levels we were seeing one week prior.


Sale & Purchase

Newbuilding Orders

3rd -7th September 2018


With the summer lull period having come to an end, interest for new contracts is starting to gain pace, with several new orders coming to light this past week. However, this increasing activity seems to have focused in its majority right now on the containership sector, where 7 new contracts emerged for a total of 44 new vessels, with most of these belonging to the smaller more versatile the feeder subcategory. On the dry bulk side, 7 new vessels were ordered, 3 of which were Handysizes, while another 3 were Kamsarmaxes and 1 was a Supramax. Meanwhile another 7 new vessels were added to the tanker orderbook, ordered by Far Eastern and US interests. A couple of new orders were also rumored in the offshore, passenger and LPG sectors, showing the overall growing momentum being seen in the push now being made by shipbuilders to entice further buying interest across the shipping industry as a whole. In regards to prices, we have not yet seen any significant changes during the last few weeks, with the slow down in activity over the past few weeks having played their part.


Sale & Purchase

Secondhand Sales

3rd -7th September 2018


On the dry side, things were relative subdued during the past week, inline somehow with the downward correction noted in the freight market as of late. On the other hand, while most segments witnessed a rather sluggish level of activity, S&P transactions for Handysize vessels showed some positive momentum, with interest varying across different age levels. Notwithstanding this, we may well expect an bullish attitude to take shape now, though given the price levels being noted it will be a while before any further price increases can be noted.

On the wet side, overall activity seems to be holding at relatively fair levels for the time being, given the overall trend noted in the year so far. Moreover, as we have witnessed before, most market participants continue to hold a rather “bargain hunting” attitude, something that should continue to feed a fair volatility with periodical ups and downs in terms of number of vessels changing hand.


Sale & Purchase

Demolition Sales

3rd -7th September 2018


Another week with limited activity to note in the ship recycling market, with just a handful of units concluded for demolition over the past few days. There is still a feel that appetite amongst breakers is still at limited levels despite the prevailing price levels being noted. The limited flow of demo candidates has played its part in keeping things level, though with expectations now for a re-firming flow of candidates to emerge things could start to get more competitive as we move forward. There are however other important factors feeding this clampdown of late. First of all, dry bulk sector is almost absent in the year so far in terms of activity, a sector which has played a big part in feeding volume over the past couple of years. Given the prevailing state of earnings and this trend is likely to hold in the short run at least. As such things have largely depended on the tanker sector, which has already hit a 5-year high in terms of number of vessels sent to be scrapped.











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