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Intermodal Weekly Report

21 Φεβρουαρίου 2021.

shipyard18Market insight

By Stelios Kollintzas,

Tanker Chartering Broker

Edible oil product movements across the board are looking no different than petroleum markets. Freight rates are moving sideways and returning very low TCEs. Soya bean oil exports from Argentina were heavily affected by the prolonged strikes during December, which pushed shipments onto January and February. Despite the high volume of cargoes shipped on those months, mostly to India , there was still ample tonnage to absorb them and not to affect the freight rates. However, MR tonnage list in March opening basis South America looks tighter and rates in the Atlantic Basket too soft to support the ballasting of further ships from elsewhere. As such, there is some potential for slightly better rates.

Representative freight rates:

30/32000mts ARGENTINA / INDIA US$37/38.00 ½

40/42000T ARGENTINA+BRASIL/INDIA 2/2 $34/35

25/30000T ARGENTINA/EAST MED 1/1 $30/31

ARGENTINA/WEST MED 25/30000T 1/1 $31/33

Sunflower oil supplies through H1 of 2021 looks tight because of the poor yield of sunflower seed harvests across Black Sea producers. This dynamic has already been evident in January where Ukraine and Russia, the two biggest exporting competitors shipped about 600,000 tonnes. Down from about 800,000tonnes exported same period last year. Furthermore, in an effort to secure supplies for domestic use, Russia's decision to increase the export tax on sunflower seeds to 30% from Jan. 9 to June 30, will give another hit in its exporting figures. Shipping wise, long-haul shipments to China have been notably exceeding those to India in January. A trend which is likely to be continued in February. Freight rates in this market are no different than the rest and as long as the poor CPP market across MED prevails, owners will see no premium in soft oils.
Entering into 2021, Palm oil market is being hit by several factors that lead to drop in export activity. Lack of manpower due to the pandemic related measures and high rainfalls have been few of them. However, the main hit came by the introduction of further export taxes and levies both in Indonesia and Malaysia making it very unattractive for traders to ship their cargoes. In any case, there has been sufficient tonnage laying around waiting for employment. Such employment is likely to come in March, where levy and export taxies will soften, Chinese return from New Year holidays and restocking will restart.

Representative freight rates loading from South East Asia:

E.C. India 12-15,000 MTS 22-24 usd/pmt

W.C. India/Pakistan 12-15,000 MTS 25-26 usd/pmt

Mid China 12-15,000 MTS 30.50 usd/pmt

Rotterdam (imo3) 2/1 40/42,000 MTS 39-41

T/C Del Korea-Re-del Cont. 47-51,000 DWT 12,000/13,000 PD

Looking ahead, - As long as the vaccination of the world successfully continuous, economies around the globe will re-open. As a result, a rebound in edible oil demand and a recovery in production would come naturally.

 

Chartering (Wet: Stable- / Dry: Firmer)

 

A mixed picture emerged in the dry bulk market last week, with Capesize sector suffering discounts while the rest of the market enjoyed improved tonnage demand. The BDI today (16/02/2021) closed at 1,495 points, up by 131 points compared to Monday’s (15/02/2021) levels and increased by 189 points when compared to previous Tuesday’s closing (09/02/2021). Outlook in the crude carrier market remains uninspiring with average T/C earnings for all sectors hovering below OPEX levels for another week. The BDTI today (16/02/2021) closed at 589, an increase of 92 points, and the BCTI at 572, an increase of 90 point compared to previous Tuesday’s (09/02/2021) levels.

 

Sale & Purchase (Wet: Firmer / Dry: Firmer)

 

Interest in the tanker secondhand units seems to be picking up with crude carrier vessels almost monopolizing buyers’ appetite. At the same time, an impressive number of dry bulk SnP deals materialized with buyers focusing on geared candidates while Container SnP activity was present for another week. In the tanker sector, we had sale of the “ENEOS BREEZE” (301,013dwt-blt ‘03, Japan), which was sold to Singaporean owner, Shenchi Energy, for a price in the region of $22.8m. On the dry bulker side sector, we had the sale of the “MAGICA G” (82,740dwt-blt ‘12, S. Korea), which was sold to Greek owner, Moderna, for a price in the region of $16.4m.

 

Newbuilding (Wet: Softer/ Dry: Stable+)

 

The newbuilding market activity saw signs of a potential rebound with the volume of last week’s concluded deals being at healthy levels. Dry bulk sector was present while non-conventional segments saw another week of increased buying interest. On the Dry bulk front, Greek owner Niovis Shipping ordered two Ultramax units at NACKS for an undisclosed price. At the same time, Bulgarian owner Navibulgar exercised an option for two firm 31,800dwt vessels and signed a contract for two more at Jiangsu NY. Container sectors witnessed another firm activity; against long-term T/C to MSC, Seaspan Corp. and CDB Leasing concluded two 24,000teu Container each, all of them to be built at Yangzijiang at a price of around USD 150 million. It also came to light that Seaspan ordered up to ten 13,000teu units at Samsung on the back of a 12-yrs T/C with Zim. Lastly, Hyundai Mipo secured a total of three 40,000cbm LPG units by two Greek owners, Brave Maritime and Benelux Shipping.

 

Demolition (Wet: Firmer / Dry: Firmer)

 

Offered scrap prices out of the Indian subcontinent demo nations improved last week. Bangladeshi buyers appear particularly decisive in holding onto their leading role in the region with Pakistani breakers remaining closed for both tankers and dry bulk units. Indian breakers increased their bids as well, on the back of improved steel plate prices and the confidence that the Union budget of India brought to the local community last week with its intention to double the country’s recycling capacity. At the same time, demolition candidates remain at low numbers, with owners reluctant to dispose of their vintage units at the current levels. However, a resurge of Chinese steel imports could push breakers to raise their offered prices and consequently, the scrapping option to become more attractive to owners. Finally, the Turkish market seems that found a bottom, with positive fundamentals emerging last week which may provide the much-needed support for a small rebound in the coming weeks.

 

Wet Chartering

 

The effect of the Chinese New Year Holidays has left the crude carrier market under pressure last week. Sentiment in the VLCC and Suezmax market remained quiet with limited fresh cargoes coming to light. Aframax T/C average earnings closed the week up by $1,715 per day w-o-w. However, the sector lacks any meaningful support with rates hovering below zero in most business routes. At the same time, the softer sentiment doesn’t seem to have materially affected the period market with level of hires remaining stable at the time of writing.

VLCC market activity was overall steady. Average T/C earnings closed the week down by $-194 per day w-o-w on the back of soft demand for trips out of both the Middle East to USG and USG to china. West Africa market closed at the WS3.9 points.

The Suezmax market witnessed another challenging week with both West Africa and Middle East markets losing some ground while rates for business out of Blacksea gained 2WS points w-o-w. With the exception of the Aframax Cross Med business which lost $1,335 per day w-o-w the rest of the business routes enjoyed an increase in rates with TD17 improving by 19.69WS points w-o-w. Yet, the overall sentiment remains weak with average T/C earnings at the -$1,114 per day mark.

 

Dry Chartering

 

Diverging trends on the dry bulk market last week, with Capesize softening further and Panamax surging counter seasonally to record highs for this time of year. Capesize competitiveness increased further against the rest of the sizes with $ per ton economics for certain routes at record highs, while despite the Cape5TC dropping, period rates increased. With Panamax rates continuing to rally and bunker prices firm, Capesize is expected to react upwards through the week.

Capesize 5TC dropped on average -18.0% w-o-w, with the TA RV premium to the Pacific down -$1,480/day on average at $9.4k/day. Congestion at Chinese ports seems to have normalized, while ballasters to the Atlantic have increased compared to two weeks ago. Nevertheless, better post-holiday shipping demand and cargo combination from Panamax to Capesize is expected to absorb ballasters and support the segment higher.

Panamax physical activity and sentiment remained bullish despite the CNY holidays. Panamax 4TC rates increased +9.5% w-o-w on average, driven by robust grains demand out of the Atlantic and low ice class tonnage in the Baltic leading to multi-year high premiums for Baltic coal cargoes this week, as European coal demand has surged amid the cold wave. The Pacific is also getting stronger supported by recovering coal demand and the tight ECSA market.

Supramax 10TC declined -1.9% w-o-w on average, with the Pacific declining and the Atlantic strength continuing. Supramax benefits out of the US Gulf grains strength which fills in the gap of the delayed Brazilian harvest and the surging Panamax market, while the Pacific is also expected to rebound this week.

 

Analysts:

Yiannis Parganas

Tamara Apostolou

 

 

 

 

 

 

 

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