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Allied Shipbroking - Weekly Shipping

06 Απριλίου 2021.

shipsea10Market Analysis

29th March - 4th April 2021, Week 13

With the first quarter of the year having come to a close, we can already see the exuberant aftermath of the sharp rally that has taken place during the course of these three months. The dry bulk market has made its most promising start to the year for at least a decade. Freight rates have been quick to set new records as the weeks progressed and overall activity and trade seemed to have fired up. Yet as March came to a close, things started to subside on the freight market front. With much of Europe and the US seeing a slower pace as part of their Easter holidays, the market was able to take a slight step back from its previous highs. Yet the positive momentum still seems to have a hold on the market. Sentiment is still positive and there is ample of evidence of over exuberance still around. Taking a look at longer-term trades, you can still see an upward pattern holding firm.

Nowhere has this been more evident than in the second hand dry bulk market. Asset prices have more than recovered the losses they witnessed this time last year and have shown to still hold one of the quickest rallies on recent record. Prices have jumped on average around 15% year-on-year, while if we look at only 5 and 10 year old assets the average year-on-year increase has been 28%. What is more remarkable is that the majority of this increase has taken place over the past 3 months, while early April 2020 wasn’t even the absolute bottom in asset prices. At the same time, this trend doesn’t even seem to be over just yet. The positive momentum is still holding its pace with further gains looking to be made over the next month, while it looks as though it will take time before this upward trajectory has run its course and we start seeing prices stabilize. Buying appetite has seemingly been abundant in recent weeks,
while we have also seen an exponential increase in transactions being reported. At this point the only downside seen in the market is the stand off approach that is slowly being taken by many sellers who are hoping to hit higher prices, something that only goes towards further feeding the price hike being noted. At the current rate, it doesn’t look as though it will take long before we are able to hit the high point of 2014 in asset prices. While given where we have reached in terms of freight rates, even those asset prices would not seem too farfetched, given that the last time we noted such high levels in the freight market was more than 10 years back.

All and all, we are looking at a market in sharp contrast to both what was going on last year, as well as what we have been seeing over the past 5 years to say the least. The market is surely in the midst of a sharp change, while it looks as though market fundamentals are there to support this change in direction. Pent-up demand may have been the cause for the initial spark, yet it has been longer-term market drivers that have now seemingly pushed for this relentless market rally of late. The question therefore seems to now be focused more so as to the rate of improvement that will unfold over the coming months rather than anything else.


George Lazaridis

Head of Research & Valuations



Freight Market

Dry Bulkers-Spot Market

29th March - 4th April 2021


Capesize – The freight market returned on a positive track last week, reflected in the reported rise of 4.4% in the BCI. This surge was nourished mostly from the increased iron ore shipments from W.Australia to China, few days before the Easter holidays. At the same time, support came also from other key trading routes such as Brazil to China, but things there were not equally exciting.

Panamax – Another week with losses, with the BPI falling to 2,484bp. There is discouraging momentum in the segment as activity overall remained subdued for another week. This had as a result the gradual rise of tonnage lists in key regions globally and the deterioration of market sentiment. Owners are awaiting for an uptick to be witnessed in the market after the holiday break, which should help the positive momentum to return.

Supramax – The correction mode resumed here too last week, as the BSI TCA lost another 7.2%, remaining though above the US$20,000 mark. Demand was disappointing once again in both basins, pushing rates lower. However, earnings are still at considerable good levels and owners’ sentiment is still holding at robust levels, which is likely to help freight rates finding a temporary floor soon.

Handysize – The downward momentum held here too, with the BHSI TCA falling to US$20,461 this past week. The key routes driving the market of late (demand for cargoes from US Gulf and east cast of S. America) have started to lose some steam, being reflected in the diminished number of enquiries witnessed in the market. However, sentiment is still robust here as well, with owners expecting much better conditions to take hold after the Easter break.


Freight Market

Tankers - Spot Market

29th March - 4th April 2021


Crude Oil Carriers— The crude oil freight market experienced a step back during the past week or so, with the benchmark BDTI figure losing 8.6% of its value. In the VLs, we did not see a significant change week-on-week. Middle East rates remained relatively stable, while West African numbers increased by 4.1%. In the Suezmax segment, the downward path was even steeper across all of the main trades. Middle East rates decreased the most, with weekly losses of 33.5%. Finally, relatively attuned with the bigger sizes, the Aframax market lost traction too as of the past week. At this point, the Caribs-USG is the most under pressure route, having lost 14% of its value during the past few days.

Oil Products - On the DPP front, things took a shift as of the past week, with most of the main trade experiencing considerable losses. Despite the anticipated potential in the Med trade, freight returns took a hefty negative dive (of 26.5%). On the CPP front, we witnessed a rather mixed week, with many trades though remaining on a negative track.


Sale & Purchase

Newbuilding Orders

29th March - 4th April 2021


It seems as though it has been a fairly quiet week in the newbuilding market, especially for the dry bulk segment which had ramped up a fair bit of activity during previous weeks. However, it was not a totally inactive week, as the order of 2 Kamsarmaxes and 1 Ultramax came to light. The bullish sentiment still dominates the segment and thus we expect interest from buyers to remain strong in the coming weeks. Nevertheless, the rising momentum noted in newbuilding prices, nourished from the increased demand, are slowly trimming some of this interest. In the tanker market, it was another uninspiring week, with no fresh business being noted as of late. The improved, but still unconvincing freight earnings and the deeply hurt sentiment amongst owners are expected to play a key role over the coming weeks as well. There is a need for a significant upturn in the demand/supply balance in order for fresh capital and investment to be pored into this segment. At the same time, prices are also not yet at levels that could be considered bargain deals. Finally, it is worth mentioning, that a boom was witnessed in the containership segment this past week, in line with the current market fundamentals and the positive outlook for this specific sector.


Sale & Purchase

Secondhand Sales

29th March - 4th April 2021


On the dry bulk side, the overall activity momentum shifted slightly as of the past week, given the relatively limited number of transactions that came to light. A fairly different picture compared to the volume noted throughout 1Q2021, though relatively explained by the Spring break disruptions that are taking place. Though in part we are also seeing many sellers step back and as such hold back transactions, in their effort to hopefully get better prices down the line. Notwithstanding this given the general good sentiment and recent buying appetite levels, we can expect things to quickly ramp up.

On the tankers side, another good week in terms of activity noted. Despite the prolonged uninspiring freight rate levels, we are currently amidst a different track both in terms of vessel prices, as well as, transactions levels. If this can be translated as an improving forward sentiment, we could expect a more interesting SnP market to emerge in the near term.


Sale & Purchase

Demolition Sales

29th March - 4th April 2021


The alarming increase of COVID-19 cases in the Indian SubContinent has led local governments to proceed to fresh lockdown measures, which have caused further disruptions to the ship recycling market. Meanwhile, the current freight earnings in key sectors such as that of the dry bulk and containers, have also curbed scrapping activity as of late. In Bangladesh, we witnessed the demolition of two tankers being reported this past week. However, the new measures being taken regarding the pandemic is expected to halt the rising momentum of activity noted in the past couple of weeks, while prices are likely also to lose some ground. In India, further lockdown measures were also announced this week, in an attempt to trim the spread of COVID-19. Thus, we will see a slow-down in demand as well here, with the question being what will happen after the end of the announced measures. Despite this, we were still able to see some activity emerge this past week on the back of improved steel prices. In Pakistan, there was no fresh business reported this past week. Meanwhile, the government here has not yet announced any additional restrictions to tackle the pandemic, but it is likely to do so soon. In contrast to the overall bearish sentiment, prices being quoted across local scrapyards have held firm.














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