Friday, 10 January 2014 11:58

Market Report - January 10, 2014

Following a record of $68.5 billion in new orders in 2007 at the height of the shipping bubble, South Korea’s top three shipbuilders have reported combined orders totaling $52bn for 2013. This is one of the surest indicators yet that recent market improvements may be short lived if the rush to order at bargain basement prices continues. Out of interest, the world fleet is currently valued at a breath taking $659.6 billion.

Vale SA, the Brazilian iron ore mining company declared force majeure over the holidays on a number of its iron ore sales contracts as poor weather conditions caused floods and landslides affecting iron ore transport through the state of Espírito Santo. The declaration lasted for 12 days during which parts of the rail link from the iron ore mines to Tubarão port were partially or completely shut down. Vale estimated that the impact on iron ore shipments was in the range of 2.5 million tons and was certainly enough to put a dent into the Capesize market.

The Baltic Dry Index closed well down on Thursday at 1706 points compared to its relatively cheerful pre-Christmas level of 2134.

  Capesize     Panamax   Supramax 
Index   2500 1645 1188
Pre-Christmas  3596 1883  1499
Spot time charter   $24,100/day      $13,100/day   $12,400/day   
One week Ago  $32,800/day  $15,000/day    $15,700/day

 

The charge of activity in bulk markets likely reflects covering off year end positions before it’s too late but in any event the Baltic Dry Index had another good week closing on Thursday on 2337 points compared to 2145 points last week and 1719 points the week previously.

Tankers: 

292 tanker

The success of the Belgian VLCC owner/operator Euronav in purchasing the Maersk VLCC fleet is a sure sign of market confidence with a 20% increase in Euronav’s share price this week. However, it was quite an expensive Christmas gift as the purchase price for the modern fleet of 15 vessels was $980 million. As with drybulk, VLCC rates are suffering a post-Christmas lull and this week have been falling like the proverbial lead balloon. Rates are down to $15-20,000/day for voyages from the Arabian Gulf to Asia which is about half of where they were at the beginning of the week.

Containers: Rates from Asia to Europe have started the year at their highest level for more than 17 months in the run up to the Chinese new year at the end of January. Maersk, Zim, CMA CGM, OOCL and Hapag-Lloyd were all to apply rate increases of $250-$500 per TEU this week but whether these can survive the now traditional “slow February” remains to be seen. 

Friday, 13 December 2013 15:09

Market Report - December 13, 2013

 

  Capesize     Panamax   Supramax 
Index   4291  2085  1562
Last Week   3843  1867  1531
Spot time charter   $37,800/day      $16,600/day   $16,300/day   
One week Ago  $33,500/day  $14,900/day    $16,000

 

The charge of activity in bulk markets likely reflects covering off year end positions before it’s too late but in any event the Baltic Dry Index had another good week closing on Thursday on 2337 points compared to 2145 points last week and 1719 points the week previously.

Containers: The US Federal Maritime Commission (FMC) has pushed back a decision on whether to approve the P3 Alliance, effectively delaying the effectiveness of the proposed agreement.  It has asked Maersk, CMA CGM and MSC for "additional information" on the vessel-sharing agreement which was first announced in June this year. After the parties have submitted the requested information, a new 45-day regulatory review period will begin and will include a 15-day public comment period for interested parties.

Tankers: VLCC deliveries are down this year with around 30 new vessels expected to enter the market compared to 49 new entrants in 2012 and 62 in 2011. Against this, the International Energy Agency in its latest report has revised upwards its 2013 oil demand estimate by 130,000 barrels per day to 91.2m bpd and a further 1.2m bpd to reach 92.4m bpd in 2014. At the same time, average VLCC sailing distances are up a healthy 9% since 2010. However, and despite continued market fragility, the VLCC market seems as attractive to speculators as ever with 27 orders for new builds  already placed this year compared to only 15 last year. By way of at least some capacity mitigation, it is estimated that some 85 VLCCs, or 13% of the fleet, are approaching their third (and very expensive) special survey with many likely to be scrapped.

Also of significance this week, BP SHIPPING has ordered 14 medium range product tankers with Hyundai Mipo Dockyard. Nine of the vessels are expected to be in the 50,000 tons DWT range, the balance being 40,000 DWT vessels with deliveries spread over 2016/17.

Page 12 of 12