BMTI Dry Bulk Commodity Overview (12 Nov 2019)

Uncertainty looms in the European steel outlook, according to EU steel association EUROFER. A pre­sent “downslide” in the EU manufacturing sector is unlikely to bottom out soon, association director Axel Eggert said in a recent statement, noting “esca­lating trade disputes” between the United States and several of its main trading partners as well as continuing uncertainty about Brexit, both major fac­tors that could continue to have a dampening impact on the EU steel industry. EU steel consumption declined by 7.7% YoY in the second quarter of the year after falling by 1.6% in the first quarter. A com­bination of weakened exports and lower investment has taken a toll on steel use in the European Union, putting consumption at 39.3 Mt in Q2. The stock cycle, says EUROFER, turned negative in the quart­er, contrary to the seasonal pattern, worsening an already negative trend in final steel use. The down­turn in steel demand drove a 4% YoY fall in domestic deliveries in the EU in Q2 after a decline of 3% in Q1. A low-level stabilization in 2020, however, is seen, says Eggert, with an expected growth rate in consumption of 1.4% due to modest re-stocking.

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Maritime Lending Down to Twelve-Year Low (1 Nov 2019)

Bank lending to shipping concerns has fallen to its lowest level in at least twelve years, according to a new analysis by Greek researchers Petrofin Global Bank Research. The analysts say that last year saw the top 40 shipping banks loan a combined US$ 300.7 billion to shipping projects, which was US$ 45 billion lower (or 13%) than the year before and the lowest level since 2007 (US$ 352.3 billion), when the analysts began reporting on ship lending. Petrofin said that some of the reduction in loans was due to major shipping banks still in the process of off-loading their heavily exposed maritime portfol­ios that were critically damaged in the financial crisis. European banks have lowered their shipping expo­sure by 14% in the past year, says Petrofin, while US banks have raised it slightly by 5%. The analysts also noted a strong eastward shift in ship financing with the global share of European banks moving to 58% today from 83% in 2010; US banks account for 6.5% (from 2%); Asia-Pacific banks account for 35% (from 15%). German banks now account for US$ 38 billion in global ship loans (vs. US$ 154 billion in 2010).

Surprise jump in Cape rates as week ends (25 Oct 2019)

CapesizeSentiment rules for the volatile Capesizes with the end of the week bringing an unexpected bounce-back despite a nearly complete lack of fresh time charter activity in the last previous five days. Trans-Pacific RV freights—which had suffered the sharpest declines in the week—saw the sharpest improve­ments with around US$ 1,000 added to the assess­ment bringing the rates near US$ 23,000 daily. Voy­ages also benefited from the upturn with predictions of continued declines in the RBCT voyages eastward proving premature as rates flattened at US$14.5/mt.

Handy Bulk Market Update (18 October 2019)

bulk carrierThe chartering market seems to be in gradual decline, whilst numbers are still satisfactory for the owners to cash in. Kamsarmax tonnage has been traded from Black Sea for a Red Sea r/v at close to US$ 16,000 daily. To cover a cargo from Venezuela charterers were ready to pay US$ 15,000 daily with delivery India via Venezuela to Singapore/Japan, but dropped the ideas because of uncertainty over eventual sanctions.

Off the Continent Ultra tonnage has been traded at US$ 15,500-16,000 daily for 2 laden legs with redelevery Atlantic. Another Ultra was shown US$ 27,000 daily from the Continent via Baltic to India. Ultra tonnage is likely to find takers at around US$ 13,500-14,000 daily for a trip to ECSA, whilst to US Gulf the rate is lower at around US$ 12,000 daily, but why?

A 28,000dwt tonnage has been rumoured done at US$ 10,000 daily for a trip from ECUK via the Baltic to the East Med. Voyage rates exchanged for 30,000mt coke from the Baltic to North Spain equate to around US$12,000 daily on Supramax tonnage open on the Continent.

From Black Sea/East Med Supra tonnage is said to hold at around US$ 17,000 daily for a trip to West Africa. Handysize tonnage appears stable as well with 34,000dwt tonnage bid US$ 11,000 daily for a trip to the Continent or US$ 13,500 daily for a trip to the East Med, which looks a bit softer. An interesting fixture from Sea of Marmara to Quebec has been rumoured concluded on a 31,000 dwt – Laker – ballasting from Gibraltar at the daily equivalent of around US$ 9,000 daily basis Gibraltar or around US$ 12,000 daily basis Marmara.

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Bulk Carrier Freight Market Overview (16 October 2019)

capesize vesselThe market for the Capes has turned down with new business hardly seen in any basin. A drop in spot freight rates is seen nearly throughout the routes with the trans-Pacific round voyage hovering around US$ 23,000 daily and the Atlantic counterpart dipping below US$ 24,000 per day. Coal trips from Southern Africa to ARA can be concluded hardly above US$ 9/mt while this commodity loading in Colombia is doing in around the high US$ 10s/mt to the same destination at the moment.

The Panamaxes seem to twinkle towards their bigger sisters as business is somewhat scarce and the spot freight rates cannot hold to last done levels. Fronthauls are talked in a range of US$ 25,000 daily for tonnage of 74,000 dwt but not much vessels are open for such trips. Young tonnage of 82,000 dwt is trying to get rates at some of US$ 15-15,500 daily.

Little amount of business is seen for the Supras with a 62,000 dwt carrying salt from Egypt Med to USEC at a rate in the high US$ 13,000s daily and tonnage of 58,000 dwt is rated in the high US$ 11,000s per day for trips from the Continent to the US Gulf. The Handysizes seem to take a pause. From Continent to USEC younger tonnage of 38,000 dwt is talked at rates in the mid US$ 13,000 daily

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Handy Bulk Market Update (11 October 2019)

Ultramax at sunsetA quirky Kamsarmax market in the Atlantic has given some impetus to higher rate levels. Baltic rounds are hovering around US$ 17-18,000 daily. TC trip from Black Sea to Portugal has been traded at close to US$ 20,000 daily. ECSA fronthaul runs have been done at US$ 17,500 daily plus US$ 750,000 ls. Grain charterers ex-US Gulf are holding out for US$ 50/mt for Kamsarmax stem to China. Handy activity has thrown the focus on the Continent. There is widespread view of a pretty strong market with no signs of easing yet. In an attempt to avoid high rates coal charterers decided to increase their cargo size from Handy to Kamsarmax size. Steel charterers were rating a 40,000dwt at US$ 16,000 daily from GNS to Adriatic. For a fronthaul run owners of a 29,000dwt – open in South Spain were seeing US$ 15,500 daily for a trip via St. Petersburg to the East, which on the basis of passing Skaw, would be close to US$ 20,000 daily. Black Sea grain charterers were getting rates at US$ 17.75/mt for 30,000mt from Nikatera to Egypt Med. A couple of charterers with second half October Supra stems seem be have decided to wait and keep watching the falling market for fronthaul trips. In the US Gulf period rates for 35,000dwt tonnage have been exchanged at around US$ 10,000 daily from charterers versus owners idea of US$ 12,000 daily for 12 months trading. A 61,000 dwt was tied up for a cargo from Atlantic Columbia to Brazil at the equivalent of US$ 15,000 daily, which for trips to the Med are being fixed at around US$ 21-22,000 daily. Brazil appears steadier with Ultra fronthaul rate close to US$ 17,000 daily plus US$ 685,000 ls. Coastal was done on a 36,000dwt in ballast from West Africa at US$ 17,500 daily. The East has not been too busy at all, whilst amazingly enough there is still quite a number of charterers showing interest in period tonnage.

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Little Change in Black & Azov Sea (9 October 2019)

Ultramax at sunsetThe market situation in the Black Sea and the Azov Sea has seen little changes for the coasters during the last days, BMTI was told by an owner active in the region. Grain cargoes are abundant in the area and are concluded from Azov ports in a range of US$ 19-22/mt when heading to Marmara Sea. Same shipments and loading area can be fixed at around the mid US$ 30s/mt when the destination is in the eastern Med and in the mid/high US$ 30s/mt when going to the Italian Adriatic. The earnings of standard sea/river vessels of 5,000 dwt are hovering around US$ 2,800 daily lower year-on-year and some US$ 2,000 lower when compared with the average of the last five years. In view of the approaching winter season barge transport of sulphur on Volga-Don canal is expected to increase before the freeze begins. The river typically closes on 1 November. Sulphur prices for Q4-2019 from Azov to North Africa will range in the mid-to-high US$ 60s/mt CFR. Spot freight rates from Black Sea to Morocco are talked currently at about US$ 21/mt for sulphur shipments of 25-30,000mt which is around the same level seen during the last two weeks. In contrast stems of 10-15,000mt of urea loading in Yuzhnyy and redelivery Turkey are concluded in a range of US$ 12-14/mt which is a drop of US$ 1 week-on-week. Some 3,000mt of minerals saw a spot freight rate of some US$ 14/mt from Marmara to EC Greece and rebars loading in EC Greece and heading to Constanta can fetch about US$ 11/mt on tonnage of 5,000 dwt

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Bulk Carrier Freight Market Overview (3 October 2019)

handymax bulkerChina-connected trade seems to be having a modest turnaround on Capesize business, though it is still not quite clear as to its sustainability or underlying cause beyond simple sentimental recovery. Pacific RVs, at any rate, mount another US$ 1,000 jump at midweek to hit the US$ 22-23,000 daily range even with few, if any, new fixtures to justify the rebound. Kamsarmaxes remain on the fore of front haul biz from South America with APS rates still just under US$ 17,000 daily plus US$700,000 BB—but widely expected to break that wall before the week is over. Activity is still just strong enough in the Pacific to keep RVs over US$11,000 daily, though with some eastern holidays in swing, there are some doubts as to the persistence of said activity into mid-October.

Grain cargoes are keeping the Supramaxes occupied in Western Europe with a Supra having been fixed recently from La Pallice to West Africa with Sometra at a tick over US$ 19,000 daily. Nonetheless, grains and other agri-prods have been arriving too slowly on the deepsea market to keep Atlantic-based rates from sliding further as Black Sea front hauls slip to US$ 28,000 on modern tonnage. USG front hauls have dropped to around the same level, both having shed about US$ 500 at midweek. Eastern rates re­main far more resilient with activity steady and Indo rounds unmoved within the low US$ 12,000s area. When China gets back into action next week, there is a good chance that eastern Supra rates will be pro­perly reignited from their current flat-lining status.

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BMTI Dry Bulk Commodity Overview (26 Sep 2019)

wheat fieldEuropean wheat prices have remained relatively flat in the past week, even having gained some sentimental support from indications that Morocco will begin its importing season in October. Morocco said it plans to reduce its customs duty on soft wheat imports to 35% from a previous 135% starting on 1 October, which analysts say strongly indicates plans to begin grain imports in Q4, especially as Morocco’s own domestic grain output has fallen sharply short of expectations. French wheat exports are especially enthusiastic about the prospect of new Moroccan import demand. German producers were less opti­mistic as Baltic-sourced wheat exports are tradi­tionally rare to secure trade into North African mar­kets. French milling wheat for December is steady at about EUR 171.5/mt on Euronext trading in Paris, remaining under the recent one-month high of EUR 172/mt reached a week before. German bread wheat (12% protein) for September ex-Hamburg is trading at EUR 2.5/mt below the French wheat contract.

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BMTI Handy Bulk Market Update (20 Sep 2019)

bulk carrierThe chartering market looks still pretty stable in the Atlantic whilst the East is coming off for Handysizes. Off the Continent, the Ultra-Supra market appears to be lagging behind Handies, which have been com­manding very respectable numbers. Supra tonnage was fixed at US$ 19,000 for a trip to the East Med. Ex-USG owners of a 32,000 dwt have not seen bet­ter rates than those they were offered the day before yesterday, which was US$ 16,000 to the Continent. To cover Rouen to Algeria, Handysizes of 35,000 dwt were paid US$ 15,500 daily from Antwerp via Rouen to Algeria. One charterer even took a 35,000 dwt from Oran via Rouen back to Algeria at US$ 11,500 daily. Even for a trip to Brazil major char­terers took a vessel from Algeria via Rouen to Brazil at US$ 9,000 daily. Timber charterers are unwilling to take US$ 14,500-15,000 daily from the owners of 34-36,000 dwt vessels for a 45-day trip to the East Med, and prefer to stick to US$ 13,000 daily.

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Bulk Carrier Freight Market Overview (13 Sep 2019)

CapesizeCapesize cargo has predictably dried up in both bas­ins, particularly in the Pacific, where a recent re­stocking drive into the Far East had fuelled some astronomical increases, in some cases to nine-year highs. Rates have been falling in response, but not as rapidly as might be expected, although day-on-day declines of US$ 800-900 on the front haul run (to settle in the high US$ 50,000s) is also rather dra­matic. It is anyone’s guess when the slide will stop. With South America no longer the powerhouse it was last week, Atlantic Panamax rates have levelled out in the US$ 18-19,000 range on TARV basis. On the other hand, ECSA export demand is still rather vibrant and arguably still the most relevant source of new cargo demand in either basin, hence the domi­nance of ECSA deals on Kamsarmaxes to NoPac on round voyage basis. As such, 2LL can even secure upwards of US$ 21,000 DOP on Continental deli­very, which isn’t too shabby considering such rates were looking fairly exotic just a few months ago.

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Short Sea Sentiment Shifts to Baltic Owners (11 Sep 2019)

General sentiment continues to be buoyed by the ongoing grain season activities in the northern Euro­pean coaster markets with new shipments entering the Baltic from Germany, Scandinavia and the Baltic States, among others. Rates have been slowly but steadily edging upward on last-done, but very slow­ly with some shipowners reporting week-on-week premiums of up to EUR 0.50/mt but more upgrades proving to be closer to EUR 0.25/mt if anything at all. The firming pace of activity is nonetheless ex­pected to make September a better month than August was with hopes high across the North Sea and the Baltic Sea. Inter-Baltic trips from Norway with minor split cargoes of 3,000mt to the German Baltic continue to trade at unspectacular rates in the single digits of EUR 6-8/mt, depending on terms.

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Ship Finance Review — Clipper Expands Handysize Fleet (06 Sep)

Ultramax at sunsetPowering through their recent hardships, the same ones that have affected the dry bulk market at large, Clipper Bulk of Denmark has announced the recent purchase of three Handysize vessels of about 32,000 dwt each. Full delivery of the “Clipper Apollonia”, “Clipper Aegina” and “Clipper Alexandria” is expec­ted within the coming few months, announced the company in a statement. Clipper has emerged from a major restructuring operation that involved losing nearly 30% of its onshore staff as well as acquiring new capital at the same time to shore up its precari­ous financial standing. The restructuring process also saw Clipper sell off a number of its own bulk carrier vessels. This new acquisition will bring Clipper’s fleet to around 85 Handysize and Supramax vessels.

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BMTI Handy Bulk Market Update (28 Aug 2019)

handymax bulkerThe chartering market is looking very promising which many players are confident will last for the remainder of this year. Panamaxes are dominating with charterers struggling to find them. Sentiment from the Continent remains largely bullish. Tonnage of 38,000 dwt was fixed to Brazil at US$ 15,250 per day with delivery Norway. Rates from North France to the West Mediterranean on 33,000 dwt tonnage have risen to US$ 16,000 daily, which is catapulting the Rouen/Algeria voyage to around US$ 24/mt. And for a trip to the Far East with delivery in the Bal­tic, charterers are bidding a 27,000 dwt US$ 18,000 daily. British Steel took a 35,000 dwt from St. Law­rence via Narvik to the Continent at US$ 11,000, which is a fixture that is self-explanatory of the dire situation facing charterers in the North Atlantic.

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Dry Bulk Commodity Overview (23 Aug 2019)

wheat field commoditiesEuropean wheat prices appear to be firming on the back of a softer euro and renewed optimism for the EU wheat crop. Paris prices rose by EUR 0.5/mt at the end of last week to EUR 173.25/mt for Decem­ber milling wheat contracts after reaching a contract low at the start of the week some EUR 3/mt lower. The euro, however, has been falling since the start of August, making euro-denominated wheat more at­tractive for dollar buyers on the global marketplace. Analysts including Strategie Grains have responded to the turnaround by upgrading their export fore­casts for EU soft wheat in the present season. Fresh optimism about the German wheat harvest, albeit delayed by recent rainfall, has driven new sales in the domestic market with some traders claiming that as much as 0.25 Mt has already been purchased from this season’s new German crop. More than 90% of the current German wheat crop has already been harvested, making sales activity less vulnerable to shifting weather conditions going forward.

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Bulk Carrier Market Overview (21 Aug 2019)

HandysizeCorrections have been coming fast and hard on the Capesize long hauls with Pac RVs losing nearly US$ 1,500 on Tuesday to hit US$ 26,000 and TARVs settling at just above US$ 30,000. One very notable exception, however, is the front haul market, which appears to have been energized by another round of cargo demand, driving it about US$ 2,000 upward on the Continental delivery to exceed a freight of US$ 52,000 daily on the 180,000 dwt assessment.

Panamax rates haven’t entered an all-out collapse—far from it—but the once flat and steady trans-Atlan­tic round voyage rates have buckled under the pres­sure of reversing sentiment and sliding cargo de­mand to slide into the high US$ 19,000s daily on UKC delivery. Pacific-based business is so far prov­ing to be far more stable with drops still negligible as owners stay hopeful cargoes will be strong enough to keep freight rates from falling from current levels.

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Ship Finance Review – Stocks Fall on Economic Worries (16 Aug 2019)

Wall StreetStock markets fell sharply this week—the second biggest drop all year—on ongoing trade war worries and news from Germany and China indicating slow­er economic growth. Bond prices rose sharply, push­ing yields to multi-year lows, analysts said. The S&P on Wall Street fell 2.93% on Wednesday, pressured by declines in the energy sector. Japan’s Nikkei ex­change dropped 1.3%, though eastern stock markets were relatively stable compared to western ones. European stock markets declined across the board after the German government reported that the Ger­man economy shrank over the second quarter of the year, the second negative quarter in a row, indicating that the eurozone’s biggest economy was in reces­sion according to the widely accepted economic definition of recession. Germany, which remains a highly export-dependent economy, has been especi­ally affected by the ongoing US-China trade war.

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Some Things Never Change – A Flashback in Time (09 August 2019)

On 3 February 1637, at a Dutch auction, not enough buyers of tulip bulbs were found and the tulip bubble burst. Many speculators and investors lost all of their belongings.

Since the 16th century, tulip bulbs from Armenia and Turkey have been imported to Europe. First, the tulips were sold at reasonable prices. After new varieties were bred, a true tulip mania began. The demand was huge, but it took a long time to grow the tulips. Thus, a low supply was offset by a great demand.

euros shipping investmentPeople, rich and poor, entered the business with the popular plant. Most of them had no interest in gardening, but only in the trade of the flower. Knowledge of horticulture was not necessary anyway, since one could turn to intermediaries who only demanded start-up capital.

Holland at that time was a world power, attracting much gold and silver that was shipped into the country. Thus, existing goods faced more money (inflation) and prices rose. This presented the basic conditions for the emergence of a tulip bubble.

Around 1623, the rare tulip variety Semper Augustus came to the Netherlands. One of them cost 1,000 guilders, which was about six years’ income for a worker. Other varieties were later even traded for up to 10,000 guilders. At the time, this was the equivalent of a house in Amsterdam. However, the plants were not traded on the Amsterdam stock exchange, but rather in so-called taverns, where auctions were carried out.

But one day, on February 3, 1637, there were not enough buyers at one of the auctions: the tulip bubble burst. In the following months, prices for the former prestige object collapsed by 99%. Speculators went broke in droves.

Representatives of Dutch cities came together at the end of February to set up commissions. They laid down the rule that open futures contracts could be paid off by a penalty of 3.5% of the purchase price. This was paid by the growers and thereby the commissions wanted to prevent a spread of the distortions to other sectors of the economy.

This tulip bubble is considered the first well-documented speculative bubble in economic history

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Rapid Reversal Ahead of Bayram Holidays in the Azov Sea (7 August 2019)

Black SeaDespite anticipating a correction after the run-up of mid-summer, Azov owners say they were none­theless caught off guard by the magnitude of the crash in rates seen in the past two weeks, taking an even more extreme turn in the past week, which saw rates fall by some US$ 4-5/mt week-on-week and sometimes as much as US$6/mt. Average grain rates for Azov/Marmara are reported at US$ 23/mt or some US$ 3-4/mt lower than a week before, while grain rates for 5,000mt (46′) ex-Rostov to Marmara have been trading as low as US$ 19-20/mt, repre­senting losses of US$ 6/mt in just the transition between months. The upcoming Bayram holidays in Turkey and across the Black Sea in the Muslim world is not likely to help sentiment as owners prepare for an upcoming period of bearish sentiment and rate reversals. Black Sea rates have been somewhat stead­ier by comparison with the Kherson/Marmara rates holding to mid teens of US$ 16/mt or thereabouts.

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Commodities: World Steel Output +4.6% in June (6 Aug 2019)

steelExports of steel from Turkey surged 30% year-on-year in May to 2.1 Mt, based on new data from the Turkish Steel Producers’ Association. Domestic out­put fell by 8% nonetheless to 3.1 Mt in the month due primarily to weaker domestic demand even as international demand for Turkish steel continued to grow. In the year through May, steel shipments from Turkey jumped by 20% in the five-month period to 9.8 Mt. The US deciding to reduce tariffs on Turkish steel exports also spurred demand for steel exports to the US, one of Turkey’s major Atlantic buyers.

A combination of lower output forecasts in the EU, Russia and Canada has prompted the International Grains Council to reduce its newest projection for world wheat production in the 2019-2020 season. IGC now expects to see 763Mt in wheat produced in the current season, 6 Mt less than its previous pre­diction. While it kept its forecast for US output flat at 333.5 Mt, IGC lowered predictions for Russian output to 75.7 Mt (down from 79.5 Mt), EU output to 148.7 Mt (down from 151.2 Mt) and Canadian output to 32 Mt (from a previous 33.6 Mt). The EU itself recently downgraded its in-house forecast for wheat production to 141.3 Mt, slightly lower than the 142.3 Mt prediction it had the month before.

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Digging into the Past – Ship Finance – From Handshake to ‘Shareholder Value’ – Part II/II (26 July 2019)

euros shipping investmentFollowing last week’s description of shipping finance in eighteenth century Greece:

Shares versus Loans

The loan carried a yearly interest rate of about 30% and was to be repaid provided the vessel was not lost. The shareholders’ pay-off depended on the profit remaining after the payment of interest and other expenses. Half of the profit would go to the crew (no fixed wages were paid) and the other half to the shareholders. The shareholders’ income would thus depend on the charter rates the vessel would get. And thus their participation was riskier than a straightforward loan, whose return would be independent of the charter rates. Some investors, usually the wealthier ones, were willing to undertake these risks to their entirety while others wanted to reduce it. Thus, if an investor entered 50% of his funds in the vessel and the rest in a loan, he was better off in case the return on the vessel was below 30% and worse off otherwise. This reduced the variation of the investment return. The high interest rates for the loans were due to the high dangers at sea. At the end of the eighteenth century, a ship loss in the eastern Mediterranean Sea was calculated to be about 15-20% so the average vessel age was in a range of 5-7 years.

Developing Situation

The situation changed with the increased investment required for a steamer ship. The necessary capital could no longer be raised nearby and the merchants resorted to the London capital market or other financial centres. In the beginning of the steamship era, the captains did not have a controlling interest but as their know-how for running steamships increased, several captains bought out the other partners and became controlling owners. This structure of a shipping firm is the norm in contemporary shipping where every vessel is a separate company with a leading partner, several other partners and considerable bank financing. Of course, shipping loans today are not written off in case the ship is lost, and the development of the specialized insurance market has fundamentally changed the nature of risk into a financial factor rather than a physical one.

But in general, it can be stated that from the beginning of financing on all parties involved (merchant-owners, investors, accountants and notaries) indirectly show an understanding of the risk return tradeoffs and try, through several financing alternatives, to apportion the risks in an equitable way

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Bulker Shipbroking Overview (24 July 2019)

panamaxAs almost anticipated the Capesizes have turned negative, with the TCA down by 885 to 32,078. All routes declined with the trans-Pacific rounds losing most with more than US$ 1,000 and hardly be able to reach the US$ 30,000 daily mark. Even the wild card, the Brazilian to China voyages are sliding and have dropped already more than US$ 1/mt from the peak seen recently.

For the Panamaxes the amount of fresh enquiries has slowed down a bit although the spot freight rates continue to increase. Ore shipments from Northern Australia keep coming at spot freight rates in the high US$ 15,000s daily on 90,000dwt tonnage towards Singapore-Japan range. Trans-Atlantic rounds can be quoted for young tonnage of 80-2,000 dwt at some US$ 23,000 per day.

Business is not very abundant for the smaller sizes at the moment but coming steady into the market. Young Tess 58 tonnage is talked in a range of US$ 10,000 daily for a trans-Atlantic round trip when open mid China. Indonesian rounds can be quoted at a similar level on same tonnage with delivery in Southern China. Fertilizer shipments of 60-65,000mt can see rates of some US$ 42-44/mt loading US Gulf and redelivery WC India compared to about US$ 38-40/mt seen before. Handies of 28-30,000dwt are rated in a range of US$ 7-7,250 daily for a trip from EC India and redelivery SE Asia.

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Digging Into the Past – From Handshake to ‘Shareholder Value’ Part I/II (19 July 2019)

euros shipping investmentAlthough centuries of merchant shipping have passed, the kind of financing of ships in general has been the same throughout the years. There exist two possibilities: (1) a merchant has enough capital to buy and maintain a ship or (2) a ship is financed through the sale of shares and borrowing to a number of investors willing to participate in the enterprise. Since early times, for this kind of financing it was normal that only a certain amount of money truly existed as cash, with other parts of the money being ‘on the books’ or in bonds or loans (promises). The merchant normally was also the ship’s captain and responsible for the construction of the ship and the management of the whole enterprise. He sought partners and, furthermore, borrowed according to “Shipping Terms” for the sea loans or, in regular terms, in view of establishing a risk sharing mechanism. Only on rare occasions did a vessel belong to a single owner.

At the end of eighteenth century in Greece, for instance—one of the main ship-trading countries of the time—returns on the capital of the ship owner as well as the interest charged on the loans were carefully calculated. Loans were on a per-voyage basis and had a duration of a few months. These loans were subject to the “risks and dangers of the sea”, namely if the vessel was lost no claims could made against the property of the merchant shipowner. It is not known what other specific loan types were available.

The entire capital-raising procedure at the end of the eighteenth century was similar to the one that is followed today in the launching of private equity funds. The launch was carried out in a restricted time interval and the personality of the leading fund manager was instrumental in the success of the fund-raising effort. The call was addressed to the important members of the local society. Surely, the merchant circulated a financing proposal for the particular vessel in a closed circle, providing shipping and financial details, a kind of business plan that must have included some estimate of the required financing as well as a certain forecast of revenues to be expected.

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BMTI Handy Bulk Market Update (17 July 2019)

dry bulk terminalIn the Atlantic there is ample reason for the owners to celebrate and enjoy playing around with charterers. Now the charterer’s flexibility is challenged to prepare the ground for a deal with the owner. Kamsarmax owners have been commanding US$ 30,000 daily for a fronthaul run from the Continent.

Handysize owners are somewhat less sanguine and believe the market has peaked – temporarily at least. A 38,000dwt got US$ 13,000 daily for a trip from the Baltic to the East Med, and 33,000dwt was open at US$ 7,500 daily for a trip to the USG, which the same owners covered last week at US$ 9,000 daily, and which rate they have so far not seen this week.

The larger sizes keep running the show from Black Sea. An 82,000dwt tonnage was covered at US$ 19,000 daily from Canakkale to Baltic with redelivery Skaw. An Ultra was offered US$ 27,000 daily from East Med via Black Sea to Singapore/Japan, after owners indicated to charterers US$ 16,500 daily from WC India via Black Sea to the East. The owner was offered US$ 15,500 daily for short period. Continue reading

Short Sea: Azov Freights Pushed by River Tonnage (12 July 2019)

Coaster freight rates are picking up as “grain market for river tonnage is very hot”, a broker working in the area is telling BMTI, explaining “owners three weeks before were asking for about US$ 19/mt for 3,000mt of wheat for a trip from Rostov to Marmara and last week rates of US$ 25/mt to Marmara were seen”. Freight rates in a range of US$ 23-24/mt are talked for voyages with loading in the Ukraine and heading to the Eastern Med with basis 1,000 discharge. Mid-July shipments are expected to be even substantially higher with rumours around of some US$ 28-29/mt from Russian ports to Izmir, basis 1,000 discharge. According to a local charterer for voyages out of Azov to the Adriatic owners are demanding mid-low US$ 30s/mt, compared to high US$ 20s/mt during the last months.

Seagoing coaster on the other hand still have to accept lower freight rates as the market remains weaker and probably stay so until end of August. A corn shipment of 8,000mt has been concluded at a rate of around US$ 14.50/mt with delivery Constanta and destination in Greek Cyprus. From the Egyptian Med a fertilizer cargo of 3,000mt was talked in a range of US$ 21/mt for a redelivery in the upper Adriatic. Some steels of 9,000mt loading in the port of Novorossiysk saw a freight rate of about US$ 23/mt for delivery in the Egyptian Med and a voyage in the Black Sea from Odessa to Constanta was concluded at a freight rate of some US$12/mt for a shipment of 3,000mt of steel billets

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Bulker Shipbroking Overview (10 July 2019)

Yesterday’s assumption of a possible break seems to be right. With the exception of the fronthaul the Capesizes have recovered the losses they have gone through. The rounds in both basins are talked in a range of US$ 28,500-28,800 daily for the Atlantic side and at some US$ 23-23,300 per day for the Pacific. Iron ore voyages are steadily sailing on their ocean-highways with freight rates for end July loading a bit below US$ 9/mt when coming from Western Australia and a bit above US$ 22/mt when loading port is in Brazil.

The Panamaxes enjoy the growing of the spot freight rates at an even accelerating pace in both hemispheres although business is quite low at the moment. Only a flurry of coal shipments heading to India are seen at freight rates for loading in Eastern Australia at the beginning of August in the mid-high teens. Fronthauls for modern tonnage of around 82,000 dwt are trying to touch the US$ 25,000 daily mark.

The situation for the smaller sizes is without major changes in the Atlantic basin. Spot freight rates keep on climbing and there are business opportunities around. In the East the market can be characterized as flat with some retreat in rates like a 56,000 dwt open mid China going to India via Indonesia at a low US$ 7,000s daily rate.

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Ship Finance Review (4 July 2019)

Wall StreetAnalyst J Mintzmyer of Seeking Alpha has identified Star Bulk Carriers [SBLK] as a “dry bulk pure play” due to its current value at around US$ 8.4 being a “massive” 35% discount to its NAV (net asset value) and the company’s well-positioned, modern fleet which is set to be 100% fitted with scrubbers before the IMO 2020 regulations come into play. Mintz­myer also sees great potential in SBLK due to the current rally in Capesize rates (with day rates up to US$19,000 this week vs. US$4-7,000 three months ago) and Vale’s resuming iron ore output at its mines that were closed until recently following January’s mine disaster. The analyst has accordingly raised his fair value estimate for SBLK to US$ 14 per share. Continue reading

Container Market Update (2 July 2019)

container shipContainership rates burst into action in the past week with several main benchmark rates leaping by 15-25% week-on-week, including those rates from Shanghai to South America (basis Santos), which rose by more than 25% to reach US$ 2,260/TEU, according to the SCFI. The main index itself in­creased by a very strong 8.5%, as a measure of all rates together, posting 829.7 by the end of last week. Other big gainers included rates to USWC, which rose by 24.5% week-on-week to US$ 1,720/TEU. Rates to USEC rose as well, if not quite as sharply, gaining 16.0% on the week to hit US$ 2,789/TEU. The combined US destination routes account for 40% of the total SCFI calculation, so their increase has had a significant impact. Rates to Europe were less spectacularly improved with Mediterranean Sea redelivery, in fact, losing 0.7% on the week to settle in the vicinity of US$ 726/TEU, based on the SCFI. Continue reading

Baltic Short Sea: Sluggish Summer Sentiment (27 June 2019)

baltic sea short seaSettling from last week’s minor uptick in activity and sentiment—perhaps buoyed by increasing bunker prices as well—rates for northern ships have settled back into their historical sideways motion as owners continue to keep a hard line at operating costs, which is where rates continue to hover dangerously just above. Market dynamics are undeniably poised against owners at the moment, as they have been for most of the year, with open tonnage just plentiful enough in most areas of trade to keep charterers from feeling any urgency to fix on forward positions or give premium rates unless absolutely necessary. With the onset of summer sluggishness and wide­spread holiday-taking across northern and western Europe, there is little hope for a recovery in the short term. Whether July brings a new wave of demand, inspired by a return of grain from the southern Euro­pean markets as the Black Sea harvest starts, remains yet to be seen.

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Bulker Shipbroking Overview (26 June 2019)

Despite slowing in upward momentum, Capesize voyages do not appear to have hit a wall yet with modest improvements taking Brazil/ARAG voyage rates toward US$ 8.4/mt and Brazil/China toward US$ 18.5/mt. Whether they will keep rising over midweek is another issue, brokers strain to remind. Pacific RVs seem to be the first rates to buckle under the pause in demand with a flat and even rate of US$ 17,000 daily the newly downgraded (if just slightly downgraded) level for 180,000mt cargoes. The Atlantic spot basin, by comparison, is still going strong with a surprisingly robust US$ 1,000 upgrade on Tuesday taking average freights over US$ 19,000 and suggesting US$ 20,000 daily on the horizon.

The Panamaxes day in the sun seems to have ar­rived after several weeks of suffering pressure on rates and less-than-spectacular sentiment. The up­turn is most notable within the western hemisphere where owners are already seeking long haul rates at US$ 1,000 premiums to what they were asking for at the end of last week. A case in point is the trans-Atlantic round voyage from the Continent, which can now fetch upper US$ 8,000s daily on modern tonnage after settling for anything in the US$ 7,000s less than a week before. Pacific business is back in action as well with NoPac rounds pushing toward US$ 9,000 daily on standard tonnage to Singapore.

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