BMTI – Trend Experts for Shipping

In February of this year, Ukraine produced more than 2.55 Mt of coal, just 0.2% less than expected. This is according to statistics from the Coal Miners Union of Ukraine in reference to data released from the Ukrainian Energy and Coal Industry Ministry. In the year to date, asserts the miners union, mining enterprises of all forms of ownership have produced a combined 5.20 Mt of coal or 103% of the target.

After steadily declining for about a month, Russian wheat prices are starting to stabilize, market ob­servers report, with competition from other area producers being lessened in recent days as the euro-USD exchange rates rebalances. Prospects for the year ahead are favourable for Russia with the Black Sea crop now expected to hit 83-87 Mt of Russian wheat, surpassing even last year’s output and far surpassing the 26-28 Mt expected in neighbouring wheat producing country, Ukraine. Weather trends remain positive for Russia’s harvest, claims SovEcon, with precipitation over recent days reported in the Central, Volga and southern regions of the country.

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The situation in Black Sea/Azov Sea hasn’t changed in favour of the owners during the last days. Spot freight rates are declining further regardless if the vessels are coming from deepwater ports or from shallow draft ports. A general lack of cargoes is felt in comparison to the available spot tonnage around. Rates for grain cargoes have dropped by some US$ 1.5-2/mt during the last week, other commodities have lost about US$ 1/mt in the same time. Earnings are approaching OPEX levels. Bad weather in the region is hardly any good news in this situation and is expected to endure for quite some days more with possible traffic problems in Kerch Strait and difficult operations in ports. Furthermore according top port agents, since 1 February, owners calling or leaving the ports of Mariupol and Berdyansk will have to pay an ice due of US$ 0.7 per cubic meter vessel volume. Coal shipments of 5,000mt loading Rostov and heading to Marmara are concluded at some US$ 18/mt while same amount of grain and same route is getting US$ 18.50/mt at the moment. Steel parcels of 5,000mt leaving Constantza and destination Poti are talked at around US$ 15/mt.

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World steel output amounted to 1,869.9 Mt in 2019, an increase of 3.4% from the year before, ac­cording to new data from the World Steel Associ­ation. Regional output declined in all geographical regions except for the Middle East and Asia, accord­ing to the WSA data. Asia, as a region, generated 1,341.6 Mt of steel last year or 5.7% more than the year before with China’s output alone hitting 996.3 Mt or 8.3% more than in 2018. Middle East output surged by 19.2% year-on-year to 45.3 Mt. Turkish steel output fell by 9.6% to 33.7 Mt. CIS output fell by a modest 0.5% to 100.4 Mt including 71.6 Mt from Russia (down 0.7%) and 20.8 Mt from Ukraine (down 1.2%). European Union-based steel produc­tion declined by 4.9% year-on-year to reach 159.4 Mt. Germany again produced the largest share of EU steel or 39.7 Mt or 6.5% down from 2018. Italy produced 23.2 Mt (-5.2%), France generated 14.5 Mt (-6.1%) while Spain produced 13.6 Mt (-5.2% YoY).

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Grain activity from the ECSA and US Gulf is offering Panamaxes a glimmer of hope in the Atlantic but this has to be balanced against long tonnage lists ov­erhanging in most areas for the second half of Janu­ary. A 2018-built, 82,000 dwt was reportedly fixed on subs for a trip basis APS Trombetas for a bauxite trip to Aughinish at US$ 15,000 daily. A 2012-built 82,000 dwt fixed a TCT via USEC redel India at US$ 15,000 daily basis delivery Gibraltar. A 2015-built 82,000 dwt fixed delivery ECSA early February for a front haul at US$ 14,500 daily plus US$ 450,000 BB. From the Black Sea, a 2016-built, 81,000 dwt ship fixed delivery Port Said mid-January TCT via Black Sea and China redel Durban at US$ 10,000 per day. Somewhat of a stand-off in the Far East with some better demand from East Australia but Indo­nesia still largely giving only APS rates e.g. a 2019-built 81,000 dwt is rumoured to be on subs APS Indonesia TCT redelivery China at US$ 5,000 daily plus US$ 60,000 BB. Shipowners seem more willing to undertake speculative ballasts towards the ECSA.

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The chartering market off the Continent has been pretty busy for the larger Supra-Ultramax tonnage. Front haul rates have been reported agreed at US$ 20,500 daily on Ultra tonnage for a trip to China. Even for Baltic rounds with delivery Rotterdam and redely North Spain have been done at the equivalent of US$ 14,000 daily. Ultra owners were rating trips to West Africa at US$13,000 daily with Ireland deli­very. An Ultra open West Med was also competing for the same business at US$ 11,500 with delivery Gibraltar reflecting the poor state of the med market. The Kamsarmax market is in a downward spiral. Trans-Atlantic is now at US$13,000, which line will be hard for the owners to defend. It is likely to con­tinue dropping. DOP rates can no longer be taken for granted for USG business. Charterers prefer to pay a ballast bonus. From the lacklustre Black Sea, grain charterers booked a cargo of about 50,000mt from Ukraine to GNS at the daily equivalent of US$7,500. The USG Handysize market is considered stable if quiet. Coal charterers were fixing a 38,000 dwt ship to Italy at the daily equivalent of around US$13,000. From New Brunswick a 38,000 dwt has been fixed on subs at US$ 10,000 daily for a trip to UK-Continent.

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On the event of the 71st Eisbeinessen Dinner in Hamburg—the world’s largest gathering of shipbrokers and shipping people—BMTI is offering a special, limited-time 15% discount across all BMTI products. Enter promo code EISBEIN on the order form to secure the discount on any BMTI market report (Daily, Weekly or Short Sea) and/or Research Study. This offer is only valid for 15-30 November 2019. Place your order today to take advantage of this limited time offer.

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).

The 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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A 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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The 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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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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The 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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Corrections 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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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.

People, 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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