BMTI – Trend Experts for Shipping

Louis Dreyfus made headlines this week, announc­ing they would be exiting the Capesize market due to its excessive volatility and control by mining groups to the detriment of owners. And it’s hard to argue with their rationale. With major trades in iron ore and coal increasingly dominated by mining in­terests in South America and Australia, owners see their influence waning apace. China’s consolidation of the global steel and iron trade will also centralize Capesize interests even further. As we have seen in recent years, Cape rates are continuous roller coaster of precipitous ups and downs that seemingly never stabilize into a solid trend. The bulk carrier market is nonetheless looking a bit rosier going forward. Louis Dreyfus will continue to trade in the smaller bulker sizes of Panamax on down, where global trade re­mains diversified and subject to outside market for­ces, including owners. As if to highlight this tone of volatility, Continental front hauls leapt more than US$ 2,000 at midweek, settling in low US$ 20,000s daily on ships of 180,000 dwt on Far East redelivery.

Enthusiasm about the Panamaxes seems to have been short-lived with the steam already having left the spot market and Pacific round voyages coming under renewed pressure with cargo activity again somewhat sluggish. Standard rounds in the eastern basin are again hovering just above or below the US$ 10,000 daily line, which shipowners find borderline unacceptable. Atlantic-based freight rates are looking comparatively more stable, but also besieged by overtonnage with the owners now relenting to APS deals more often than they would like to. UKC front hauls are somewhat steady in the US$ 18-19,000 daily range, owners of 76,000 dwt vessels report.

Volatility appears to be the province of the US Gulf with Supramax rates recovering there as fast as they declined just a few weeks ago. USG front hauls are already getting low-middle US$ 20,000s daily while trans-Atlantic trips to the UKC-Med are said to be fixing upwards of US$ 17,500 daily at US$ 2,000 higher than the assessment itself, which is already in the high US$ 15,000s. Pacific rates, meanwhile, are trending sideways, better than most markets can say, with Indonesia rounds routinely fixing in excess of US$ 11,000 daily on modern Ultramax tonnage.

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Losses have been rather substantial in the eastern Handy bulk trades in the past week as the monthly switchover and widespread holidays gave charterers all the excuse they needed to get rates reduced to­ward their preferences. In the event, Supra NoPac rounds lost US$ 500 week-on-week to settle in the lower US$ 11,000s after trading high US$ 11,000s just a week earlier. Indonesia rounds, meanwhile, shed some US$ 300-500 over the week, putting the South China delivery and redelivery round in the high US$ 10,000s of about US$ 10,750 daily on tonnage of 58,000 dwt. Period chartering has been done, though intermittently, with short periods of six months getting US$ 13,000 daily on Handymax tonnage of 54-56,000 dwt from Southeast Asia.

Nickel ore business has remained fairly steady with 28,000 dwt ships getting up to US$ 12,000 daily on Indo rounds from CJK to China, brokers report. Grain rounds via NoPac have been securing around US$ 10,500-10,750 daily on ships of 38-42,000 dwt, we are told, with CJK delivery in mid-April. Handysize rates have had a bearish week, but not as harsh as among the Supras, with some US$ 100-150 down on average rates week-on-week, leaving No­Pac rounds at about US$ 9,250 daily on 36,000 dwt.

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From the Desk of a Continental Broker: The solidity of the markets’ performance is unques­tionable. Panamaxes are leading the way. Encourag­ingly, charterers continue to take tonnage from the East with a most recent peak of US$ 17,000 daily done from Mumbai area via ECSA to the East. Capers are less fortunate with rates declining. But talking in more general terms, sentiment remains unclouded. Off the Continent, scrap charterers were bidding a rate of US$ 14,500 daily for a 57,000 dwt on a trip to the East, which isn’t great, whilst ice-classed tonnage of 56-58,000 dwt vessel was being bid US$ 15,000 daily from Gibraltar via the Russian Baltic back to the Med, which is better. A Rouen/Algeria voyage for 30,000mt was rumoured as done at US$ 19/mt and equates to around US$ 10,500 daily in­cluding 450 miles of ballast to the loading port.

The Black Sea is short of Ultra-Supra vessels willing going east of Suez. But the rate structure is hardly affected with Supra tonnage worth around US$ 18-19,000 daily whilst Ultramaxes are worth around US$ 21-22,000 daily. The US Gulf is in a bit of a downward spiral. After a front haul trip on Ultramax tonnage was done at US$ 23,000 daily thence US$ 22,000 daily and US$ 20,500 daily respectively and now US$ 19,500 daily—which seems to have failed, however. A 58,000 dwt was booked at US$ 21,000 daily to WCSA, not good at all in comparison with earlier fixtures done. In line with it, Handies have also been dragged down with 32-34,000 dwt worth just about US$ 13-13,500 daily for a trip across the Atlantic or US$ 14,500 for the larger 36-38,000 dwt vessels, respectively Further, a trip to the West Coast pays around US$ 16-17,000 daily, depending on the vessel or whether charterers are jitterbugs.

In the ECSA, Ultramax tonnage has been in the limelight with Raffles surpassing everyone by book­ing an Ultra at US$ 15,750 daily plus US$ 575,000 BB to load sugar to the East. T/A rates for Supra tonnage are hovering at around US$ 17,500 daily whilst for front haul a rate of US$ 14,000 daily plus US$ 400,000 BB seems to have been agreed. In contrast, it has been very quiet on the Handy front. There appears to be no let up in the East where the owners of 28,000 dwt tonnage want US$ 10,500 for a trip from north China to India, or coal charterers rating a 37,000 dwt at US$ 10,000 daily for a quick 15-20 day employment ending Japan-Korea range.

The Red Sea has developed into the most intriguing market where every charterer risks to take a beating. Casillo has now increased its cargo size to 40-45,000mt, suiting an Ultramax-Supramax, but with the lack of tonnage in the area, the headaches to co­ver this cargo are unlikely to disappear soon.

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Atlantic Panamaxes stay in bearish mode
Panamax freights remain under pressure in the Atlantic with trans-Atlantic round voyages having fallen into the four-digit range of high US$ 9,000s daily on Continental delivery. (p. 1)

Improved revenues reported by Scorpio Bulkers
Scorpio Bulkers (listed on the NYSE under SALT) said its losses for the last quarter of 2017 were “lower than expected”, paying a dividend to investors, despite still having failed to turn a profit in the quarter. (p. 1)

Relative stability among Far East Handysizes
Handysize freights, while also under pressure, saw less pronounced declines in the past week with only about US$ 100-200 reduced on average freights, leaving the Aussie rounds to NoPac in the high US$ 6,000s on tonnage of 28,000 dwt. (p. 2)

BMTI’s Shipping Technology Monitor – 2018 *

In the Study »Shipping Technology Monitor« BMTI presents a wide selection of it’s own coverage of today’s leading trends in ship design and propulsion, including many contributions from technology experts in their own sectors of the shipping economy who have shared their knowledge and opinions on the subject.

• Green Shipping (essays about the future of shipping in a world of changing emissions standards)
• Expected broking & economic trends from every sector
• Ship Design (opinions and detailed accounts from industry thought leaders and ship designers)
• Digitalisation (emerging technologies including Big Data, cryptocurrencies and online shipbroking)
• Cybercrime (electronic threats to maritime security and new ways to guard against them)
• Automation (robotics, drones, 3D printing and the promise of autonomous shipping)

There are still convincing macroeconomic reasons to expect the eastern Capesizes to rebound in 2018, indeed to strengthen after Q2, including urgent coal demand to China (as domestic production continues to fall) and a general increase in mineral demand throughout the Far East. For the moment, however, the Capesize spot market is anything but bullish as charterers seem to have no problem withdrawing their business for the time being, even with the shift into February having little perceptible impact on sentiment. Front hauls are still in free fall with rates for trans-Atlantic round voyages plummeting before the weekend by nearly as much as US$ 2,000 to hit US$ 11,500-12,000 daily on modern 180,000 dwt units. Pacific rounds are quite bearish as well with rates in the low teens of US$ 12-12,500 daily after spending them in the mid-high teens just last week.

It’s hard to imagine Panamax voyages from ECSA to China were getting US$ 33/mt two weeks ago as they have tumbled to half of that—about US$ 14-15/mt—in the current market. Activity hasn’t fallen off completely; indeed, things remain lively enough. But cargo demand is still falling short of available ships, a recipe for correction. In the event, front haul trips have fallen into the low US$ 20,000s of US$ 21-22,000 with some owners already offering US$ 20,500. Period inquiry, nonetheless, remains strong.

It is the same story with Handy bulkers as charterers take advantage of an over-tonnaged market, hoping to push rates downward by keeping their cargoes under wraps. This has only come with mixed suc­cess, however, as Pacific rates have generally held steady or taken just minimal declines. Discounts are more pronounced in the Atlantic with USG delivery still falling (US$ 22,000 now on Supra front haul), but front hauls are holding on Continental delivery.

…read more in today’s BMTI Daily Report.

Considerably more Capesize fixtures and news of activity bubble up to the surface as the week ends, but nothing consistent or extensive enough to justi­fy a recovery. Indeed, the spot market is as disparate as it has been all week with only long-term period time charterers of any interest to charterers, seem­ingly, at the moment, with year long durations done anywhere from US$ 18,000 to US$ 20,000 daily on worldwide redelivery. Long haul rates, meanwhile, continue their collapse as Pacific rounds and TARVs each lose nearly US$ 3,000 to settle at around US$ 10,000 daily and US$ 26,000 daily, respectively.

Renewed support in the Panamax derivatives sphere on Q1 (settling near US$ 11,000) suggests the mak­ings of a bounce next week, brokers are telling us, but for the time being spot freights continue to slide in both East and West. The fact that average Panamax rates closed out 2017 more than 60% than where they started would seem to indicate potential for further gains in the mid-term, if not the short-term.

Supramaxes are firing on all cylinders in the Atlan­tic, particularly from the lively USG market, where owners can now ask for upwards of US$ 25,000 daily for a front haul and stand a good chance of getting it. This is compared low US$ 20,000s avail­able just a week ago. Similarly, trans-Atlantic trips USG/UKC-Med are fetching US$ 22-23,000 daily on DOP. Inter-Continental Handysizes have been securing fertilizers on 38-42,000 dwt ships at rates in the high US$ 7,000s amid rumours of US$ 8,000.

…read more in today’s BMTI Daily Report.

Supras see recovery in Black Sea front hauls
After a slow stretch at the start of the week, the Supras saw a renewed sense of urgency just before the weekend, helping lift Black Sea front hauls back toward US$ 17,000 daily on Supras to CJK. (p. 1)

Atlantic voyages firmer on smaller tonnage
Ore rates from Liberia to GNS for a 50,000mt cargo have reached US$ 16/mt. Fertilizer charterers were seeing tonnage at US$ 19/mt for 25,000mt from Dakar to the US Gulf. (p. 2)

Eastern Handysizes steady amid slowing activity
Southeast Asia trips via Australia to NoPac are giving ships of 28-32,000 dwt freights in the mid US$ 8,000s much as they were at the start of December. (p. 2)

…continue reading in today’s BMTI Daily Report.

Supramaxes see new signs of support
Rate trends have begun to look up for the embattled Supramaxes due to a resurgence among the biggest bulkers and a return of demand in SE Asia. (p. 1)

Firm trends remain in Black Sea coaster freights
Owners insist a strong upside remains in place, helping them get modest upgrades over last-done levels, however broadly speaking rates have moved only marginally upward in the past week, suggesting that they may have reached a momentary peak. (p. 1)

Containerships moving into reefer market share
Reefer ships transport 21% of all seaborne perishable cargo; their share of reefer capacity is only 5%. (p. 2)

…continue reading in today’s BMTI Daily Report.

Rate trends peak at three-year high
Dry bulk rates have collapsed on average with the BDI having declined for the first time in nearly two weeks. The index reached a 3.5-year high last week. Average Panamax earnings have stabilized at around US$ 11,750 daily on TC basis. (p. 1)

Eastbound Handies encounter turbulence
Handysize tonnage of 35,000 dwt was fixed to Morocco from Brazil at US$ 15,000 daily, which market is also showing signs of easing. (p. 1)

Coasters: September recovery continues apace
The ascendant trends that were kicked off in the last few weeks have come home to roost in the second half of September with firming movements observed all across the northern markets. (p. 2)

…continue reading in today’s BMTI Daily Report.

European Short Sea Index (EUSSIX) for Dry Bulk and Break Bulk

BMTI is pleased to announce the first official publication of the European Short Sea Index in the BMTI Short Sea Report of 23 August 2017. To meet the need for a comprehensive indicator of Europe’s short sea mar­ket, BMTI has developed the “European Short Sea Index” or in abbreviated form “EUSSIX”.

The EUSSIX index is generated by weighted inputs from BMTI’s three main regional indices: Northern Europe, Mediterranean Sea and Black Sea-Azov. The EUSSIX, a directional index to be published on a weekly basis, is the result of the aggregated freights for dry bulk cargoes transported in Europe and adja­cent regions with ships between 1,000-20,000 dwt.

In contrast to deep sea and intercontinental mari­time transport, short sea shipping is restricted to relatively short distances along the coast and ships in the size range that fall below the typical Handysize vessel description. As such, the world recognized and referenced Baltic Dry Index cannot serve this sector of commercial shipping as a reliable economic indicator. The European short sea market has long needed such an index for its own vibrant and volatile market. BMTI, with years of experience intensively observing, analysing and collecting data from the sector, has decided to meet this demand with this new index, to be published on a weekly basis. In utilising relationships with Europe’s short sea in­dustry players, BMTI is in the process of expanding our freight inputs to strengthen the reach of the EUSSIX. Any additional short sea market players who would like to participate in contributing to this new short sea index are welcome to contact BMTI.

Index calculation is based on current data for dry bulk and break bulk freight rates in the European short sea market.

It was a mildly positive week for listed bulk carrier firms on Wall Street with the emergence of im­proved rates among the bigger bulker sizes helping boost stocks prices ever so slightly. DryShips Inc. [DRYS] ended the week back near US$ 1 per share after spiking by 50% at midweek. DRYS has been flirting with investor volatility all year with a series of reverse stock splits that have kept investors ready to pounce on the next opportunity for a quick turn­around. The rest of the more traditional listed stocks steadily rose through midweek with Navios Mari­time Holdings briefly rising 15% before ending the week at a 5% premium above US$ 1. Stronger stocks included Scorpio Bulkers Inc [SALT] which held steady all week near US$7.35 and Star Bulk Carriers Corp [SBLK], which climbed 3.5% over the week to close at just under US$ 10 per share. Safe Bulkers, Inc. [SB] increased by a respectable 8% through the week to end at US$ 2.6 per share on the NYSE.

One of the largest bulker companies in the world, Pacific Basin, has reached an agreement to acquire five bulk carriers for a combined US$ 104.6m. Own­ers welcomed the move as it would keep total bulker capacity from expanding while consolidating ton­nage simultaneously. The five vessels include one 2014-built Handysize, two 2014-built Supramaxes, one 2016-built Supramax and one resale Supramax.

A new joint venture, Ivy Shipping LLC, has been launched by Paris Kassidokostas-Latsis with the in­tent of acquiring Supramax and Panamax bulk carri­ers. The new JV has already acquired four Japanese-built Supramaxes of build year 2011 to be delivered next month and to be managed by Marla Ship­management Ltd. Mr. Kassidokostas-Latsis, who had previously invested in LPG and tanker ships, says his new direction into bulker was based on considering current market conditions, seeing potential in the market and collaborating with strategic investors.

…continue reading in today’s BMTI Daily Report.

South American energy fizzles for Panamaxes
Lower interest in the Atlantic took a toll on sentiment as Kamsarmaxes ex-Continent via NCSA get middle US$ 9,000s DOP back to the UKC-Med. (p. 1)

Coasters: New transhipment regs focus in Azov
The wreck of the “Geroi Arsenala” in April triggered a new round of disputes about transhipment. (p. 1)

Far East Handysizes see surprising stability
Results have been mixed for the Far East Han- dysizes, but certain routes have gained more momentum in the past week including the Aussie rounds from SE Asia to NoPac, which climbed more than US$ 200 week-on-week to enter the low-middle US$ 6,000s daily for tonnage of 28-32,000 dwt. (p. 2)

…continue reading in today’s BMTI Daily Report.