BMTI – Trend Experts for Shipping

Brokers have been surprised by the huge number of fixtures reported, detrimental to the market’s performance. The Continent appears steady for Handies. Scrap charterers took 30,000 dwt ton­nage at US$11,000 daily to the East Med, grain char­terers were rating 35,000 dwt tonnage at US$ 9,500 daily to cover Rouen/Algeria. A similar rate this size of vessel should be worth for a trip to the US Gulf.

The Black Sea remains dispiriting with grain charter­ers trying to undercut last-done fixtures. From West Africa, Chinese log charterers keep searching for logger types and even Supramax tonnage to carry logs to China at levels around US$ 12-13,000 daily for 36-38,000 dwt tonnage and around US$ 13-14,000 for Supramax tonnage, respectively. The ECSA trade region has been slow with coastal charterers trading a 34,000 dwt vessel at around US$ 9,500 daily for 2 laden legs. The US Gulf re­mains disappointing for Handysize owners whilst the larger sizes keep thriving, with a 52,000 dwt taken for an inter-Caribbean employment at US$ 13,750 daily, and a similar size was fixed to Japan at a very good US$ 19,000 daily. Another 57,000 dwt was taken for a trip to the Med at US$ 15,500 daily. Handysize tonnage has been offered at just below US$ 30/mt for a grain cargo to Pisco, Peru, which looks very high in comparison with a rate of US$ 26/mt that was indicated for a 30,000mt cargo from Montreal to WCCA, which according to shipbrokers equates to something around US$ 12,500 daily. South African brokers have been talking of a fairly quiet week with Supramax rates to India hovering at around US$ 12,250 daily plus US$ 235,000 BB. An Ultramax vessel was done to China at an APS rate of US$ 13,500 daily plus US$ 350,000 BB. An okay rate of US$ 11,750 daily was conceded to owners of a 57,000 dwt Dolphin type vessel for a Mombasa round voyage with delivery and redelivery Richards Bay. Just recently an Ultramax was taken for a trip to the US Gulf at US$ 10,500 daily. Handysize charterers, who have been actively fish­ing for Handysize rates for a trip to the East, were told about the rather punchy freight of US$ 14,000 daily by the owners of a 36,000 dwt vessel.

The East has been suspiciously quiet, which either means that charterers are taking a breather and plan to return to the market next week or that the market is changing direction. Salt charterers have been rating a high consumer 35,000 dwt at US$ 8,500 daily for an Australian round voyage with delivery Singapore.

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Sentiment has taken over the Capesizes, but in the positive way that owners have no problem with accepting even as the party looked like it might have ended by the weekend. With losses of US$ 1,000 seen on the Pacific rounds on Friday and average rates slipping back into the high teens of US$ 18-19,000 daily, there is speculation that a new bearish cycle could be awakening. On the other hand, we have seen such short-lived corrections before, and owners hope this is the case this time as well. Brazil/China voyages had been pushing toward US$ 20/mt, but no it would seem that any owner who managed to fix above US$ 19/mt in the recent fren­zy should consider themselves fortunate. TARVs have levelled out in the US$ 17-18,000 daily range.

Period TCs really is the name of the game for the Panamaxes at this point with a resurgence of activity in long-term time charters having forced charterers to show their cards and put upwards of US$ 14,500 daily and higher on medium period deals on 82,000 dwt vessels via Southeast Asia. Short period on the standard tonnage is also going for strong rates in the US$ 13,500 daily vicinity on 3-5 months of trading, though some brokers say the enthusiasm has cooled a bit on period charters. North Atlantic-positioned owners say that open tonnage is tightening there.

Even with much of Europe in Athens for Posidonia, the loss of Handy traders seemed to have had little negative impact on trading on the other side of the Atlantic with the USG revival full steam ahead and upwards of US$ 300 added to front hauls and UK-Continent redelivery rates from the USG on Ultramax vessels hitting rates in excess of US$ 20,000 daily and US$ 15,250 daily, respectively, with no let up in sight.

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The summer lull is spreading all over the Atlantic market with the exception of the Continent-Med area, which is still pretty stable with rates holding or even improving for some trades. Scrap charterers had to agree to US$ 12,500 daily on a 57,000 dwt ship for a trip to the East Med. The US$ 15,000 daily agreed on a TESS 58,000 last week for a front haul run is low in comparison, but finds its explanation in that the owners’ option for a front haul was next to non-existent and thus they had to bite the bullet. Fertilizer charterers were seeing tonnage of 55,000 dwt at US$ 11,000 daily for a trip to Nigeria.

Handysize tonnage is getting more expensive with owners of 33-36,000 dwt talking US$ 12,000 daily to the Mediterranean versus the charterers’ rate of US$ 10,000-10,500 daily. The Black Sea is still con­sidered by some players to be an okay market with 33-36,000 dwt fixable at US$ 7,500 daily for trips back to the Continent, which considering the sum­mer lull, is considered not bad at all. Front haul for Supras is still hovering around US$ 15,000 daily. A good number of early unfixed vessels remains the major issue in the NCSA-USG area. From WCSA, a major trading house decided to put in their own tonnage to cover a cargo to the Med for which spot market tonnage was offered at US$ 14-15,000 daily. Trading from the Brazil is hampered by the truck drivers’ strike. Cargoes are not getting in an out of the ports. Bunker supply is being affected as well. Thus, tonnage of 34,000 dwt has been traded at US$ 9,000-10,000 daily for a trip to the Continent-Med. Owners of a 57,000 dwt were talking US$ 13,000 daily plus US$ 300,000 BB for a trip to Chittagong, which is a true reflection of the market’s poor state.

The East is a rough patch for spot tonnage, with hardly any fixable cargo around. Clinker charterers were bidding 35,000 dwt tonnage US$ 8,500 daily for a trip to P.I., but decided instead to go for larger tonnage. Owners of a 35,000 dwt vessel failed to attract charterers at US$ 10,000 daily for 2-3 laden legs with spot delivery in China, and an owner of a 32,000 dwt vessel wants a rate of US$ 9,500 daily for a trip to Southeast Asia. Prospects seem to have improved for June loaders for which several cargoes have already been emerging and thus supporting owners’ stance not to back down yet.

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Hong Kong-based dry bulk owner, Pacific Basin Shipping Limited, announced on Tuesday that it had signed a conditional agreement to acquire four secondhand or newbuilding bulk carriers at a com­bined value of US$ 88.5m. Fifty percent of the pur­chase would be funded by equity, said the owner. All four of the vessels—two Supramaxes and two Han­dysizes—are what would generally be called Handy bulk, comprising tonnage in the range of 64,000 dwt to 37,000 dwt. The largest, a 64,000 dwt, 2018-built Supramax would be purchased for US$ 28m and delivered in the middle of the year. The second Supramax, at 58,000 dwt, was built in 2010, pur­chased for US$ 15.5m and set for delivery in early 2019. The remaining two Handysizes are both of 37,000 dwt tonnage and log-fitted, one built in 2015 and one a 2018 newbuilding, both ships to be delivered in Q4 of this year, purchased at US$ 20.5m and US$ 24.5m, respectively. The three-year-old Handysize was already under long-term TC, which Pacific Basin said would replace its charter cost with ‘significantly’ lower operating costs. Earn­ings from new shares to be issued by the company would be applied to the purchase, said Pacific Basin. CEO Mats Berglund said the secondhand ships are consistent with the company’s target of acquiring good quality vessels at historically low prices. Pacific Basin, with an impressive fleet of 111 ships, is clear­ly no stranger to the dry bulk market. This purchase reflects a smart investment in arguably the best bulk carrier sector to acquire at the moment. Indeed, shipping market players say, anecdotally, that Han­dysizes are the best bang-for-buck in today’s S&P market. A recent poll by Splash­247 and MarPoll found, when presented with four promising vessel types—Handysizes, chemical tankers, small (sub 3,000 TEU) containerships and LPG carriers—nearly half of the over 300 respondents (43%) selec­ted the Handysize ship as the best asset play in 2018.

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Traders confirm that freights have fallen sharply on the sea-river-going trades with new grain demand having dried up rather suddenly and chaos reigns in some corners amid shifting seasonal patterns as well as rising uncertainty from trade hit by US sanctions. Others expect the weaker ruble to eventually boost trade from the region. Freights from Azov lost as much as US$ 2/mt over the past week as charterers continue to apply pressure to rates and (most) own­ers are more than happy to comply. Yeisk/Marmara rates have fallen into the lower US$ 20s/mt amid rumours that they are already in the high teens of US$ 18-19/mt. Most rates on this run, however, are still hovering in the range of US$ 22-24/mt, brokers say. Nikolayev/Marmara grain is flat at US$ 20/mt.

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The holiday hangover has lingered over the Baltic Sea and North Sea coaster markets in the past week with southbound freights from ECUK still getting around EUR 40/mt on scrap of 3,000mt into the Western Med, brokers say. The reverse trip north­ward, meanwhile, is lucky to fix anything higher than the lower EUR 20s/mt, we are told by several reliable sources, with high teens probably even more likely. Imports from the Russian Baltic to Ireland have been seeing solid business since the second quarter began with talk that up to EUR 33/mt has been secured on middle-range parcels of 5,000mt. General cargoes from the lower Baltic to ECUK are looking at about EUR 20-21/mt with 4-6,000mt agri-prods. Mineral cargoes of 5,000mt have report­edly fixed EUR 35/mt from the WCUK to Marmara, with pressure from charterers putting the same run closer to EUR 33/mt for end-April positions. The market seems to be generally caught in a sense of limbo with neither owners nor charterers showing much interest in provoking or seeking any major change from last-done, hoping that a stronger mar­ket drive comes about early May when ice conditions have receded completely. On the bearish side, some brokers note, there does seem to be more tonnage coming open than what is being concluded, indicat­ing that the near term could see more power in the hands of charterers than in weeks past. We shall get a better picture when the holiday haze finally passes.

Baltic Ice Report: Ice is drifting slowly eastward in the Bay of Bothnia, according to Baltic Sea Ice Ser­vices. In the northern Bay of Bothnia is 40-75cm thick fast ice in the archipelago. At the fast ice edge is 30-50cm thick ridged consolidated ice to southwest of Kemi 2 and to Oulu 1. From Kemi 1 west and further to south runs a lead. Farther out is first 10-25cm thick very close ice and then 25-50cm thick rafted and ridged ice. In the southern Bay of Bothnia is 30-55cm thick fast ice in the archipelago. Off the ice edge is a heavily ridged ice zone, very difficult to force. Farther out is 25-50cm thick ridged very close ice. Ice pressure occurs in the ice field. In the Quark is 20-40cm thick close and very close ice. South of Sydostbrotten is open water. In the Vaasa archipe­lago is 30-50cm thick fast ice to Ensten. Further on to Norra Gloppsten is 15-30cm thick level ice. In the north Sea of Bothnia is 25-45cm thick fast ice in the archipelago. In the south Sea of Bothnia is 15-40cm fast ice in the archipelago. Farther out is open water.

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Pressure has remained on Capesize derivatives this week with May futures looking oversold, according to FIS analysts, who say the May-5TC spread is over­stretched at US$ 4,000. They warn upside moves will be more limited the longer that no type of not­able upward movement is seen in the indices. The Capesize index is still well in bearish territory, trad­ers observe, with technical resistance at US$ 9,304.

It was a corrective week for listed bulker companies on Wall Street with only a handful making any posi­tive gains. Indeed, with the exception of Eagle Bulk [EGLE], mounting a minor 1-2% week-on-week rise to US$ 4.9/share, most of the listed bulkers headed downward over the week. Most downgraded, argu­ably, was Navios Maritime Holdings [NM], shedding 13-14% over the week to settle at US$ 0.8/share. DryShips Inc. [DRYS] dropped 4% to US$3.5/share.

An exchange-traded fund for shipping futures was announced last week. The US-based Breakwave Dry Bulk Shipping ETF (BDRY) will be the first ex­change-traded product focused on freight futures in the dry bulk shipping market. BDRY is designed to use a so-called laddered strategy to purchase con­tracts while letting existing positions expire and settle in cash. The product will provide long expo­sure to dry bulk shipping using a portfolio of near-dated FFA contracts based on dry bulk indices. In essence, traders will be able to participate in the dry bulk derivatives market without having to trade the futures themselves, or so claims the fund, which has been created by a partnership between Breakwave Advisors and ETF Managers Group (ETFMG).

Following suit with the German and UK shipping banks, Italian shipping lender Banca Carige (based in Genoa) has put its portfolio for three shipping companies up for sale. The exposure of the three firms have an estimated combined value of US$ 750m and are loosely defined as ‘unlikely to pay’, a short step away from an official ‘non-performing’ designation. The loans, connected to Ignazio Messi­na & C., Finbeta and Scerni di Navigazione make up a share of shipping credit that the bank intends to offload before the end of the year. The value of Ignazio’s loans is estimated at about US$ 585m.

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There are still signs of positivity pushing through in the Capesize derivatives trade, we are told, with early trading on Thursday hinting at a revival by the weekend. No such luck, however, on the spot mar­ket, despite a notable increase in Atlantic fixing and short period trading. Cargo volumes have remained stubbornly limited on the Capesize market, so rates have continued to slide in response. With no reason for a trans-Atlantic market to stay aloft, TARV rates plummet at week’s end by more than US$ 1,500 to settle in the low US$ 6,000s daily and below opex.

A consensus is building among Panamax observers and traders that the mid-range bulkers are poised for a quite positive 6-8 weeks ahead as a combination of oncoming South American grain cargoes—driven by strong eastbound demand—and slimming tonnage availabilities generate a bullish upward spiral in spot freights in the Atlantic. Even as current spot markets stagnate around last-done rates and activity takes a breather, a strong upside remains in place for the near term with front hauls likely to shoot back into the US$ 20,000s by the end of the month, if not already next week. TARV rates are hovering in the low-middle teens of around US$ 13-14,000 daily.

Handy bulk has had a good run through the week, emerging as the only bulker sector to boast contin­ued growth and consistently bullish gains in rates both East and West. The USG, as is often the case, seems to be the primary catalyst here as front hauls to S’pore-Japan move into the middle US$ 20,000s of US$ 25,500 daily plus and as high as US$ 26,000 daily on Ultramax tonnage of 58-62,000 dwt. Niche mineral demand also appears to have returned to Southeast Asia with multiple orders for nickel ore via the Philippines pushing Supramax spot rates on Chinese redelivery into the range of US$ 13-14,000 daily. Buoyancy should persist into next week.

…read more in today’s BMTI Daily Report.

Handysize owners with early March tonnage are not rushing to fix their vessel. They rather monitor the market for the time being. Ultra tonnage has been traded along the lines of US$ 22,000 daily ice-free area in the Baltic for a trip to India.

Strengthening surge in Capesize spot freights
A Capesize recovery is well underway—even if the smaller bulkers can’t say the same—with strong and uniform gains of US$ 1,000 day-on-day taking long hauls some US$ 3,000 higher over the week. (p. 1)

Fertilizer trips in play on UKC-Med delivery
Off of the Continent, fertilizer charterers are linked with a deal for 30,000mt to three ports USG-Mexico range in along the lines of around US$ 26-27/mt. (p. 1)

Global barley prices turning bullish
Tight supply of barley on world markets is expected to keep prices at high levels, analysts say, with malting and feed barley prices benefiting from a growing upside thanks to a combination of bullish forces. (p. 2)

…read more in today’s BMTI Daily Report.

Slowly but surely activity has been creeping up in the eastern basin in recent days with owners seeing more room for securing better rates even as prevailing trends remain flat. Indonesia-based business has also gained momentum with S. China delivery to ECI now getting middle US$ 8,000s via Indonesia instead of the low US$ 8,000s range typical a week earlier. Rates for NoPac rounds have not changed significantly since the year began with owners still settling for just over US$ 8,000 in most cases. Back haul rates to the Continent are set to start increasing. Brokers report that Handysizes have been seeing more enquiry of late, which comes as some encouragement for owners who nonetheless have been settling for last-done rates since the start of the year. SE Asia trips to NoPac via W. Australia have been fixed up to US$ 7,500 daily on 28,000 dwt ships, owners say, with some seeking US$7,750. A 32,000 dwt vessel has done US$ 8,250 ex-CJK to N.China.

…read more in today’s BMTI Daily Report.

Capesize freights are off to the races
A handful of new period deals (with standard tonnage getting US$ 20,000 daily for a year-long duration) and a few Pacific rounds proved to be enough to sent sentiment surging again. (p. 1)

Pac Handysize owners resist downgraded rates
Coal charterers so far have not been able to find tonnage of 35,000 dwt at US$ 7,500 daily for a trip from Indonesia to Bangladesh for which some owners would like as much as US$ 9,000 daily. (p. 2)

Bauxite’s outsized influence among minor bulks
The long haul is said to have accounted for 12% of tonne-mile growth in 2017 even as bauxite still makes up a tiny 2% of the dry bulk trade. (p. 2)

…continue reading in today’s BMTI Daily Report.

Buoyancy returns with growth in Indo rounds
Panamax trends on benchmark rates via Indonesia are firm if not overly ascendant with Indo rounds to South China oscillating within the US$ 9,000-9,500 daily range on 72-76,000 dwt tonnage. (p. 1)

Handy bulk owners content with slow-but-steady gains
Owners seem fine with the current return to positivity on Supramax routes, even as gains have been incremental at best. (p. 1)

Coasters: Robust business via Turkish Med
Imports and exports alike have been rather vibrant via the Turkish Med in recent days with grain imports from the Sea of Azov (5,000mt with stowage of 46′) to Mersin fetching about US$ 62/mt from Yeisk and US$ 64/mt from Azov port. (p. 2)

…continue reading in today’s BMTI Daily Report.

Indo rounds drift back into the shadows
On South China delivery, ships of 58-62,000 dwt via Indonesia are fixing no higher than US$ 7,500 daily on ECI redel and US$ 6,750 daily back to S. China. (p. 1)

Good news for Handies from South America?
Hefty rates are said to have been paid from ECSA, with Lauritzen rumoured to have taken a 38,000 dwt vessel from North Brazil via Plate to China at a rate significantly higher than US$ 15,000 daily. (p. 1)

Coasters: Bullish November cheers owners
Firm trends are most likely to continue through the remainder of the month with some suggesting that the shift to December may drive another spike as new cargoes enter for year-end requirements amid an even tighter tonnage supply. (p. 2)

…continue reading in today’s BMTI Daily Report.