WEEKLY MARKET REPORT.

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Category: General

Published on Wednesday, 22 January 2014 03:57

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 By George Bassakos

SnP Broker

As we have now entered 2014 and the Chinese are soon entering their Year of the Horse (sit tight for the ride!), it is a great opportunity to see how last year ended and what shall we expect for the months ahead...

 

What a great finish for the year it has been for bulkers, with the BDI reach-ing the highest level since 2010 at 2,337 points by mid-December, with Capes reaching just over the 40,000 USD/day-mark; smaller classes did not fare that well, but definitely better than during the anemic 1st half of the year.

 

What happened since then? We have seen the indices retreating heavily during the holidays, with the BDI losing around 1,000 points, bottoming out at 1,370 points, having only just returned to positive territory with Capes leading the way after the difficulties they faced earlier in the month.

 

Sentiment remains strong within the dry sector, with expectations of better times ahead, due to a slower rate in new building deliveries and improved prospects for global economic growth, according to the latest growth revi-sions by the World Bank...Is this the full story though??

 

China's economic growth continues to cool; China will manage to pass the official target of 7.5% growth for 2013 as a whole, but at the same time this is its lowest figure for any year since at least 1999, as per the Financial Times.

 

The United States, on the side of the Atlantic, while still struggling to over-pass the so-called 'fiscal gap', do not seem strong enough to be able to pro-vide world trade with the necessary support, fact that one sees by just look-ing at the levels freight rates container vessels have reached.

 

Last but not least, Europe remains as always romantic, focusing on President Hollande’s personal affairs, while at the same time austerity imposed by the North is still suffocating the South and while all appears to be working per-fect in theory, the truth is that austerity measures and lack of bank financing are still placing a lot of pressure on the more fragile economies such as the Greek one.

 

And then you have the supertankers, waking up from their long hibernation whilst being in the mid-winter season, now commanding rates in excess of USD 100,000 per day despite having been in the doldrums for most part of 2012 and 2013...

 

The fundamentals are simply not there yet, but this doesn’t seem to deter Owners who seem as if they simply don’t care and trying to enjoy as much as they can from this unexpected scoop!

So, what’s next? What will the Year of the Horse bring for shipping? Who will be this year’s Horse Whisperer? Enjoy the ride... but beware of the ob-stacles.

 

 

Chartering (Wet: Firm+ / Dry: Softer- )

 

The Dry Bulk market has lost further ground this past week and despite some positive corrections taking place mid-week onwards, it seems that the following days will find freight rates moving sideways with no im-pressive come-backs being noted. The BDI closed today (21/01/2014) at 1,369 points, down by 59 points compared to yesterday’s levels (20/01/2014) and a decrease of 1 point compared to previous Tuesday’s closing (14/01/2014). Rates for VLs surged this week, as activity ex-MEG was very strong, while those for Suezmaxes continued to enjoy the ex-tremely strong momentum that pushed the average rate for the seg-ment north of $ 80,000/day. The BDTI Monday (20/01/2014), was at 1,344 points, an increase of 291 points and the BCTI at 612, an increase of 4 points compared to the previous Monday (13/01/2014).

 

Sale & Purchase (Wet: Stable+ / Dry: Stable+ )

 

Things on the SnP front were much quieter this week, while prices ap-pear to be set to keep moving higher as potential Sellers are feeling more confident by the minute. On the tankers side, we had the sale of the “LUXEMBOURG” (299,150dwt-blt 99, S. Korea), which was reported sold to Japanese owner Modec for a price of US$ 28.0m. On the dry bulker side, we had the sale of the “AOYAMA” (56,013dwt-blt 06, Ja-pan), which was picked up by Hong Kong based buyer Pacific Basin, for a price of US$ 22.5m.

 

Newbuilding (Wet: Firm+ / Dry: Firm+ )

 

As increasing demand for slots persists, so does the trend of firming newbuilding prices. This past week average prices across the board for both Bulkers and Tankers have moved further up, with the price quoted for the Suezmax sector noting the biggest increase. The last order placed for the segment took place in June last year and the price report-ed back then was around US $ 58.0m. This past week U.S. based owner Diamond Shipping hit headlines with the first known Suez order for 2014 that consists of two units (158,000dwt) in S. Korea’s Hyundai H. I. and the price for each of the duo was reported to be US $ 67.0m, which represent a whopping 15.5% increase from the last done, while at the same time the newbuilding price of a VL is fast approaching US $ 100.0m once again, both facts displaying the strength of the upward momentum in the newbuilding market at the moment. In terms of new orders, U. S. based owner Baltic Trading has exercised options for two Ultramaxes (64,000dwt) at Zhejiang Yangfan in China, for a reported price of $ 28.0m each.

 

Demolition (Wet: Firm+ / Dry: Firm+ )

 

It seems that the strong trend of the early days following the start of 2014 was more than a fluke as the demolition market continues to enjoy some very good momentum. This past week prices in the Indian Sub-Continent firmed further, with breakers displaying an appetite not seen for quite some time now. India and Bangladesh continue to lead the way with India managing to snap the majority of demo candidates for yet another week. With the help of a stability in both steel prices and the US dollar/Indian Rupee exchange, Indian cash buyers moved aggressively back into action, managing to lure their Bangladeshi competitors into a higher bid competition, while Pakistan remained a simple spectator, unable to compete at these levels. Further to the East, the demolition market remained unchanged, with Chinese yards sitting on the sidelines for another week. Average prices this week for wet tonnage were at around 350-450$/ldt and dry units received about 340-435$/ldt.