Older ships are being rushed to the scrapyards
Amidst a major crisis like the current one, with most of China under lock-down, the shipping industry has a solid opportunity to accelerate the decommissioning of a significant number of older vessels. And as it turns out, this has been the case so far. In its latest weekly report, shipbroker Allied Shipbroking noted that “a state of imbalance in the ship recycling market seems to have been due at this point. The dry bulk sector started on the wrong foot from the very start of the year, with the scene in the freight market being a picture of complete disarray and freight earnings reach in some cases all time lows. Given this, an excessive tonnage capacity has been pushed towards the demolition market over the past few days, with breakers seemingly looking to accommodate as much tonnage as possible. As a result, offered numbers have eased back below the US$ 400/Ldt mark, while, at the same time, the prevailing attitude amongst the main buyers is “passive”, waiting on how things may evolve in the near term.
[divider style=”normal” top=”20″ bottom=”20″]
Capesize index plummets to -133, the first time ever in negative territory
The Baltic Exchange Capesize Index (BCI) dropped to -133 index points on 4 February 2020, turning negative for the first time ever on 31 January 2020. The composite BDI index (BDI), which has excluded the more stable handysize segment since March 2018, also dropped on 4 February 2020 to settle at 453 index points. The BCI has been on a freefall through the entirety of December, but the descent started to pick up more steam during the past couple of weeks. A streak of negative developments has been at the root of this downturn, including seasonality, IMO2020, Chinese New Year, flooding in Brazil and the outbreak of the coronavirus. The first quarter of the year typically marks the downturn in the Capesize markets, partly due to the Chinese New Year. However, with the recent outbreak of coronavirus in China, large parts of the country have extended the holiday and remained closed to contain the spread.
[divider style=”normal” top=”20″ bottom=”20″]
[divider style=”normal” top=”20″ bottom=”20″]
Coronavirus and force majeure
On Thursday 30 January, the China Council for the Promotion of International Trade released a statement confirming that China was offering force majeure certificates to local companies unable to fulfil their international contractual obligations due to the coronavirus outbreak. The relevant directives and certificates do not, for the time being, apply to Hong Kong law contracts where the counterparty is a non-Chinese entity. The widening quarantine restrictions in China, together with airlines suspending and reducing flights to and from China and the closure of ports in Hubei province indicate disruption to import and export of crude, iron ore, soybean and steel, to name but a few. Given the importance of China, in addition to the human cost of novel coronavirus, the financial impact and disruption to global trade look set to continue.
[divider style=”normal” top=”20″ bottom=”20″]
Ship owners looking for deals only in the S&P market
The combination of a slump in freight rates, but also a general lack of activity due to the Coronavirus has limited ship owners’ appetite for deals in the market, most notably in the newbuilding segment, but also in the S&P market. In its latest weekly report, shipbroker Banchero Costa said that in the dry market, three Capesize units were reported sold during the week. The modern “Aqua Vision” 180,000 dwt built in 2011 at Dalian was sold for $20 million, back in December the “Gotia” 180,000 dwt built in 2012 at SWS was done for $ 23 million. Two other vessels were reported: “Aquajoy” 171,000 dwt built in 2003 at Sasebo was sold for $ 11.3 million and “Norfolk” 164,000 dwt built in 2002 at CSBC was reported sold for $9.5 million. Concerning PostPanamax, “Ocean Garnet” 93,000 dwt built in 2010 by COSCO Dalian was sold at $11 million and “Ocean Sapphire” 93,000 dwt built in 2012 by COSCO Dalian was sold by the same owner at $13 million.
[divider style=”normal” top=”20″ bottom=”20″]
[ads1]
DNV GL Fuelboss platform creates new online hub for lng bunkering
As the adoption of LNG as a ship fuel continues to speed up, DNV GL has launched a new online bunkering platform to take operators seamlessly from order through to delivery. FuelBoss offers ship owners, operators and suppliers a single common platform for nomination, scheduling, spot inquiries and business intelligence. LNG suppliers Gasum, Cryo Shipping and Nauticor are amongst the confirmed pilot customers and have supported the development with their expertise and domain knowledge. LNG has arrived in shipping. After a long wait, the number of vessels trading will more than double in the next two years. As the fleet grows from vessels that primarily work fixed routes to those in more general operation, the complexities of LNG bunkering and planning need to adapt to these changing patterns.
[divider style=”normal” top=”20″ bottom=”20″]
Baltic Exchange and Freightos Group Unleash Shipping Market Visibility
For the first time ever, daily spot ocean freight rate indices for 40-foot containers (FEUs) are now available via the Baltic Exchange and the Freightos Group, adding real-time, transparent price discovery and risk mitigation into the container freight market that powers global trade. The Freightos Baltic Index (FBX) has been produced weekly since April 2018 by digital freight platform Freightos, based off of live pricing data from hundreds of global logistics providers. With the robust, real-time data, as well as oversight from the Baltic Exchange, the FBX is positioned better than ever to provide a true pulse of the market in one of the world’s largest and most important industries. Container shipping pricing has become volatile and FBX will be the foundation of index-linking and future derivatives which allow carriers, forwarders and imports/exporters to hedge their risk, as is already customary in other industries, said Freightos CEO Zvi Schreiber.