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Ship owners looking for more deals in the dry bulk segment

Ship owners are actively looking for more deals in the dry bulk S&P market. In its latest weekly report, Intermodal said that it was another active week in terms of SnP has concluded in the dry bulk market with a diversified array of transactions recorded. Despite the correction in dry trade freight rates, there is still ample purchasing appetite displayed from interested parties, while vessel values – more or less – remain stable. It is said that in the Capesize front, clients of Berge Bulk are linked to the purchase of BWTS fitted ‘Cape Fushen’ 178k/2008 (SWS, China) at $13.8m, a price slightly lower than last done.

Tanker market volatility could be on the cards until the end of 2020

The tanker market could be facing some volatile months ahead, especially in the Aframax and Suezmax segments. In its latest weekly report, it is said that “as with most crude tanker markets, the Aframax and Suezmax sectors have remained under pressure since June. Part of this downside is not too dissimilar to the typical seasonal weakness seen during the summer months, although in most cases the downside has been caused by a lack of crude demand and falling seaborne trade, whilst these vessels have not benefitted to the same extent as the VLCCs from floating storage demand. However, as we move closer to the 4 th quarter, these sectors may see increased volatility even if demand (and rates) are lower than previous years”.

Dry bulk market: capesizes lack direction

It was all heavy swell for the Capesize market this week as rate levels swung with no clear direction. The Capesize 5TC opened the week at $15,248 to close at $15,761. The Pacific basin was seen to gain traction throughout the beginning of the week, supplying positive sentiment into other parts of the market before it fell away mid-week as charterers took the upper hand. It was a short-lived drop as the Pacific steadied itself by weeks end. West Australia to China C5 settled Friday at $7.082. The Brazil to China C3 fed off the early positive sentiment to be very active this week fixing tonnage for laycans throughout October. The route closed with a week on week increase of 69 cents to settle at $16.295. The North Atlantic was largely inactive before a stronger fixture was heard, which helped to lift spirits in the region.

 

Ship shape for the future?

The global maritime industry is in a state of flux. The arrival of COVID-19 threw a spanner in the works; but growing interest in alternate fuel and energy efficiency, digitization, and the business trend of moving from solution providers to service providers, are changing the face of the maritime industry. The last few years saw the International Maritime Organization (IMO) set goals and regulations to reduce emissions. In January of this year, the IMO’s cap on sulfur used for marine fuels came into effect. This regulation, as well as the target of a 50 percent carbon emissions reduction by 2050, are expected to change the industry. That said, shipping companies and regulation bodies share the responsibility for a greener shipping industry. Reducing overall carbon footprint, as well as balancing fuel consumption in individual vessels to create cost savings should be enough motivation for all stakeholders.

Tanker market on the back foot in August

The tanker market faced downward pressure during the month of August. According to the latest monthly report from OPEC, “dirty tanker rates in August settled into the lower levels seen since the end of June and are likely to remain for the coming months amid ample tonnage and sluggish demand for tankers. Floating storage continued to unwind, removing a factor supporting rates in recent months. Clean tanker freight rates picked up from the poor performance seen in the previous month, but remained below levels seen in the same month last year due to continued sluggish demand for product trade flows. Global spot fixtures remained muted m-o-m in August, declining 0.4 mb/d, or 3 percent, to average 13.4 mb/d. Spot fixtures were some 5.9 mb/d, or 30 percent, compared to the same month last year. This represents the change of fortunes in the tanker market relative the last year, as COVID-19 disruptions continue to weigh on demand amid high inventories in major demand centres. OPEC spot fixtures averaged 9.68 mb/d in August, an increase of 0.7 mb/d, or 7 percent, from the previous month, as some spare capacity returned back to the market. Y-o-y, OPEC spot fixtures averaged 3.9 mb/d, representing a decline of 28 percent, reflecting production adjustments taken in response to the collapse in demand seen since April. After declining considerably over the previous months, fixtures from the Middle East-to-East rose 13 percent, or 0.7 mb/d, m-o-m in August to average 6.1 mb/d. Y-o-y, this represented decline of 2.0 mb/d, or 24 percent. Middle East-to-West fixtures experienced a similar trend, increasing 36 percent m-o-m in August.

Demolition market in Pre-Covid levels

The ship recycling market has kept up its recovery pace, with prices rising to the levels close to the pre-Covid period. In its latest weekly report, shipbroker said that “the market continues to encourage with further improvement in price levels being indicated this week as some privately concluded sales have reached levels not seen since the Coronavirus outbreak emerged which naturally depressed rates and sentiment across the sub-continent. This has come from a mini resurgence in Bangladesh where demand has returned as the local waterfront comes to the realisation that they have been left behind their neighbouring counterparts and need to start re-acquiring tonnage, just like they were at the impressive rates seen earlier in the year. We will therefore have to wait to see if India can maintain itself against this latest competition as Pakistan continues to be the strongest market and looks set to continue their recent momentum into the foreseeable future”.

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