Dry bulk market losing steam, fast
By total
Published: 2011.11.25
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It’s been a week of falls for the dry bulk market this one, leaving ship owners with a sour taste in their mouths, as evidence of a recovery is not visible in the horizon. This latest negative trend is actually proving those analysts, that had predicted a slowdown in the market before the year’s end, right. They were arguing that the current balance between demand and supply is in favor of demand, with the flurry of new building vessels being such, that it couldn’t be absorbed by the market. At the same time, shipyards around the world are speeding their deliveries, a sort of «tradiiton» during these past few years.
As a result, yesterday the Baltic Dry Index, the industry’s benchmark was down by another 0.87% to 1,814 points. As was the trend mid-week, all major dry bulk ship segments were on the red, with the Capesizes setting the trend. The larger Capesize ships lost 1.33% yesterday, with the relative Baltic Capesize Index (BCI) now standing at 3.042 points. Similarly, Panamaxes were down by 1.03% to 1,822 points, while Supramaxes lost an additional 0.14%. "With demand still weak as being indicated by negative developments in steel price futures and expected to moderate further in seasonally low 1Q, we believe the capesize rally in 2H11 primarily on back of robust steel production and Chinese inventory build-up could reverse as trend reversal occurs," RS Platou Markets said, quoted by Reuters.
In a recent analysis, Tasos Papadopoulos from shipbroker Intermodal said that “shipping’s obvious dependence upon China and her extraordinary growth highlights the importance of understanding China's resource-based foreign policy and its priorities. China has only begun to build out its renewable energy program, its urbanization efforts are perhaps only 30 or 40 per cent complete-bringing its masses of rural workers into the modern urban world- and even greater stockpiles will have to be accumulated for the coming years. Chinese are relentlessly long-term thinkers and have proven themselves remarkably good at achieving goals set in past five and ten-year plans.
Nowadays, almost everyone accepts that fossil fuels (oil, coal, natural gas) are in short supply and not long-term solution to power the world's economy. It was a mistake to take fossil fuels for granted and today it is a mistake to take virtually any material for granted. Therefore, CCP (Chinese Communist Party) has a stated goal to generate 15 to 20 per cent of its primary energy consumption from alternative energies (wind, solar, hydro and nuclear) by 2020. China, having early realized this fact, is rapidly accumulating a lion's share of metals that are critical for a switch to renewable energies such as silver, copper, zinc and the so-called rare earth elements (neodymium, indium, europium, cerium, lanthanum etc). It is clear that China is moving forward as quickly as it can to obtain these essential materials before the developed world mobilizes with the same goal. In this sense, Chinese mine copper in the world's most dangerous places (China Metallurgical Group Corp, a state-owned conglomerate, paid $3.4 billion for the rights of Aynak copper field, one of the biggest foreign investment in the history of Afghanistan), have made infrastructure-deals in order to secure long-term supplies of resources with at least 35 African countries, and signed notable aggressive agreements with Brazil, Bolivia, Venezuela, Ecuador and Argentina in order to gain access to Latin America's mineral wealth” said Mr. Papadopoulos.
He went on to state that “China's over spending on infrastructure is a significant down payment on their long-term plan described above which incorporates a major goal: A better life for its populace. A large percentage of the population still living in the countryside and farming in a traditional communal-style manner, but it’s estimated that "China's rural population will shrink from the current 900 million to 400 million in 30 years". There are already newly built cities that have roads, buildings, mass transit systems and indeed everything but residents! The benefits on the world trade, when these cities will be inhabited, are obvious. Just to mention that China currently only has around fifty cars per thousand people. In the Western world, not only does there seem to be no such strategic plan to secure resources but also China is in far better financial shape and flexibility, with its huge trade surplus, in comparison with the indebted anaemic economies of USA, Japan and Europe. China has identified the truth that if you solve "energy" you solve most other problems. If oil goes up, so does the cost of delivering iron ore, so too does the cost of mining coal and so do the price of finding more oil” concluded Intermodal’s Tasos Papadopoulos.

from: Hellenic Shipping News Worldwide

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Capesizes drive market lower, analysts divided on dry bulk outlook in the long run
By total
Published: 2011.11.21
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Dry bulk ship owners convinced market will recover eventually
By total
Published: 2011.11.16
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from： Hellenic Shipping News Worldwide

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Spot demand for Mideast oil tankers hits record
By total
Published: 2011.11.15
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The unprecedented activity in the spot tanker market is not driven by any significant increase in OPEC production, but by oil companies looking to take advantage of rock bottom freight rates in an oversupplied market.

Tokyo-based ship broker Meiwa International said the previous high for Middle East tanker booking was 124 fixtures of very large crude carriers (VLCCs), each capable of carrying 2 million barrels of oil, in July. It did not give an estimate for November.

"Whether this will be repeated for December remains to be seen. But as the past couple of months have been very busy, it wouldn't be unreasonable to expect 125-130 fixtures," said broker firm Marex Spectron, which estimated 137 fixtures for November.

Another brokerage firm, Charles R. Weber, counted 135 VLCC fixtures from the Middle East this month, most of them bound for Asia.

Oil companies have turned to the spot market instead of renewing long-term charter contracts, as a flood of new VLCCs provides the industry with assurances that tanker supplies will be more than ample for the foreseeable future.

"Redeliveries from time charterers into the spot market compound a fleet growing from a wave of newbuildings," Weber said.

"Thus, it makes sense that the number of monthly VLCC cargoes, which have materialized in the spot market in recent months, have risen with little significant affect on spot market earnings."

Crude oil tanker earnings on the Baltic Exchange's benchmark Middle East route have recovered in the last few weeks, trading at $10,479 on Friday, after tumbling to a record low of -$6,492 a day in late September.

The market has traded in negative territory for the majority of the last three months, meaning ship owners on average were pocketing less in revenue than they were spending to operate their vessel.

 

Source: Reuters

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Falling tanker ship values adding pressure to ship owners
By total
Published: 2011.11.14
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Despite the respite of tanker freight levels during the past week, things haven’t just turned beautiful for tanker owners, especially those with a high leverage. According to London-based shipbrokers Gibson, the pain and the doldrums are here to stay for a while.“Tankers took the hit a little later than the dry cargo market following the crash in the autumn of 2008 and were subsequently cushioned by the temporary floating storage requirement, which provided considerable support particularly through the winter/spring 2009/10. As the crisis unfolded, other participants including banks and shipyards were prepared to play their part as owners searched to mitigate their exposure to the crisis. Those owners lucky enough to have little or no debt were able to draw upon cash reserves built up during the high markets prior to the 2008 crash” said Gibson.
The company’s report went on to ask the question of are the banks losing patience with ship owners? According to Gibson, “virtually every day we see the trade press report financial results which indicate that the situation is worsening. It is not fresh news that the world economic growth is much slower than first anticipated, but the shipping markets are amongst the first in the firing line for the hit. As the crisis deepens for tankers, we are seeing even the best run ‘blue chip’ companies being forced to sell assets at considerably less than book value. Is it any wonder that the banks and other financial institutions are extremely nervous with asset values falling almost daily? The banks themselves have come under closer scrutiny, with top shipping banks downgraded by credit rating agencies such as Moody’s. To put it mildly, the rapid depreciation of asset values must be giving the banks a massive headache. Some of the banks are actively seeking to offload their shipping portfolios at the same time as owners are trying to refinance debt or raise capital. Others have already fallen foul of the banks and are trying to protect themselves from creditors and possibly liquidation, which could result in more fire sales. Last month a bank forced the sale of a 12 year old Suezmax for a reported $24.5M, a tanker which had been purchased by a German KG for $86M just four years ago. This is just a typical example of many recently enforced sales” said Gibson.
It went to mention that ship owners don’t have many options. It stated the example of Saga Tankers which decided to “throw in the towel” completely and leave the market, by selling all four of its VLCCs. “Some other major players have decided to offload ‘surplus’ tonnage in order to raise cash to keep things ticking over. Owners will need the support of the banks more than ever during this prolonged crisis. The continual sale of assets at considerably below book value will only undermine the investment owners have made in recent years. However, as long as the current crisis goes on, we will continue see more arrests, enforced sales and even greater downwards pressure on asset prices” concluded Gibson.
Meanwhile, in the past week, VLCC rates picked up. According to the latest weekly report from Paris-based shipbroker Barry Rogliano Salles (BRS), “once again, records will show an extremely busy activity for VLCC tonnage for November with more than 130 fixtures concluded. However, when looking at today’s rates, owners are obviously still far from a recovery. One must take into account the sudden and violent increase in bunker costs which are today fetching $700/Mt… Therefore, if and where Worldscale rates have improved, daily returns (still based on a hypothetical speed of 14 knots) have not moved in the same proportions… Voyages from the Middle East Gulf to the East ended the week at about WS55 which equates to hardly $5,000 per day, far from luxurious! For once, it has also been a busy week for voyages to the West and rates have now settled at WS40 for USG discharge but, despite this increase, daily returns are still very far from positive figures. In the western hemisphere, tonnage is becoming more scarce and, if rates keep improving in the East, there should be fewer ballasters which could influence rates. However, for the moment rates remain stable in the mid WS50s from West Africa, either to the USG or to the East” said BRS.
Furthermore, on the Suezmax market, it said that “by looking at rates achieved these last few days on Suezmax tankers, one would imagine that the market was rather quiet. The west African market was actually quite active but tonnage availability has again been sufficient to contain any rate increases. With the strong increase in bunker prices, daily returns are obviously impacted, and at WS77.5 for a voyage to USAC, daily returns are in fact only around $10,000. The feeling for the forecast is that the market will not move much from the present levels. By comparison, the Med and Black Sea markets have been quieter. In between lower demand, fewer delays through the Turkish straits, and a large number of available ships, rates (as anticipated) slipped to WS80 ex Black Sea. Taking into account the impact of bunker costs, daily returns are badly affected at about $6,500/day” concluded BRS.

From: Hellenic Shipping News Worldwide

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Demolition prices could fall, on lower steel prices
By total
Published: 2011.11.11
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Ship owners could soon have to rush to scrapyards across the Indian subcontinent or other countries, in order to achieve better prices for the sale of their older vessels for scrap. In what could trigger more sales of ships for demolition and in that way,help lower tonnage oversupply, a major issue across all shipping segments, CRWeber noted, in a recent analysis that average demolition values in China and the Indian subcontinent have come under pressure lately, with “$/LDT values posting a 7.3% decline since mid‐October. Although global steel prices have gained 4.8% since January, prices have shed 13.9% since reaching a YTD high in March. Given the price discount for steel reclaimed via tanker demolitions in
locations with cheap labor relative to global steel prices, demolition values have been less impacted than global steel prices; average China and Indian subcontinent $/LDT values have only lost 2.5% since March.
Several global steel production facilities are reportedly idling production as the European sovereign debt crisis continues to stoke uncertainty in global markets. Accordingly, the gap between global steel price indices and demolition values could narrow, mitigating greater further $/ldt losses Despite a more limited pricing gap, even minor $/ldt losses may present fresh downside risk for tanker markets as the recent progression to newer, double hull tanker demolition sales remain one of several key factors to alleviating overcapacity in the sector” said CRWeber in its report.
It went on to mention, that double hull tanker tonnage accounted for 78.1% of the total tanker tonnage demolished, a figure significantly higher than the average of just 18% during the first three quarters. “Over tha past two weeks, however, demolition sales activity has declined markedly, with just one unit reported as sold to such buyers”, concluded CRWeber.
Meanwhile, in the crude freight market, there have been significant changes in the MEG VLCC front, during the past few days, says shipbroker Fearnleys. In its latest weekly report, the shipbroker said that “with more than 130 VLCC fixtures already registered for November loading in the MEG and with additional cargoes still making their appearance, owners are clearly feeling more optimistic and are more confident in their efforts to lift rates further. Charterers, on the other hand, are faced with a thinner selection of tonnage and a more confrontational attitude from owners. Under the circumstances, we deem it likely that MEG VLCC rates could rise somewhat above present levels. We would also advise a careful monitoring of an eventual early start to the December loading programme. The availability of VLCC tonnage in the Atlantic remains slim, but this has so far had little impact on rates due to the relative stability of the Suezmax market in the area. Suezmax activity was stable in WAF and rates have remained at last week´s levels. In the Med/Bsea Suezmax rates were rather flat and could experience further downward pressure as a result of diminishing delays in the Turkish straits which are already at nominal levels. Rates for Aframaxes trading from the Nsea to the Continent remained unchanged from last week at ws100. In the Med and in the Caribs, however, Aframax rates experienced a slight decline as a result of more than sufficient available tonnage for the requirements in play” concluded Fearnleys.
In its analysis of the tanker market during the third quarter, Teekay Tankers said that “crude tanker rates weakened significantly during the third quarter of 2011, primarily due to an oversupply of vessels relative to demand. In addition, a number of isolated and seasonal factors exerted downward pressure on rates during the quarter. The decision by International Energy Agency (IEA) member countries to release 60 million barrels (mb) of oil from government stockpiles impeded tanker demand during the quarter, particularly in the United States where 30 mb of crude oil was released from reserves. In Europe, the ongoing absence of Libyan oil exports as well as oilfield maintenance and unplanned outages in the North Sea further weighed down on crude tanker demand. Tanker rates have remained generally weak in the early part of the fourth quarter to date, though rates in the Mediterranean and Black Sea spiked significantly in October as a result of an increase in transit delays through the Turkish Straits due to stricter regulations on the passage of vessels during non-daylight hours.
The tanker fleet grew by 20.0 million deadweight tonnes (mdwt), or 4.4 percent, in the first three quarters of 2011 compared to a net increase of 14.5 mdwt, or 3.4 percent, in the same period last year. The level of new tanker ordering remains very low with just 6.4 mdwt of tanker orders placed in 2011 to date, of which 2.0 mdwt was attributed to shuttle tankers, compared to 40.0 mdwt of tanker orders in 2010, of which 0.7 mdwt was attributed to shuttle tankers. As a result, the global tanker order book has fallen to 96 mdwt, the lowest level since March 2006. Expressed as a percentage of the active tanker fleet, the order book is at its lowest level since February 2003 at 20 percent of the total fleet” concluded Teekay.

from: Hellenic Shipping News Worldwide

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Newbuilding deliveries peaked last year, oversupply to start easing next year says forecaster
By total
Published: 2011.11.09
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Tonnage oversupply issues has been the biggest problem hindering freight rates across most shipping markets since last year. Despite record breaking scrapping of older vessels, things haven’t improved much. Still, in its latest weekly report, Clarksons said that the worst may be over. As it mentioned, “we may have reached the peak in terms of deliveries last year, with shipyards delivering 96.9 million GT in 2010, compared to our forecast of 95.8 million GT for 2011 and then a further 86.9 million GT forecast for 2012” said the world’s leading shipbroker.
In its report on the newbuilding activity of the past week, Clarksons said that “with the world continuing to spin on its uneasy axis, and our leaders continued inability to bring any kind of stability to the financial markets, we are left wondering how this will affect the shipbuilding industry as a whole. In China, there are signs that the State, in the form of the country's transport ministry, may well step in to try and control the amount of ships that the state controlled yards are able to deliver, as concerns in all quarters grow that the current over supply of tonnage is of no help to anyone within the shipping community. In the long term, this is a laudable decision from the world's largest shipbuilding nation assuming of course that the Ministry is able to implement such measures and if achieved should be welcomed by the wider shipping community. The issue of course for cash hungry shipyards is what measures they are able to take, to not only sustain a certain level of production, but also how they can go about incentivising Owners to place new orders in a market that is currently over supplied, as well as underfunded, with many traditional shipping banks unable to step up to the plate to fund new orders” concluded the report.
Meanwhile, in a separate report from Piraeus-based shipbroker Golden Destiny, the past week ended with new building sentiment returning at firmer levels. According to the shipbroker the week ended with 56 fresh orders reported worldwide at a total deadweight of 2,602,100 tons,. The new building orders reported posted an increase of 115 % week-on-week and annual since similar week of last year.
“The total amount of money invested is estimated at region $1.34 bil while the contract price of 33 orders hasn’t been disclosed yet. Bulkcarrier orders presented a decrease of 33% while tankers showed an impressive 3000% increase from last week’s ordering activity. In the bulk carrier segment, the activity is relative firm with one panamax unit of 76,000 dwt being ordered by Chinese player, Tianjin Zhonghai, in domestic yard at an undisclosed price and three supramax units in Japanese yards, Oshima and Tsuneishi, by a joint venture between Japanese shipowner and Indian steel group, Tata NYK Shipping, for delivery in 2012-2013. In the handysize segment, Harbor Shipping of Greece is said to have placed an order for one 35,000 dwt unit in China’s Cosco Guangdong yard at an undisclosed contract price with delivery at the end of 2013. Japanese shipbuilding industry appeared also active as some business came to light in Oshima with the placement of supramax and panamax units by Saga Shipholding of Norway, N.Y.K. Line of Japan and United Ocean Enterprises of Singapore” said Golden Destiny.
It went on to add that “in the tanker segment, the new building trend towards MR size continues with more units contracted this week by Mexican oil company, Pemex, for six 51,000 dwt units plus an option for six more in South Korea’s SPP Shipbuilding at a price region $34 mil each for delivery in 2013 and 2014. Furthermore, Uniseas Shipping of Greece is said to have placed an order for four 52,000 dwt units in Hyundai Mipo of South Korea at a price region $37 mil with delivery in 2013, the contract includes an option for three more units.
In the container segment, a post panamax order came to light this week by a Chinese player, following a period of non activity since the end of July. China Shipping Container Lines has placed an order for 8 boxship units of 10,000 TEU in domestic yards, Dalian Shipbuilding and Hudong Zhonghua, for delivery in November 2013 at an estimated price of $94,25 mil per vessel, total cost of $754,24 mil. The player holds an option for two more units in each yard for delivery during 2014. In the gas segment, Japan’s leading players, Mitsui OSK Lines (MOL) and Osaka Gas International Transport agreed in a joint ownership for the construction of two LNG units with 153,000 cbm gas capacity in Mitsubishi H.I. for delivery in 2014-2015. The vessels, which Mitsui OSK Lines will manage after delivery, have been secured in a 20-year LNG supply contract between MOL and Osaka Gas” concluded Golden Destiny.

from: Hellenic Shipping News Worldwide

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Scrapping of older vessels to intensify in coming months, says Braemar Seascope
By total
Published: 2011.11.07
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So far this year, demolition of older vessels has been feverish, in an attempt by ship owners to help alleviate the tonnage oversupply pressures that the global shipping market has been dealing with, in almost every shipping trade, from dry bulk to tanker.

According to Rodney North, Braemar Seascope Director in Demolition, the level of scrapping activity in the dry bulk segment so far this year, is 400% more than in 2010, while in the tanker sector levels are approximately 25% lower than in the previous year.
But, as Mr North says in an interview with Hellenic Shipping News Worldwide, the size of the orderbook and the number of vessels delivered from shipyards around the world has been such, that the rate of scrapping has done little to diminish the global fleet, thus applying pressure to freight rates. As he says, scrapping activity must continue to remain high and increase in the coming months and years, in order for the shipping industry to recover and return to a healthier balance between demand and supply.

How has the demolition activity been progressing so far this year both in the tanker and dry bulk segments?

Bulker - 23.6m dwt sold for demo in 2011, 400% higher than in 2010 at same point. 
Tanker - 8.25m dwt sold for demo in 2011,  25% lower than in 2010 at same point.
In 2011 the demolition market has been dominated by sales of dry bulk vessels with a notable number of larger lightweight vessels i.e. panamax and capesize vessels being sold for scrap. For the most part activity relating to tanker scrapping has been subdued compared to the number of dry vessels being sold for demolition. This is partly because the vast majority of single hull tankers have already been phased out. Over the last few months we have seen a greater supply of overaged double hull tankers coming onto the market, especially late 80s and early 90s built MR and Aframax tonnage, although this trend is likely to spread to all tanker tonnage.
Overall this year has seen prices rise steadily with small peaks and troughs for both wet and dry tonnage respectively, with levels well in excess of US$500/Ldt being maintained throughout the majority of the year. Tanker demolition has been somewhat more complicated this year with new regulations being imposed in Bangladesh whereby all tankers have to be gas free for man entry and hot works (the same as in India). Pakistan has been the main beneficiary of this new regulation with many owners unwilling to undertake gas free cleaning for hot works at their expense prior to arriving at the final breaking port. Many of the cash buyers have been left having to purchase vessels on an ‘as is’ basis, cleaning the vessel at their cost and expense before undertaking the final voyage to India or Bangladesh to satisfy the needs of the buyers there. The vessels that are gas free for man entry and hot works have seen a premium in terms of the prices being offered this year.

Do you think these levels of activity are enough to help alleviate oversupply pressures in both markets?

No. According to our Research Department this year will see a net bulk carrier fleet growth of 10% compared to a 6% demand growth, while the figures for tankers are at 6% and 2% respectively.
As it stands given the current number of newbuilding deliveries and those projected for the next two years, even with large number of vessels being scrapped the global fleet is still set to grow. Supply is still exceeding demand and this will continue unless we see a significant increase in the amount of vessels being scrapped or we see a marked increase in newbuilding cancellations.  The question also remains as to whether the demolition market can sustain increasing numbers of scrap vessels, and the possibility of oversupply of scrap tonnage leading to a fall in prices.

Do you expect that pressure from a tonnage supply point of view will improve next year?

No.  As far as bulk carriers are concerned we anticipate a net fleet growth of 8%-10% as against a steady demand increase of 6%

In terms of scrap prices offered, would you say that they are attractive to ship owners or not?

Yes.  For example if selling today, owners could expect to realise US$16million to $18m for a single hull VLCC and US$21m-$22m for a first generation double hull VLCC (the latter having a higher lightweight and therefore higher price). Considering this against the background of owners facing negative spot market earnings on the major trading routes, it is clear there is pressure on potential sellers to seriously consider taking advantage of the current strong demolition levels. Owners purchasing older tonnage are naturally using the current demolition value of the vessel as the starting point in terms of valuing the vessel.
This year has seen historically very strong demolition prices, with prices now around US$500/Ldt being offered for all tonnage types for delivery on the Indian subcontinent.  Combined with falling second hand values and depressed freight rates, demolition values should be considered attractive for Owners with potential scrapping candidates.

How has the situation regarding the ban of demolition activity in Bangladesh been affecting the market so far?

Over the past year Bangladesh has seen numerous closures and resumptions in shipbreaking activity relating to moves by the High Court and the Bangladesh Environmental Lawyers Association relative to the implementation of improved health and safety procedures and recycling regulations. Overall the impact on prices has not been negative, with Pakistan and India remaining aggressive even in the periods of Bangladesh’s absence. The main effect of the various openings and closures of the Bangladesh Shipbreaking market has been to create volatility with cash buyers and breakers speculating on price against anticipated demand fluctuations. In the past when Bangladesh has been unable to purchase vessels for long periods, we have seen China absorb some tonnage finishing in the Far East, as Bangladesh was removed from the competition,  and India being that much further to ballast to with high bunker prices. However, more recently the very firm prices available from India and, to a lesser extent Pakistan, have negated the influence of Bangladesh’s absence with China simply being unable to compete on the larger lightweight vessels.

Do you think that demolition activity will be more intense in the months to come?

In short YES. With the outlook for global trade growth recently worsening and supply still far surpassing demand, it would seem inevitable that as more and more vessels fail to make a profit or even break even, owners could be left facing the alternatives of cold lay-up or demolition.

from, Hellenic Shipping News Worldwide

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Medium range tankers surviving the downturn so far in the year
By total
Published: 2011.11.04
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With the vast majority of tanker markets in the red, it's difficult to discern a silver lighting. One of those is the medium-range product tanker market, with MRs hanging in there. According to a recent report from CR Weber, "since the start of 2011, tanker time charter rates have been under negative pressure as the prolonged state of recessed spot market earnings -- and expectations for a continuation thereof – have taken their toll. This trend has been most observable for the VLCC class, for which the one‐year time charter rate assessment has declined by 36% to $19,000/day" said the shipbroker’s analysis. For the MR class, however, the rate assessment presently stands at $13,500/day – precisely the same level as at the start of the year said CR Weber.
It went on to explain that “contributing to the halting of MR time charter rate declines are the stronger earnings the class has earned on the spot market this year due to heavier demand and a relatively better‐balanced fleet growth profile. Rising levels of US product exports on the back of better refining margins for US Gulf area refineries capable of sourcing crude inputs priced at widened WTI prices (relative to Brent prices) against sluggish domestic demand and rising Latin American demand has formed one of the bases of this scenario. Similarly, poor refining margins in Europe have seen refinery utilization rates there stagnate at low levels. These features have created opportunity for the MR spot market by offsetting a lull in demand for US product imports with longer‐haul US‐Latin America runs and reduced ballast time on trans‐Atlantic trades. Though a boon for MR owners, for charterers these developments have
meant greater exposure to costlier rates—and greater volatility thereof.
By taking MR tonnage on time charters, charterers can hedge exposure to future rate developments or, potentially, profit by operating tonnage on the spot market. At present rates, an MR trading a cargo from the US Gulf to the ARA ranges followed by a subsequent cargo from ARA to New York, may potentially obtain  triangulated earnings of ~$22,100/day over an assumed 38 days. In this scenario, gross freight paid by a spot charterer equals $1.7m. Performing the same voyages on tonnage chartered in at $13,500/day plus bunkers and port costs would equate to a savings of ~$363,000 over the 38 days.
Similarly, trading a cargo from the US Gulf range to Central America's east coast followed by a subsequent cargo from the Caribbean to the US Atlantic Coast can obtain potential triangulated earnings of ~$22,800/day over an assumed 22 days at present rates. Performing these voyages on chartered in tonnage at $13,500/day plus bunkers and port costs would have saved the charterer ~$227,000.
Examining the prospects for time charted tonnage being operated purely on the spot market as a profit play shows that period charterers can earn as much as $9,115/day once time charter costs, freight income and voyage costs are accounted for on the aforementioned triangulated trades at today's rates. With the MR outlook considerably better than for the class' larger piers, it is possible that time charterer rates are now firmly at attractive levels" concluded CR Weber's analysis.
Meanwhile, in the product tanker market this past week, Fearnley's said that "on the back of many fresh TC2 inquiries in the market, the week seemed to start without any clouds on the horizon. In addition to a handful of uncovered cargoes left over from last week, ws180 or higher was on the owners´ minds for movements UKC/USAC basis 37kt. The charterers however stepped back and fixing activity was largely muted until mid-week, pushing rates down to around ws165. On the larger tonnage activity is slow, with fixing levels steady at ws115 basis 60kt. Despite the run-up in rates for MRs on the Continent, the smaller tonnage has been relatively unaffected. Handy- and Flexi-size rates are stable at ws165 basis 30kt, and ws215 basis 22kt for NWEurope trading. Despite high fixing activity, the backhaul
voyages ex USG for destination UKC-Med has slightly softened to ws137.5 basis 38kt, however Caribs upcoast is firming further to ws177.5 basis 38kt.
In the Middle East, the LR1s are still not experiencing any positive movement in the market. For voyages MEG/JPN, rates have taken another turn down, and we are now estimating rates to ws107.5 basis 55kt. Rates for LR1s trading Jet MEG/UKC are now estimated at usd 1.75 million basis 65kt. The list of available tonnage remains substantial, without any signs of sudden improvement. LR2s trading MEG/JPN are still experiencing a softer market, with rates now estimated to ws105 basis 75kt. MRs trading SPORE/JPN are still seeing rates at around ws150 basis 30kt, and MRs trading MEG/JPN are fixing at around ws140 basis 35kt” concluded Fearnley's.

from: Hellenic Shipping News Worldwide

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Dry bulk market officially in the “red” on lower cargo demand
By total
Published: 2011.11.03
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The dry bulk market kept falling yesterday, on lower iron ore demand, which has caused the industry’s benchmark, the BDI (Baltic Dry Index) to plunge to more than one-month lows, ending the session down to 1,859 points, or by 2.77%.

All shipping segments were down yesterday, with the Capesize market sustaining the biggest losses by 3.23%. The Panamax market was down by 1.20%.
According to the latest report from Shiptrade Services, after the previous weeks’ steady increase, the market turned downwards with Capesizes suffering the most. Commenting on the Capesize market, it mentioned that “the week began positively, but lack of cargoes in the Pacific forced Owners to lower their levels, or start ballasting towards the Atlantic.
Atlantic basin was active, with good cargo volume mostly coming ex Brazil.
Rates for Transatlantic rounds concluded at USD 34.000 per day, while on the Fronthaul trade, rates for trips to F.East, levels concluded at USD 49.000 per day. On the Tubarao/Qingdao trade rates were fluctuating between USD 30.00 – 30.50 pmt but week’s closing rates softened as an effect of the ballasters from the Pacific.
Pacific basin was quiet due to the absence of the iron ore majors but Owners could see a few alternative cargoes ex S.Africa / W.Canada. Rates softened, and at weeks closing, rates for the Australia/China trade concluded at USD 11.00pmt, while on TCT basis, rates for Pacific round concluded at USD 25.000 per day basis N.China delivery” said Shiptrade.In a separate report Fearnley’s said that “after a relatively long period with improving rates, the Cape market experiences a correction mid last week. Rates kept dropping throughout this week, with West Australia/China being done just bellow usd 10 pmt. Tubarao/Qingdao was done last week around usd 32 pmt, the lowest done this week is just below usd 25 pmt. The drop in spot rates has resulted in less period activity with chrtrs aiming around mid teens, a level perceived to be of non interest to the owners. The rest of the week is remained to be quiet with Eisbein going on in Germany” said the report.
On the Panamax front, the Nordic-based shipbroker it said “fair activity with mineral requirements in the North Atlantic from USEC and Baltic catering for healthy levels as market is tight for prompt loaders. Fixing levels in the 20´s for Baltic rounds, upper teens for TA rounds. Less activity and weakness in the USG and ECSA from an increasing number of
ballasters appears from the Med and Far East. Levels for trip out hovering in the 26 + 600 range basis APS. In the Far East activity is low, tonnage lists grow, and rates are under downward pressure. NOPAC rounds 12500, period activity scant. The general sentiment is losing confidence from a slow and descending forward market” said Fearnley’s.
Shiptrade Services mentioned that “Panamax rates dropped slightly since the cargo volume was not enough to cover the available tonnage. In the Atlantic basin, the USG market remained the driving force, especially for the Fronthaul cargoes with fixtures at USD 26.500+650.000 GBB basis APS USG. Rates for Transatlantic round remained at USD 17.500 - 18.000 per day. In the Pacific basin activity remained flat with many Charterers waiting for rates to drop further. At week’s closing, rates for S.China/S.E.Asia positions interested for Indonesia round, concluded at USD 14.000 – 14.500 per day. Positions at N.china/Japan range interested for trips ex NOPAC could get USD 13-14.500 per day” said Shiptrade.
On the Supramax trades the Piraeus-based shipbroker mentioned that “the market followed the same trend, with less cargoes and rates dropping. In the Atlantic basin, we could notice a decrease in the number of cargoes, but some areas were more attractive. In the USG region rates for trip to continent/East Mediterranean remained steady close to USD 30.000 per day, while for trips to F.East fixtures reported at USD 38.000 per day. On the Mediterranean/Bl.Sea market, rates for trips to F.East held around USD 24 - 25.000per day, while rates for trips to USG were between USD 9 -10.000per day. On the ECSA region, vessels concluded at rates close to USD 18-19.000per day + 400.000 ballast bonus basis APS ECSA delivery for trips to F.East, and for trips to Continent/Med rates concluded at USD 16-17.000per day. In the pacific basin, rates dropped, as there were not many cargoes from Indonesia, and many Charterers preferred not to move and see how the market will proceed. Some fixtures concluded to direction India but levels were fluctuating between USD 8.000 – 11.000per day. On the other hand, for the N.China positions, a few cargoes ex NOPAC remained an attractive solution at rates of USD 12.000per day (M/V Prabhu Jivesh 50956 / 02') ” concluded the shipbroker.

from: Hellenic Shipping News Worldwide

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