The tanker market had an eventful quarter, with VLCCs in particular taking full advantage of the trade war aftermath. In its latest weekly report, shipbroker Intermodal noted that “pacing towards the end of the year there are much to discuss on how the crude markets performed on the last quarter. HFO prices are mostly flat on popular bunkering locations with VLSFO/MGO being on the spotlight. Last quarter proved to be quite fruitful for crude tanker owners through all ship sizes, VLCC’S quadrupled their TCE’S and THE rest of the sizes followed up with rather healthy levels. USA sanctions on the COSCO tanker fleet, uncertainty about the IMO2020 effect along with owners bullish attitude and idle ships due to scrubber fitting boasted the market”.

According to Mr. Dimitris Kourtesis, Intermodal’s Tanker Chartering Broker, “with oil prices sitting at $60/bl for WTI and Brent at $64/bl, OPEC is trying to impose further cuts on oil output. Even after OPEC officials speaking publicly on further oil output cuts there wasn’t any noticeable change on prices. Cuts aim to reduce the OPEC total output of oil by 500,000 bpd within the first quarter of 2020. It seems that Saudis have always been supporters of oil cuts, but this time one of the main reasons is, that on Wednesday their National oil company Saudi ARAMCO will start trading in public and its IPO value as we speak, stands at about $1,7 trillion, which means that an increase in oil prices will also boost the equity value of the company”.

Kourtesis added that “it looks like some OPEC members resist these cuts. Iraq is the 2nd largest oil producer country after Saudi Arabia; it has increased its oil production by 100% the last decade. Even though Iraqi officials are strong supporters of further cuts, the structure of the oil industry in Iraq isn’t very easy to control. With oil majors operating the biggest fields and with the government having zero authority over the Kurdistan regional government this should be a hard task to accomplish. OPEC has also discussed with Russia the possibility of trying to limit the oil output, as of now this hasn’t been as successful as OPEC members would desire. Vladimir Putin knows that an increase on crude or condensate prices will drag gasoline prices higher and thus will create some internal instability. It is rumored that even if, all OPEC / non-OPEC members, somehow comply, oil prices will not reach the desired levels but at least a solid ground could be planned for the oil market to move into the new decade”, he noted.

Intermodal’s broker also said that “early last week VL’s were trading quiet but steady, as we moved towards the end of the week some activity spiked and started to slightly push the market higher. It could be that 3rd decade window for fixing is simply tight at this moment or that certain under the radar fixtures helped Owners to push higher. TD3 ended last week at 270 at WS99 (TCE $ 80,000 PDPR) and 280 at TD1 WS56.68 (TCE$ 44,000 PDPR)”.

In the Suezmax segment, “despite the holidays and people travelling, week 49 started slow with a noticeable increase of rates ex WAF as charterers try to cover their last stems for the year. TD20 closed positively on Friday at WS 138,85 levels and the Black Sea program for December is covered. Finally, in the Aframax market, “UKCONT/BALTIC Market is pushing rates higher as once more charterers are looking to cover last the stems of the year. With the position list not being really tight, TD7 stands at 80 at WS 183 (TCE $ 67,000 PDPR). Med didn’t perform as N. Europe but there is no anticipation for any decrease on rates”, Kourtesis concluded.

Source: Hellenic Shipping News Worldwide

Ships’ recycling activity has been the negative “star” of today’s shipping market, with tonnage sold for scrap failing to reach Southeast Asias’ shores. As a result, concerns are bound to be raised on the future balance of supply-demand in the maritime segment. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with what has been one of the quietest years on record to date, we finally saw a trickle of tonnage filter into the market this week which has started to resemble a functioning market once again. There have even been a small flutter of sales with one large LDT dry unit (see below) in particular catching Owners’ eyes and it remains to be seen whether this is another ‘false dawn’ or that we start to see more units entering the market place over the final couple of months of the year. As we approach the Diwali celebrations towards the end of this month, some buyers may, per the seasonal norm at this time of year, start searching eagerly for fresh tonnage where a ‘pick up’ in price levels usually occur”.

“But buyers may need to be more aggressive than ever in order to lock in tonnage with freight markets still performing strongly, swaying Owners attentions away from the recycling destinations. Whether the latest increase in price levels has an effect on Owners decisions remains to be seen! The problem we do face is that there still seems to be only one dominant market at present, Bangladesh, which leads the way for pricing and demand. Pakistan continues to be a ‘non-existent’ recycling destination, for almost 18 months, and India looks set to continue to concentrate on specialist units rather than being aggressive on large LDT market tonnage”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate note, GMS, the world’s leading cash buyer added that “following a brief few weeks of positivity, subcontinent markets are once again embarking on a dispiriting downwards descent, with End Buyers withdrawing their offers amidst declining levels from India, Bangladesh and Pakistan. There appears to be little stability to cling on to, with Local Recyclers nervous about further declines ahead and prevaricating over an imminent influx of tonnage through the last quarter of 2019 / first quarter of 2020 (that is just over the horizon). Notwithstanding, present-day reality is that there are very few vessels being currently proposed for demolition, with all charter markets (particularly, larger LDT tankers) that are currently flying. Moreover, scrap pricing almost seems to be in a complete contradiction to the trading markets, with worrying fundamentals underpinning an overall larger malaise at play in the subcontinent markets (and Turkey, to a good extent). Currencies, especially in both India and Pakistan, have taken a battering over the course of the year (especially the Indian Rupee, which has depreciated by almost 2% over the past couple of months alone), whilst local steel plate prices have declined alarmingly in all locations over the summer / monsoon months, by about USD 75/LDT. On the one hand, during the peak of the market earlier this year, industry players were frequently witnessing trades into the mid (and higher) USD 400s/LDT; on the other hand, we have (of late) seen several fixtures (admittedly on poorer units) in the low USD 300s/LDT. As such, given the overall performance of the industry, a healthy majority of End Buyers in the subcontinent markets are simply choosing to not offer at all – struggling either with their banking limits, or fearful about the lack of stability that is continually festering in the various subcontinent recycling markets”, GMS concluded.

Source: Hellenic Shipping News Worldwide

With the freight rate market on a high note, especially in the dry bulk segment, demolition candidates have been scarce, not to mention the lack of buying appetite by scrapyards. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with the market slowly coming to the end of its summer hibernation and industry stakeholders gradually returning to their desks, a trickle of small ldt tonnage have filtered into the market and resulted in some marginal activity. However, with the severe lack of tonnage and activity in the past couple of months, there has not been a decisive market, especially as prices have fallen dramatically in this time. This has resulted in cash buyers not knowing where the value lies for each potential candidate and thus, what they are prepared to offer on the back of the uncertainty from the actual recyclers. We therefore feel it needs to be redefined, but a gentle flow of tonnage is needed to re-create a slumbering market and hopefully trigger it back into life, even if these rates are lower than what was experienced at the beginning of the year. Some believe that the recent decline in rates experienced have levelled out however some question marks remain as to whether this is truly the case or not which is creating this current uncertainty”, the shipbroker noted.

In a separate weekly report, GMS, the world’s leading cash buyer said that “the summer malaise that has set in to the primary international ship recycling destinations has continued for another week, with muted demand, declining offerings and despondent local fundamentals that continue to take a toll on respective local sentiments. In the subcontinent, India remains the lowest placed market with the recent 2% depreciation on the Rupee, which declined to over Rs. 72 against the U.S. Dollar and is presently around Rs. 71.60. This came at a time when the Rupee was trading around the Rs. 69 mark a few weeks ago, when local steel plate prices collapsed by about USD 75/Ton. As such, both fundamentals have been the primary reasons behind the poor pricing and weak sentiments”.

GMS added that “in Pakistan, cheap billets from Iran continue to undercut local plate prices, resulting in accumulating inventories at local yards. A similar situation has also been brewing in Bangladesh as imports from China have been suppressing local plate levels. As such, steel plate prices remain under pressure across the board, as recyclers with inventories at local yards have been struggling to shift these at anywhere near breakeven levels. Even Turkish Recyclers were hit by declining plate prices as levels fell rapidly during the course of the week, resulting in a diminutive interest and plummeting local offerings that are trying to chase down the crashing steel prices. Notwithstanding, the one saving grace for all markets has been the wilting supply of tonnage as firming charter rates across all sectors accompanied by today’s lower scrap realities in the mid USD 300s/LDT (and mid USD 250s/MT in Turkey) are failing to tempt Sellers with older vessels to sell. Just how much longer this will last with 2020 around the corner, remains to be seen. There remains hope that post monsoon, as the 4th quarter progresses and inventory starts to shift from local yards, prices should start to stabilize and recover. Although, it does increasingly seem as though levels from the heyday in the mid (and higher) USD 400s/LDT are likely gone. For the time being, end Buyers, Cash Buyers and Ship Owners are having to re-adjust their pricing expectations on any of the expensive unsold inventory, despite layup and trading options presenting themselves on various vessels”, GMS concluded.

Source: Hellenic Shipping News Worldwide

Despite the latest surge in the dry bulk market, ship owners seem to prefer the short-term gains, opting for second hand tonnage, rather than investing in more newbuildings. In its latest weekly report, shipbroker Allied Shipbroking said that “new ordering activity seems to have slowed for dry bulkers for now, with a mere 3 units being added to the global orderbook this past week. Interestingly enough, all 3 vessels were Capesizes, reflecting the revived appetite for this specific segment, in line somehow with the improved earnings being noted of late. With the current bullish trend being seen in the freight market, owners are likely to continue to be ever more attracted to the new ordering route. However, it will be of little surprise if we see this interest spill over to the smaller segments as well. In terms of the tanker segment, the newbuilding activity gear up seen this past week past week seems to have been overdue. The positive outlook for the tanker market as a whole has pushed buyers to act in both the crude oil and oil products segments. Last week, focus was given to Suezmaxes and Aframaxes, but with some slight activity being seen in the MR space as well”, Allied said.

According to Banchero Costa’s latest weekly report, in the newbuilding market, “JMU of Japan received an order for a single bulk carrier of 211,000 dwt from NYK against 15 years TC to JFE Steel Corporation. Another single order, this time for Kamsarmax bulker of 81,600 dwt, was placed at Tsuneishi Cebu, Philippines dely mid-2021 at undisclosed price by Helikon of Greece. It was a rich week for tankers orders in general. JMU of Japan took orders also for tankers with 2 VLCC of 300,000 dwt each with undisclosed price, buyers are also unknown but apparently the order is handled locally in Japan. Enesel of Greece (N.S. Lemos) has agreed for 2×157,000 dwt Suezmax with Samsung HI, dely set for early 2021 at a price of $62.2 mln each. The order brings the total of 6 Suezmax ordered by the Owners this year in S.Korea (4 are in place with Daehan). In the LR2 sector, Union Maritime of UK went to Cosco Shipping Heavy Industries for 2+2 115,000 dwt coated tankers for dely second half 2021. Yasa Shipping of Turkey has ordered 2×50,000 dwt product carriers +2 options at Hyundai Mipo, S. Korea for dely early 2021. Prices are going higher and this time it was agreed $38 mln apiece. In addition, Bihar International (Bakri Group) has possibly agreed for a multiple order for MR2 and Aframax tankers with New Times Shipyard, China. Parties were in talks 3 years ago and now contracts seem to be finalized. High specification ships would be costing $37 mln the MR2 and some $47.5 mln the Aframax”, the shipbroker said.

Meanwhile, in the S&P market, Banchero Costa said that “in the dry market, after offers were invited last week it was reported Japanese controlled Capesize “Global Mercator” 182k dwt 2011 built Universal went to Samos at region $26.5 mln. Concerning Post-Panamax, “Ocean Topaz” around 92k dwt 2013 built COSCO Dalian seemed sold to Chinese buyers at $15 mln, last month 3 years older sister vessel (“Ocean Ruby” around 92k dwt 2010 built COSCO Dalian) was sold at $13.2 mln. A Japanese controlled Kamsarmax “Red Lotus” around 82k dwt 2006 built Tsuneishi was reported done at $12.75 mln to Greek buyers basis SS/DD passed and BWTS fitted. Two Tier II Supramax “Tomini Sincerity” and “Tomini Victory” around 57k dwt 2012 built Guoyo were purchased enbloc by Chinese buyers at $10.8 mln each. Always concerning Supramax, “Tai Hapiness” around 52k dwt 2004 built Oshima was sold at $7.5 mln, in line with the sale of “Pistis” around 52k dwt 2004 built Tsuneishi done at $7.5 mln two weeks ago. In the tanker market, the VLCC “Aquarius Wing” around 300k dwt 2005 built IHI was sold at $35 mln. Last week “Apollonia” around 310k dwt 2003 built Samsung was done at $31 mln to Singaporean buyers. Concerning product segment, the LR1 “Loengo”around 73k dwt 2007 built New Century was purchased by Danish Buyers at $10.5 mln, back in March 2 x Formosa LR1 “FPMC P Fortune” and “FPMC P Eagle” around 74k dwt 2009 built STX were done at $16.2 mln each. In addition, the product tanker “Pitanga” around 17k dwt 2009 built Gemak was sold at $10 mln”.

In a separate note, Allied Shipbroking added that “on the dry bulk side, a very firm week in terms of volume was due, with the bullish sentiment still holding for the time being. Moreover, it came hardly as a surprise that we witnessed the Capesize market coming into action this week, while along with the Panamaxes, dominated the overall SnP market these past few days. All-in-all, given the strong signs of recovery from the side earnings, we can expect a very vivid SnP market to hold for the time being. On the tanker side, we also witnessed a gear up in activity, with plenty of units changing hands the last couple of days. In this sector too, we see the bigger size segments (and mostly vintage assets) move things further at his point. Moreover, given the recent trends of the freight market, it is rather difficult to point if this is due to a the current earnings being seen, or rather an opportunistic attitude, with strong optimism being pinned against the current price levels”, the shipbroker concluded.

Source: Hellenic Shipping News Worldwide

Ship owners have started to scale back on the tanker newbuilding investment over the course of the past few months, in what could be seen as a positive sign moving forward. In its latest weekly report, shipbroker Gibson said that “one of the forward looking indicators of how healthy (or unhealthy) the tanker supply/demand balance could be in a couple of years is the tanker orderbook. Limited new tanker ordering activity over the past three years has undoubtedly been a welcome development for owners. The only exception to this general trend was robust investment in new VLCCs back in 2017 and to an extent in 2018. This year also started strong for VLCC contracting, with 12 fresh orders placed in January; however, the interest in new tonnage has completely dried up since then. MRs (40,000 to 55,000 dwt) have also seen stronger investment this year, with 40 orders placed since January. This compares to just 59 MR orders for the whole of 2018. Ordering activity in other segments has been considerably more limited. This year no Panamax/LR1 orders have been placed, while the market has also witnessed just 6 firm Suezmax orders and 8 firm Aframax/LR2s orders”.

According to Gibson, “an overall lack of enthusiasm in new tonnage is not surprising. Despite a strong Q4 2018 and early 2019, cash flows largely remain constrained, following a disastrous performance during the 1st nine months of last year. At the same time, the priority for some owners, particularly those owning larger tonnage, has been securing finance for scrubber installations. Furthermore, regulatory uncertainly with regards to optimal vessel designs and specifications make the investment decision even more challenging at present. While ordering has been restricted, the pace of new deliveries has accelerated. Since the beginning of the year, 30 VLCCs, 22 Suezmaxes, 31 Aframaxes/LR2s, 6 Panamaxes/LR1s and 30 MRs have been delivered”.

The shipbroker added that “not surprisingly, a robust delivery profile coupled with limited new investment has translated into a notable decline in the orderbook. At present, the global tanker orderbook (above 25,000 dwt) stands at just 8.5% relative to the size of the fleet currently on water. VLCCs have the highest orderbook at 13.5%, while MRs have the 2nd largest orderbook – at 10% relative to its existing size. Despite having the highest orderbook, new investment in these segments is still relatively modest from a historical perspective. In early 2016 VLCC orderbook stood at 20% and back in 2011 it was assessed at a colossal 33% relative to its fleet size at the time. The orderbook size is even smaller for other segments. Aframaxes/LR2s and Suezmaxes have respectively 7.8% and 7.4% of its fleet on order, while the Panamax/LR1 orderbook is at just 5%”.

Gibson also noted that “most of the tankers on order are scheduled to start trading this year, maintaining downward pressure on industry returns. We could, of course, see some slippage in delivery dates. However, with growing optimism for improving market conditions in the 2nd half of the year evidenced in the freight forward curve, owners may be keen to avoid delays. Beyond 2019, the delivery profile is considerably lower, suggesting tightening supply conditions. The market is also expected to benefit from new regulations, which are likely to support demolition activity. While IMO2020 will make aging and inefficient tankers even less competitive, owners will also be evaluating whether it is worth investing into expensive ballast water treatment system retrofits when their deadline for installation approaches”.

“One of the key sensitivities is future ordering activity. Limited ordering so far this year has been a good indicator of current investment appetite. Newbuilding prices have also firmed notably, discouraging investment. The biggest uplift has been in newbuild Suezmax values, which have appreciated by 17% compared to lows seen back in 2017. However, the interest in new tonnage is likely to firm once we see sustainable improvements in industry returns. The question then is: will the anticipated increase in demolition be enough to keep tonnage supply in check?”, Gibson concluded

The window of investment opportunity in second hand tonnage could soon be closing. In its latest weekly report, shipbroker Intermodal noted that “in a downward moving market, softer SnP activity is usually a given, as the gap between Sellers’ and Buyers’ ideas widens, especially when the drop in rates takes place in a relatively short period of times, which was the case recently. Aside from the levels of the market and the respective number of deals as this is depicted in the table below, what might be even more interesting to look at is whether in these cases asset prices also moved in tandem with SnP activity and to what degree”.

According to Mr. Nassos Soulakis, SnP broker with Intermodal, “in the case of the 28kdwt Japanese Handy, the number of sales during the first two months of 2017 was more than double compared to the same period this year. Two years ago a 2006 built vessel was valued at high USD 5 million, while the same amount of money will today get you a 2004 built vessel –four years older – even though the BHSI is around the same levels”.

Source: Hellenic Shipping News Worldwide

The dry bulk market’s fundamentals are still positive, given that during 2018 net fleet growth was quite low, at 3% despite the fact that demolitions stood at record low levels. In its latest weekly report, shipbroker Banchero Costa said that “in 2018, deliveries of dry bulk carriers over 20,000 dwt fell to its lowest in a decade, coming in at 266 units equivalent to 27.3 mln dwt. This compares to 427 units totaling 37.1 mln dwt delivered in 2017, and the previous capacity low of 22.7 mln dwt comprising 300 units in 2008. In terms of units, deliveries in the Supramax category (mostly Ultramaxes between 60,000-64,000 dwt) again formed the largest share of 29%, with 76 units equivalent to 4.7 mln dwt delivered. In deadweight terms, Capesizes formed the majority of 35%, counting 26 units totaling 9.5 mln dwt. Dry bulk demolitions in 2018 also fell to a record low of 41 units totaling 4.0 mln dwt, a sharp drop compared to 192 units equivalent to 13.6 mln dwt scrapped in 2017. Capesize demolitions formed a majority of 37% and 61% in unit and deadweight terms respectively, with 15 units equivalent to 2.5 mln dwt reported scrapped. The average scrapping age in 2018 for dry bulk carriers was 27.7 years, with Panamaxes having the lowest average scrapping age of 22.5 years, while Capesizes came at a close 23.3 years”.

The shipbroker added that “the dry bulk net fleet growth was 225 units totaling 23.3 mln dwt, representing a 3.0% fleet growth. Fleet growth remained relatively on par with the 3.2% growth seen in 2017, as both delivery and demolition activity slowed down immensely in 2018. In unit terms, Supramaxes, Handysizes, and Panamaxes saw the greatest net increase of 64 units, 59 units, and 57 units respectively. In deadweight terms, Capesizes saw the greatest net increase of 9.0 mln dwt comprising of 24 units. In 2019, after assuming a lower slippage rate of 25 percent based on improved freight rates and market sentiment, dry bulk deliveries are expected to increase to 37-38 mln dwt. Demolitions could see an increase this year after hitting a bottom in 2018, especially if complying with the Ballast Water Management Convention and upcoming IMO 2020 sulphur cap prove too costly. However, actual demolition activity would depend greatly on actual market performance, which could see an improvement this year as vessels are taken off the market for scrubber installation, but also faces the risk of dampened demand due to the U.S.-China trade war and slowing Chinese economy. Based on our current assumptions, the dry bulk fleet could grow around 3-4% this year”.

Meanwhile, demand-wise, the shipbroker said that “China remains very much at the centre of the action, estimated to account for 70 percent of global iron ore imports. In comparison, iron ore imports by both Japan and Europe combined are estimated at 15 percent of the global trade. Chinese iron ore imports grew 4.9 percent in 2017 to 1.075 billion tonnes, supported by strong demand from steel mills. However, growth in China’s iron ore imports has slowed in the first 9 months of 2018, decreasing 1.7 percent year-onyear to 803.5 million tonnes, even as Chinese steel production surged and domestic iron ore output continued to fall. Chinese steel production has managed to reach monthly record highs since April, bringing total steel output in the first 9 months of 2018 to 691.2 million tonnes, a strong increase of 8.1 percent year-on-year”.

Banchero Costa added that “domestic ore output over this period fell by a drastic 41 percent year-on-year as environmental and safety restrictions intensified. Even as official steel production data shows a strong increase, there is the possibility that China’s total steel production has actually fallen as illegal steel mills were shut, which could explain the rather flat iron ore import figures. The lower levels of iron ore imports could also reflect a combination of less ores required in steel making due to the usage of higher-grade ores, and some port inventory drawdown (also said to be of the higher quality ores as well). As China clamps down on environmental pollution, there has been increasing emphasis on the quality of raw materials used, resulting in greater popularity of higher quality iron ore imports from Australia and Brazil. Long haul imports from Brazil in particular could become an important driver of dry bulk freight rates due to their higher quality. The China Association of Metalscrap Utilization has also reported increased scrap used in Chinese steel making in 1H 2018, with 180 million tonnes in scrap usage estimated for the whole of 2018, compared to 148 million tonnes in 2017. Baoshan Iron & Steel Co, China’s largest listed steelmaker, as well as Australia’s Department of Industry, Innovation & Science have also alluded to the increasing usage of scrap steel in steelmaking due to the country’s growing stockpiles. Growing scrap steel supplies could encourage increased output from electric arc furnaces that use only scrap as raw material in China, which may challenge demand for iron ore in the long term”, the shipbroker concluded.

With China as a destination market for US soybeans having been eradicated these past few months (and just this week reappearing in the foray with one small shipment), US farmers have been looking for alternative markets. In a recent report, shipbroker Banchero Costa noted that “in recent weeks, there have been reports of increasing soybean imports by Argentina from the U.S. – one of the consequences of ongoing U.S.-China trade tensions. Weekly exports data from the USDA show U.S. soybean exports to Argentina rising to 1.4 million tonnes from January to 22 November this year, from virtually no shipments the same period a year ago. Other destinations which have also seen an increase in U.S. shipments this year include the E.U. and Egypt, whose shipments increased 78 percent and 274 percent respectively year-on-year to 7.3 million tonnes and 3.0 million tonnes”.

According to Banchero Costa, “the rise of such trade flows – which in normal circumstances would not have made economic sense – has been attributed in large part to the cheap prices of U.S. beans. Since July, U.S. soybean prices have fallen sharply in direct response to the 25 percent tariff levied on U.S. soybeans entering China. While U.S. prices may have risen slightly in October to around USD 325/mt based on USDA data, this remains low compared to other supplies such as those from Brazil’s Paranagua, which were at USD 414/mt”.

The shipbroker added that “Argentina also needs U.S. beans to feed their domestic soy-crushing industry, after a punishing drought reduced their harvest volume. The USDA estimates that Argentina’s soybean harvest in the 2017/18 marketing year fell around 31 percent to 37.8 million tonnes. Coupled with the fact that Chinese buyers are paying a premium for South American soybeans, the case for Argentina increasing U.S. soybean imports makes all the more sense as it allows them to free up their own soybeans to ship to China”.

Banchero Costa added that “U.S. soybean exports to China have effectively ground to a halt – even over September-October when U.S. shipments to China typically ramp up – due to the uncertainty buyers face of whether political tensions could escalate. Heightened trade tensions could result in even higher tariffs or restrictions imposed by Chinese port authorities while U.S. cargoes are enroute, thus discouraging Chinese buyers in spite of the cheap U.S. prices. This has left a large gap for Chinese buyers to fill, especially as U.S. soybeans had accounted for around 34 percent of total Chinese soybean imports in 2017. The world’s largest exporter Brazil has thus seen an extended peak season this year, as high shipment volumes of 6.5-9 million tonnes per month to China stretched from May to October according to Chinese customs data. However, there are concerns that Brazilian supplies may be unable to fully cover the supply gap, thus spurring Chinese buyers to also source soybeans from other suppliers such as Argentina and Canada”.

“While the recent trade truce between the U.S. and China had initially sparked hope of trade tensions de-escalating, details of any concrete consensus have been scant. The truce now also hangs in a precarious balance following the arrest of Huawei’s chief financial officer in Canada, which China believes to be politically motivated. Last week, Reuters reported that China had agreed to buy 300,000 to 400,000 tonnes of soyoil from Argentina. This compares to 120,000 tonnes of soyoil sent to China over the last three years. While negotiations to increase Argentine soymeal exports to China have not been as successful, the soyoil agreement is good news for Argentina’s crushing industry, and may lay the ground work for U.S.-Argentina soybean shipments to increase further”, Banchero Costa concluded.

While it’s safe to say that 2018 has been a landmark for the ships’ demolition market, particularly in the beleguered tanker segment, the past few weeks have been less than ideal, in terms of further alleviating tonnage supply. In its latest weekly report, shipbroker Clarkson Platou Hellas admitted that “a somewhat muted position has been evident this week amongst the industry players with the market seemingly hanging in a precarious position, making it difficult to predict which side of the line the sentiment will turn. Generally, it would appear all markets are adopting a ‘wait and see’ attitude with Buyers possibly trying to extract some knowledge from the economic climate globally before they take a further speculative stance. Some parties are expecting a rebound in the domestic steel rates but any potential increase in price levels for ships are meeting some resistance for the time being until confidence returns”, said the shipboker.

Clarkson Platou Hellas added that “the annual spike usually seen in the 4th quarter of the year has so far not materialized, giving credence to the uncertainty currently felt by many players in the industry but the lack of available units now noticeable may help to steer some positivity back into the actual recycler’s minds. With the freight market in the dry sector starting to come under pressure after a stirring year, maybe some dry bulk units may be forthcoming for Buyers to sink their teeth into again, but obviously this remains dependent on how long the current weak rates continue. Whilst the Bangladeshi market has been the most stable of recent weeks, it is now understood that there are problems with local banks opening Letters of Credits and subsequently, placing cash buyers with tonnage in hand into a difficult position. This could be the one potential issue that could currently affect a positive turnaround and hope that this is just a ‘small period’ blip”.

In a separate note this week, Allied Shipbroking said that “at the recycling market seems to be on unstable ground at this point. After a couple of weeks with healthy flow of units sent to be beached, the market shows once again signs of a total clampdown, leaving little to be desired right now. Moreover, given the ups and downs of late, there seems to be a lack of clear trend in the market. The most concerning thing however, is not that there is a lack of stability in terms of volume, but the rumors of excessive level of inventory noted amongst cash buyers in the market. As the price gap between cash buyers and end breakers widens further, there should be an extra negative push, adding further unwanted pressure to the overall market. With local currencies also on the waning side, there seems to be a long way to go before any stability is restored. For the time being, given that we are at the half point mark of the final quarter of the year, with most hoping for some favorable gains, at least in the short run, it is rather unlikely to witness any excess tonnage being pushed in this direction for now”.

Meanwhile, GMS, the world’s leading cash buyer said that “markets fully progressed into “bear” territory this week, with sentiments weakening and end Buyer offerings subsiding by the day. Expectedly (and as previously reported), Cash Buyers are now struggling to offload their expensive inventory at anywhere near breakeven levels and it seems as though end Buyers are starting to smell “blood in the water”. There are purportedly about 35 Cash Buyer controlled unsold vessels being offered into the various markets. With Pakistan abstaining from the buying after the recent turmoil there and India once again turning inert, much of the Cash Buyer focus has shifted squarely onto a previously bullish Bangladesh. However, given the spate of beachings over the last few tides, a healthy majority of capable Chittagong recyclers have already been booked with some of the previously concluded pricier tonnage. As such, the struggle now is for Cash Buyers to try and commit their remaining units with the few open Recyclers who are struggling to get the necessary bank limits to open fresh L/Cs, failing which, we may well see Cash Buyers start to hold onto their vessels once again (at least for a short while) until some sort of stability is seen on levels as, given the developing situation, very few offers are even emerging whilst end users across the board are fearing further falls ahead. Overall, currency depreciations against the U.S. Dollar have been an increasing cause of concern for many months now, particularly in India and Pakistan, where heavy losses have been sustained. However, this has now spread to Bangladesh as rumors of an imminent fall in the Taka before the year-end have started to make the rounds”, GMS concluded.

Source: Hellenic Shipping News Worldwide