As the activity in the S&P market has subsided on account of the summer lull, it’s a perfect time for ship owners to contemplate on future deals and plan ahead. In a recent report, shipbroker Intermodal said that “the dry bulk market activity over the past four weeks has remained stable when compared to the previous months. There are concerns with regards to the dry bulk rates, which were stable and sometimes softening along with a considerable decrease of the volume on SnP transactions”.

According to Intermodal’s, Giannis Andritsopoulos, SnP Broker, “the Handy market was soft and there were no positive signs, due to the fact that asset prices were at low levels until the Easter holidays. Following Easter, we saw that values started to increase from that time until Posidonia with aggressive buyers being firm to purchase vessels. When the “ex-CIELO DI TOKYO” (37,296 dwt-blt ’08, Japan) was sold in May a correction on prices followed. Hence, as is normal, this changed the position of buyers from firm to one of monitoring and waiting on how the market will perform”.

He added that “regarding Supras, there are still the usual suspects who noticeably purchased vessels during the past year and remain firm to continue purchasing. The values of the previous months, until the sale of the “FORTUNE UNITY” (53,472 dwt-blt ‘06, Japan), which was sold for $10.5m were stable in the aforementioned levels and had a downward trend for Japanese tonnage. However, last week we saw the vessel of Doun Kissen “NAVIOS ARMONIA” (55,522 dwt-blt ’08, Japan), being committed for $14.2m. On the other hand, Chinese Supras with the price difference from Japanese Supras (around 30%) attracted Supra buyers and the last three weeks there has been strong interest from Chinese buyers who are interested in Tier II Supras for import”, Andritsopoulos said.

“With the recently introduced regulations in regards to the Chinese flag, the SnP market has a mixed picture of the past 4 weeks, and the consequent change of plans for sellers that own a vessel built between 2001-2003 and as well as for Chinese buyers who are now focusing on Tier II vessels. As far as Panamaxes and Kamsarmaxes, we can spot limited interest in regards to modern vessels as well as in vessels being built between 2005–2007, despite there being numerous vessels for sale. For Chinese Kasmarmaxes, we witnessed big competition for the Toisa Kamsarmaxes, because of the attractive discount, which made even owners that were focusing on Japanese tonnage to reconsider and to take the chance of purchasing a cheap Chinese Kamsarmax”, Intermodal’s analyst noted.

“Lastly, it is interesting to take a look at the tanker market, as despite an absence of strong competition, some interesting deals took place lately. We saw a VLCC with Japanese flag built ’04 being sold for $22.0m., an Aframax built ’08 being sold for $19.5m and during the last weeks there is a lot of interest in MRs with the majority of the buyers being Greek.The stable asset prices together with the increase on wet tonnage will most probably lead to interesting opportunities into second-hand tonnage”, he concluded.

Source: Hellenic Shipping News Worldwide

A less than impressive first half for the capesize segment, leaves ship owners with mixed feelings ahead of what’s expected to be a crucial second part of the year, which is filled with challenges, most notably the looming trade war between USA, China and the EU. In its latest weekly report, Allied Shipbroking noted that “having reached the mid-point in the year, it seems to be a good time to summarize the overall trends noted in the Dry Bulk sector and more specifically the Capesize market, while looking to get a feel as to what we can expect during the second half of the year. All-in-all, it has been a rather interesting half, with a considerable amount of volatility, underlining how fragile the market balance remains and how vulnerable it is to small shifts in trading trends”.

“Indicatively, the BDI finished June at 1,385 points, a level which is just above the 1,366 points which it closed off the previous year, whereas contrary to this, the Capesize index, which tends to be the main influencing size segment, finished at slightly softer level, reaching the 2,170 point mark, compared to the 2,830 basis points it ended off in December 2017. This is a considerable drop, though worth mentioning that it is still well above its 6-month average figure”, said the shipbroker.

So where does all this leave us now? Are we going to be able to see a strong rally in the final quarter of the year that will help us brake above the 4,000 point mark on the BCI? Or is the capsize market going to suffer from the global economic and political turmoil at play, leading it to a perpetual motion between the 800 and 3,000 point level for the remainder of the year? According to Mr. Thomas Chasapis Research Analyst, “the answer may lie somewhere in between, given the multiple influencing factors currently at play. On the Iron ore front, China, just had its best month in terms of imports, probably well above 90 million tons, an important figure when you take into account the fact that China is by far the largest importer”.

Moreover, as Chasapis said “coal, the second main commodity for Capes, has been showing a remarkable rise in trade volumes in the year so far (as has been pointed out in previous weeks) and given the recent positive trends noted in terms of pricing of the commodity, shows for an equally promising performance over the months ahead. The caveat here is that both these commodities are highly dependent on steel production and although steel output figures in China are around 5% higher compared to last year, they are also highly susceptible to the risk of any dampening effect the recent trade war tariffs could eventually have on the steel products trade. Taking note of the overall balance at play in the market it is important to note that the Capesize fleet development has been holding at a modest level of around 1.02%, well below what was being noted in the year prior”.

He went on to note that “given all this and even when taking into account the risk overhang on trade, it looks as though a more attuned supply demand balance may well still be at play. With all being said, the first half of 2018 has left us with an eerie feel, with the intense ups and downs noted in the market being the cause of increased uncertainty. We can anticipate that for the rest of the summer period, things will be moving in a similar pattern to what we have witnessed so far in the year. Most will be likely focusing on the final quarter of the year, which is traditionally the most bullish seasonal point for Capesize vessels. As to if the market will be able to break above its previous highs during the fourth quarter, it looks as though most market thoughts are in favor of such an outcome at this point. Though all this would depend largely on the current trade trends being sustained and not so susceptible to any geopolitical interruptions at play”, Allied’s analyst concluded.

Tankers are being bought left and right as prices are becoming more attractive. In its latest weekly report, shipbroker Intermodal said that “in the last six months we have seen more than 110 reported tanker transactions involving tonnage larger than 32k dwt and younger than 18 years old. The transactions are more or less equally segregated between crude and product tonnage, with crude carrier transactions slightly more than product ones). Among these sales we notice a bit of imbalance occurring at the depreciation that is associated with age and type. When it comes to tankers the rule of thumb states that after a ship passes the 10 year mark its value depreciates at a faster rate. More so in a market that has being depressed or declining for more than 18 months as the current one”, said the shipbroker.

According to Mr. Timos Papadimitriou, SnP Broker with Intermodal, “at this stage the only segment that has shown remarkable resilience are the S. Korean built MR tankers 10 years old or younger. These ships seem to defy the overall trend and are actually resisting to price discounts rather strongly. A representative example is the Kirk and Norden deal involving two vessels both 2009 built which were reported sold at $18.65m each. In June 2017 the ex- “KIRSTIN” (50,078dwt-blt 09, S. Korea) was sold to Norden at a reported price of $19.25m. Hence, the same buyer bought similar vessels with the two deals taking place a year apart and with only a 3.1% decrease on the respective values”.

Papadimitriou added that “similar resilience can be seen on Japanese tonnage but for earlier built ships. The “CHRISTINA KIRK” (53,540dwt-blt 10, Japan) was recently sold for a price of $17.75m, while last year the “NORD INTEGRITY” (48,026dwt-blt 10, Japan) was sold after its long T/C for a price of $17.50m. The $250k difference (as reported) can be even argued as a reasonable premium due to the deadweight difference. But if you look at values of Japanese MRs of even a year older, these seem to be depreciating at more reasonable 8% per year For example the “HIGH ENTERPRISE” (45,967dwt-blt 09, Japan) and the “SILVER EXPRESS” (47,401dwt-blt 09, Japan) were both committed at low $16.0m. The deal did not go thought and one can argue that this happened due to their respective condition, specs and the overall nature of each deal. But this sort of parameters rarely influences a deep-well ship”.

Intermodal’s broker said that “if we take a look at MRs older than 10 years and regardless of where they are built, a massacre takes place. The closer a vessel approaches to the 15-yr mark the harder it becomes to retain its value. A recent example is the BP owned vessels (47,000dwt-blt 05, S. Korea), which were fixed and failed two months ago in the region of $12.0m each and were once again committed last week for $10.7m per vessel. Even vessels built in 2006 or 2007 seem to be having trouble finding keen buyers”.

Meanwhile, “as far as overall sentiment is concerned, the majority of the product players do not expect any signs of recovery before Q1 2019. There have been some voices supporting that recovery will start earlier. These were mostly cased around the product and crude reserves and what happens historically. Either or, expectations that around the same time next year we will be seeing a better market are unified. So asset wise we can say that more or less we are now going through the bottom of this cycle or –most optimistically – that we very recently reached it, while the second half of the year will most probably offer more clear signs in regards to how long it will be before optimism returns to the market”, Intermodal’s analyst concluded.

Source: Hellenic Shipping News Worldwide

Ship owners of the largest tankers, VLCCs have been witnessing some harsh market conditions, which have appeared to ease off, during the course of the past week. In its latest weekly report, shipbroker CR Weber said that “VLCC rates experienced upward pressure this week as owners’ confidence was boosted by strong demand in the Middle East and Atlantic Americas regions. The demand gains in these regions built on strong draws on Middle East tonnage to service West Africa demand over the past two weeks to moderate the extent of surplus Middle East tonnage”.

According to CR Weber, “a strong run in recent demolition sales activity also saw a number of units positioned between Singapore and Fujairah drop off position lists. Additionally, as charterers progressed into early April Middle East cargoes at the start of the week, about half of the units available to cover these were disadvantaged. As a result, those requirements that could not work disadvantaged units lent support to rates for competitive units; the gains did not extend to disadvantaged units and instead created a wider spread between the two tiers of tonnage. We note that the number of surplus units projected to be available at the conclusion of the first decade of the April program stands at 23. This marks a progressive decline from the 26 surplus units observed at the conclusion of the March program and the 33 units seen at the conclusion of the February program (which was a four‐ year high). Early indications suggest that surplus availability will continue to post modest declines as the April program progresses, which follows the recent rebound in demand in the Atlantic basin”.

According to the shipbroker, “further demolition sales activity would also bode positively for owners by reducing the surplus further. As the market progresses into Q2, there are signs that a rebound in demand in the Atlantic basin and the corresponding ton‐mile and voyage duration gains which lead to slower return appearances of performing units on position lists will lend fresh, and potentially stronger, support to VLCC rates and earnings. Adding to potential positive pressures around that time, any abandonment by OPEC producers of their present quotas could deflate front‐month crude prices as a headline kneejerk reaction, but this negative crude price pressure would not likely extend to further forward months, creating a fresh contango structure. This could support a reopening of floating storage, particularly as floating storage prices would – at least initially – be quite attractive to the economics of such plays”, CR Weber noted.

In the Middle East, “rates on the AG‐CHINA route gained 8.5 points to conclude at ws45 with corresponding TCEs more‐than‐doubling to ~$13,707/day. Rates to the USG via the Cape gained four points to conclude at ws20. Triangulated Westbound trade earnings jumped 29% to ~$16,678/day”. In the Atlantic Basin, “rates in the West Africa market followed those in the Middle East. The WAFR‐CHINA route added 6.75 points to conclude at ws44.75. TCEs on the route rallied 55% to conclude at ~$15,673/day. In the Atlantic Americas, demand surged from a recent lull. Collectively, there were 11 regional fixtures, marking a strong gain from last week’s three. Among this week’s tally, USG loadings were at a six‐week high, account for three of the total. With the demand surge effectively narrowing the supply/demand positioning, rates strengthened. The CBS‐SPORE benchmark route added $150k to conclude at $3.25m lump sum”, CR Weber said.

Meanwhile, “the West Africa Suezmax market continued its slide this week on a further slide in regional demand following stronger earlier coverage by VLCCs. The WAFR‐UKC route observed a loss of 2.5 points to ws55. Sluggish performance was also seen in the Black Sea market, where rates on the BSEA‐MED route lost 2.5 points to ws67.5. Rates in the Caribbean market were largely unchanged with the CBS‐USG route holding at 150 x ws55 and the USG‐UKC route steady at 130 x ws55”, said CR Weber.

In the Aframax segment, the shipbroker said that “after commencing the week with rates at an effective floor, rates in the Caribbean Aframax market firmed at the close of the week on the back of a strengthening of demand at mid‐week. As available positions declined, owners were able to achieve incrementally higher rates and the CBS‐USG route ultimately concluded with a 5‐ point gain to ws100. Date sensitivity is also a factor behind the higher rates being observed, which implies that as charterers progress past the front end of the list further rate gains could be elusive”, it concluded.

Source: Hellenic Shipping News Worldwide

The sustainability of the dry bulk market’s rebound is still very much reliant on the steady rhythm of dry bulk demolitions. In its latest weekly report, Allied Shipbroking said that “despite the fact that we look to be well past the days of excessive supply glut in the dry bulk market, the demolition market is still one to be closely followed by most. After all it is a market that plays a crucial role in the overall supply/demand balance. So what can we really expect to see in this market this year? In 2017, the dry bulk sector had a limited presence in the ship recycling market, closing with the lowest annual figure in terms of number of vessels that we have seen since 2011. This came attuned with the general improvement dry bulker freight market, especially from the latter half of the summer period onwards, underlining the high correlation that these two markets share”.

According to Mr. Thomas Chasapis Research Analyst with Allied Shipbroking, “the boost in positive sentiment and the increasingly bullish attitude towards the forward prospects of the market have incentivized many ship-owners to prolong their assets’ trading age by a considerable amount. It is worth pointing out that the slower ship recycling activity noted last year could also be attributed in part to the amassed activity of previous years, reducing substantially the number of vessels that are above 20 years of age. At the same time, on the tanker side, a steep increase in the number of ships sent to be beached would have been expected given the poor performance noted in their freight market, yet given the fleet cleansing that had taken place in past years, the tanker market was left with a minimal number of vessels in the “overage” group. Subsequently, this left the total figure of vessels recycled last year to reach its lowest level in over 5 years”.

Chasapis added that “moving against this, offered prices from the Cash Buyers have noted an upward trend in general throughout 2017, reaching fairly close to the prices that were being noted before the market collapse back in the summer of 2015. In the Indian Sub-Continent, there was an increase of around of 100 US$/ldt on the average prices quoted, an impressive recovery from the 5-year low figures noted back in 2016. In the other main ship breaking regions, namely China and Turkey, there was also a considerable improvement in their offered prices, but not to the same extent as those noted in the Indian Sub-Continent, further increasing as such the price gap. Moreover, this gap has widened further in 2018, with the Indian Sub-Continent maintaining its prices well above the 400 US$/ldt mark, while the other regions are well below the 300 US$/ldt mark”.

According to Allied’s analyst, “it is true, that in the case of China, this has been in part due to the shifting political environment with regards to pollution, which has pushed the industry there to focus more on green recycling options which are fully or in part compliant to the Hong Kong convention. In the case of Turkey, it has been more to do with the periodical pressure that has been felt in local steel plate prices and a weakening currency. So what can we expect from the market this year? All-in-all, the bargaining power seems to have moved to the ship owners favor, with the slack in the number of demo candidates pushing for intense competition amongst cash buyers. There is however the risk as always, that a small shift in the dynamics of the market, can turn everything on its head. A rapid change in regulations, a wild shift in earnings, a change in the seaborne trade trends, all can lead to a very different market to the one we are facing now. Given however all that we have seen, and the overall trends being noted in the market, it looks as though there is considerably more potential for upside than for downside movements in the market”, Chasapis concluded.

Source: Hellenic Shipping News Worldwide

Dry bulk shipowners had longed for this period of time for more than nine years. It was late in 2008, when the market came tumbling down, amid a halt in world trade, as a result of the aftermath of Lehman collapse and its consequences in global economy. Shipowners will tell you though, that these dramatic events only heightened the downturn of what was a doomsday scenario waiting to happen in the dry bulk market. It was only a matter of “when” not “if”. Asset prices had reached an unprecedented level which was, frankly speaking, unsustainable, while the global orderbook was overbloated as well. Demand, however high, was never going to catch up.

The years which followed showed some blips and short bursts, but it was only until the second half of 2017, when a serious and sustainable recovery rally came to be. The Baltic Dry Index (BDI), the dry bulk industry’s benchmark, finished the year at 1,366 points, while only two weeks prior had reached a number just above 1,700 points, while sustaining above the psychological mark of 1,000 points for the most part of the second half of 2017.

According to Allied’s Research Analyst, Mr. Thomas Chasapis, “Capesize and Panamax TCA saw their numbers boosted most, finishing roughly 92% and 64% higher on y-o-y basis, respectively, while the Capesize TCA managed to hit above the 30,000 $/day mark for a brief moment. The smaller size segments also witnessed a fair improvement, reaching levels well above what had been seen the past two years, though still not as impressive as the gains noted in the larger sizes. These improved earnings were quick to leave there mark on the secondhand market. With the total carrying capacity of vessels changing hands reaching just above 50 million dwt (close to 700 vessels), 2017 has clearly outperformed all previous years dating back to 2012”.

“More importantly”, Chasapis adds that “the figure that sticks out the most is the total invested capital, which concluded at the highest level noted these past 5 years by a fair margin. At the same time, it is important to note that despite total volume for 2017 being only marginally higher than 2016, the level of invested capital was significantly higher, pointing to the considerable increase in price levels being noted. These figures can be described as nothing short of impressive, especially when taking into account the highly volatile nature of this market and the still recent memory of the dire earning conditions noted back in 2016. The main drive was still one of bargain hunting, with many distressed deals having been put on the table, while many buyers still feeling that there was room for further gains to be had”.

According to Allied’s analyst, “this robust growth in values describes best of all the overwhelming optimism now witnessed all around. When it comes to investing in shipping however, increased activity in the secondhand market comes typically hand in hand with increased appetite for new ordering. This time around, new orders however were curbed to a minimum during. New contracting accounting for a mere 16% of the starting Orderbook, while given the strong level of deliveries, the orderbook decreased by roughly 28% during the year. Looking at it in more detail, we note that interest in new ordering started to emerge in mass from the summer period onwards, keeping in line with the strong movements noted in the freight market. Indicatively, the Panamax and Capesize segments showed new order activity ballooning during the final quarter of 2017, with 96% and 65% of total new orders placed within the second half of the year”.

“All-in-all the main conclusion of what we have seen so far is that the Dry Bulk sector continues to be on a healthier track, with an overall optimism being felt with regards to the medium term. However, the causes behind the most recent slump and the lessons learnt from it must not be forgotten easily. Furthermore, given that the growth of the fleet reached 2.18% for the year, while the scheduled deliveries for this year are still fair in number, we must continue to make an effort to keep the fleet growth rate attuned with what demand dictates”, Chasapis concluded.

Source: Hellenic Shipping News Worldwide

With 75 tankers of the Aframax class looking likely to enter the global fleet in 2018, on top of the 67 LR2/Aframax ones already entering into the global fleet this year, it seems that tonnage oversupply could plague the market for the years to come. What about demand though? In its latest weekly report, shipbroker Gibson noted that “crude exports out of the Former Soviet Union (FSU) are one of the biggest demand drivers for the Aframax market in the Atlantic Basin. The significance of regional trade has been further boosted by the decline in Aframax shipments in the Caribbean and in the North Sea. Strong gains in FSU seaborne crude exports were seen in 2015/2016 and trade continued to increase this year despite OPEC led production cuts, being driven by rising crude exports through the CPC terminal in the Black Sea. CPC exports averaged over 1.15 million b/d between January and October 2017, up by 250,000 b/d versus the corresponding period last year, following the start-up of the giant Kashagan oil field in the Caspian Sea. There also have been some modest gains in Russian exports of its Arctic crude, which more than offset a minor decline in crude shipments in the Baltic”.

According to Gibson, “next year there is potential for further growth in volumes lifted from the CPC terminal. The Kazakh energy ministry expects to see another 120,000 b/d gain in Kashagan output, which suggests the country is unlikely to meet its production pledge under the Opec/non-Opec output deal. The picture could be different when it comes to Russia. According to Argus Media, the expansion of the ESPO pipeline branch, that runs through Heilongjiang province in China to Dalian, is nearly complete. This project will increase the ESPO blend shipments through the spur from 320,000 b/d currently to around 600,000 b/d next year. If Russian crude production and refinery throughput are being maintained next year at similar levels relative to those seen in 2017, exports through other established routes are likely to decline. Taking into account Russia’s ambition to grow trade volumes with its Asian partners and significant oil backed loans with China, seaborne exports from the Kozmino terminal on the Russian Pacific coast are unlikely to witness a major decline. This clearly puts under threat shipments from the West, particularly seaborne, as flows through the Druzhba pipeline are mostly committed to refineries, for which it is challenging to find an alternative supply source”.

The shipbroker adds that “if there is indeed a decline in Russian crude exports out of the Baltic and the Black Sea ports, it will be another piece of bad news for Aframaxes, plagued by rapid supply growth. This year 67 units in the LR2/Aframax size group have been delivered and another 75 tankers are scheduled for delivery in 2018. Considering weak demand prospects and rapid fleet growth, it is unlikely the sector will see a notable improvement in freight levels anytime soon. In the longer term, continued growth in world oil demand and the eventual phase-out of the production cuts will aid demand for tonnage. On the supply side, the Ballast Water Treatment (BWT) regulation and the introduction of global 0.5% sulphur limit in 2020 also offer structural support, with promise of stronger demolition activity and with it, slower fleet growth. The prospects for intense demolition post 2020/2025 are particularly strong in the ice class Aframax segment, where over 60% of fleet are within the 11 to 15 year old bracket. Ice class tonnage is more expensive to run due to higher bunker consumption and as such, following the implementation of the BWT and global sulphur cap, these units are likely to come under additional downwards pressure and so could exit trading operations prior to their natural retirement age”, Gibson concluded.

Meanwhile, in the crude tanker market this week, Gibson said that “VLCC Owners resisted further falls and then managed to claw back a little lost ground as Charterers moved to mop up remaining December positions. Rates for the most modern units broke through the ws 50 barrier to the East, but more challenged units still had to accept little better than ws 45 with runs to the West moving again in the low/mid ws 20’s. The January programme will be in hand from early next week and Owners will be hoping for pre-Holiday momentum to help out, and counter ongoing easy availability. Suezmaxes started with hope, but then had to settle for a rather non-descript back half to the week with rates easing towards ws 85 East and into the high ws 30’s West with little change anticipated over the near term. Aframaxes put a handbrake on recent retreat and a busy week allowed Owners to propel rates to 80,000mt by ws 130 to Singapore with a continuation of that over the next phase likely”.

Source: Hellenic Shipping News Worldwide

The product tanker market is exhibiting mixed fortunes for ship owners, depending on which part of the world they elect to trade their ships. In its latest weekly report, shipbroker Gibson noted that ‘product tankers trading in the Far East are having a better second half of 2017 relative to the first half, and on average, have outperformed the Atlantic markets. Whilst earnings in the West have generally had a difficult second half (despite some firming this week), the Far East market has been the consistent performer, gradually firming into Q3 and only easing marginally into the first half of Q4. Part of the strength has followed typical seasonal trends. However, this year the market received an extra boost from the aftermath of hurricane Harvey, with demand emerging late summer/early autumn to fill shorts on the West Coast of North and South America. Whilst this demand has now faded, the product markets may still be feeling a longer lasting impact in terms of thinner tonnage lists from displaced vessels, stronger refining margins and higher trading demand, particularly from North Asia”.

According to Gibson, “increased activity from China has been a key support factor in recent weeks and looks set to continue to underpin the markets for the balance of the year. Earlier in the month the Chinese government issued an additional 5 million tonnes of product export quota to the state-owned refiners to use by year end. This, coupled with good margins, has encouraged refineries across China to boost runs and push more product into the export market. Whilst the independent refineries have not been granted the same export rights, they have positioned themselves to fill the gap left behind by the state-owned refiners who have less restrictive access to the external markets. All of this points to higher export demand emanating from North Asia for the balance of the year. The country’s ban of >10ppm diesel in ships and tractors has also forced some players clear storage and boost exports of the higher sulphur grade. Elsewhere in the region, strong demand for naphtha from the petrochemical sector is driving trading of the light distillate across the region. Tighter supplies and firmer LPG prices are making naphtha more appealing to petrochemical producers, cracking margins have also been firm of late, even with some recent softening. Whilst this is supporting flows from the Middle East and Europe, further trading opportunities have been created within the region”.

The shipbroker added that “moving into 2018, Chinese product export quotas may need to be raised further. The Chinese government has raised crude import quotas for independent refiners by 55% to 2.85 million b/d. Whilst undoubtedly part of this increase in import quota will supply domestic markets, there is scope for further increases in refined product exports. New refineries coming online will also boost Chinese refining capacity. PetroChina’s Anning refinery (260,000 b/d) in Yunnan is now supplying regional demand, whilst CNOOC’s Huizhou Phase 2 (200,000 b/d) plant is in start-up mode. Aside from these plants, limited regional expansions are scheduled for 2018. However, higher regional refinery runs from recently commissioned and existing plants will continue to support products trade across the region, even if the growth is slower than in recent years”, Gibson concluded.

Meanwhile, in the crude tanker market this week, Gibson said that in the Middle East, “VLCC Owners had their patience sternly tested as November enquiry became quickly finalised and December programmes were still awaited. Rates edged lower from the top end of the recent range to slide into the high ws 60’s West with levels to the West dipping to sub ws 25. The expectation of busier times to come prevented further damage, but it will need concentrated attention from early next week to recreate momentum and give any chance for the market to rebound. Suezmaxes moved through a welcome active phase with demand to the West particularly apparent.Rates responded accordingly to move into the high ws 40’s West and to ws 87.5 to the East, but that seems to be a high tide mark just for the time being. Aframaxes slid lower, as expected, on thin enquiry and heavier availability. Rates now stand at 80,000mt by ws 115 to Singapore and are likely to move lower over the next fixing phase too”, the shipbroker concluded.

Source: Hellenic Shipping News Worldwide

WTO upgraded 2017 forecast for trade expansion, following a sharp acceleration in global trade growth in the first half of the year. The estimate for growth in world merchandise trade volume in 2017 was raised to 3.6 percent. The previous estimate for 2017 was 2.4 percent. Growth of 3.6 percent would represent a substantial improvement on the lackluster 1.3 percent increase in 2016.

Stronger growth in 2017 was attributed to a resurgence of Asian trade flows as intra-regional shipments picked up and as import demand in North America recovered after stalling in 2016.

China – September: Strong signals of expansion. The official NBS Manufacturing PMI in China jumped to 52.4 in September of 2017 from 51.7 in August and well above market estimates of 51.5. It was the fastest expansion in factory activity since April 2012.

NBS Manufacturing           PMI           52.4 (Previous 51.7)

Non-Manufacturing           PMI           55.4 (Previous 53.4)

China’s One Belt One Road Initiative is good for shipping and much needed. China is now growing on internal consumption so OBOR is a way of taking the lead in international development and infrastructure.

China’s steel industry shows retreat with the activities of steel mills slowing down for the winter p

eriod: China’s steel industry PMI retreated in September, but the activity remains at expansion. Activities in China’s steel sector slowed in September after stronger-than-expected performance in the previous months, an industry report showed.

The purchasing managers’ index (PMI) for the steel industry came in at 53.7 last month, down from 57.2 in August, according to the report by the Steel Logistics Professional Committee under the China Federation of Logistics and Purchasing. With steel mills in northern China cutting production during the winter heating season, production activities will continue to slow, the report said.

August was one more month with strong Chinese seaborne iron ore imports. Chinese imports of iron ore set to be the highest in August so far this year. China’s imports of seaborne iron ore were around 88.9 million tonnes in August, according to vessel-tracking and port data compiled by Thomson Reuters Supply Chain and Commodity Forecasts. This makes August the strongest month this year, beating July’s 85.4 million tonnes and March’s 86.5 million, according to the data.

Coal Demand: Indian Coal imports rose by 9.5 per cent to 18.33 million tonnes (MT) in September, after having registered year-on-year decline for five months in a row, as some power plants faced fuel shortages.

Additionally, Coal exports from Australia’s metallurgical coal powerhouse region of North Queensland remained strong in September after setting a multi-year high in August, data from the North Queensland Bulk Ports Corporation showed.

Exports totalled 13.40 million mt in September, edging lower by just 40,000 mt from 13.44 million mt shipped in August, which was the strongest monthly total since at least the beginning of 2014, the data showed. The September figure is up 3% year on year from 12.99 million mt.

Grain Demand: China imported 380,000 tonnes of corn in August, a 14-fold year-on-year jump, as buyers stocked up on cheaper imports after domestic prices of the grain rose, data from the General Administration of Customs showed.

Growth Strategy of Companies: Japanese shipping company Kawasaki Kisen Kaisha (K Line) revealed plans to make investments totaling JPY 80 billion (around 718 million) over the next three years, excluding the containership business. As explained, the investments are part of K Line’s “Revival for Greater Strides” plan as the company approaches its centenary of operations. Under the fleet planning and investment plans, K Line will reduce the dry bulk fleet by 31 bulk carriers until 2019. What is more, car carrier fleet will be decreased by 11 vessels and short sea/coastal fleet by 1 vessel.

Oslo listed bulker owner Songa Bulk brought its vessel tally of investments to 15 ships worth USD 279.6 million. The vessels include two Capesizes, ten Kamsarmaxes, one Ultramax and two Supramaxes. Prompted by attractive second-hand prices, Songa Bulk announced last month it would be looking into more ship acquisitions. To this end, the company completed a tap issue of USD 45 million in its Senior Secured Callable Bond Issue, the net proceeds of which have been earmarked for the financing of bulker acquisitions. The total nominal amount outstanding in the bond following the tap issue will be USD 120 million.

Bulker Ordering Frenzy: Reports indicate that since the beginning of the second half of this year, the number of orders has almost doubled to 110 new ships, when compared to 63 newbuilding orders from the first half of this year. Outstanding deals were the placement of ten 82,000 dwt units by Japanese player, Nissen Kaiun at compatriot shipyards and the new mega – order involving Brazilian miner Vale for time chartering of up to 30 Valemax newbuilds.

Newbuilding Prices: Japanese shipbuilders are hoping to push up bulker newbuilding prices to compensate for a strengthening yen and reflect a rising dry bulk trading market. A series of negotiations underway involving Asian and European operators with Japanese trading houses for bulker orders based on lease deals will set the tone for future prices, according to Tokyo sources. Many of the deals under negotiation involve ultramax newbuildings, which the yards are hoping will kick off price rises across the dry sector. Tsuneishi Shipbuilding and Oshima Shipbuilding are negotiating from a position of relative comfort, with orderbooks full until the end of 2019 — and even 2020 in the case of Oshima, which is negotiating 2021 delivery slots.

Ship Recycling: Alang yards are receiving Japanese loan of $111.22 million to upgrade their facilities. The upgradation plan is aimed at helping Alang comply with international standards on ship recycling and raise its share to 55 per cent from the existing 32 per cent, a Gujarat Maritime Board official said.

Ship Finance: The European Banking Industry is Exiting Shipping – Crisis in the West – Chances in the East. Having fiercely competed with each other for transactions during the boom years, these banks are now faced with portfolios that are, to a large extent, non-performing or in default.

The financing of the shipping assets and the trade itself is coming from Eastern finance sources. Marine Money’s Shipping Portfolio League Table for 2016 shows seven Asian finance providers in the top 30 global lenders to shipping.

Increasing Trend in 12M Libor Rates

12M Libor           end- Sept: 1.7868 , up 5% from beginning of September (1.709)

Source: Maria Bertzeletou, Shipping Analyst