Total Shipping Co., Ltd

In UK, One Belt, One Road a brilliant slogan for Chinese exports
By total
Published: 2015.10.26

Chinese president presents ever-broadening vision of the trade initiative. SO expansive, yet so vague, the One Belt, One Road initiative is gradually evolving into a Chinese version of globalisation rather than a well-defined trade project.

During his state visit to the UK this week, Chinese president Xi Jinping laid out a broad vision of his flagship project, which promises to inject trillions of dollars of infrastructure funds to enhance trade links between Asia, Africa,Middle East and Europe. “One Belt, One Road is open. It’s a broad circle of friends through Africa and Eurasia that every interested country can join,” Mr Xi said in the UK-China Business Summit. “It is multi-faceted and covers various areas of co-operation, and there are various ways of co-operation.” The remarks, made during the first official visit by China’s head of state to the UK in a decade, came with a dash of diplomacy.

When Mr Xi fist launched the ambitious initiative in 2013, One Belt, One Road was more focused on enhancing seaborne and land-based trades across the continents and did not cover the UK. Official documents showed “One Belt” refers to the Silk Road Economic Belt, mainly involving the development a land bridge in Central Asia linking China to Continental Europe. “One Road” refers to the Maritime Silk Road, which aims to develop shipping infrastructure from China to Southeast Asia, the Indian subcontinent, Middle East, Africa and Europe.

Many suggested the project’s main goal was to help China export its excessive infrastructure capacity amid slowing economic growth, which Beijing has partly admitted to. According to the Chinese government, the country plans to increase trade with nations involved in the initiative to more than $2.5trn in 10 years from the 2014 level of $1.1trn. However, while there have been encouraging cases in Africa and Southeast Asia, political challenges remain in realising the China-led project remain amid instability in Central Asia as well as territorial disputes in the South China Sea.

Chinese officials have been widening the definition of One Belt, One Road, which has blunted the initiative’s political edge but made it sounded more like an idea rather than clearly-defined proposal. CCTV, China’s official mouthpiece, has even described its areas of collaboration comprising “policy communication, road connectivity, unimpeded trade, money circulation, and cultural understanding.” In his trip to the UK, Mr Xi went ahead to define One Belt, One Road as a concept which can bring prosperity to many economies, rather than merely a conventional trade project.

“The Belt and Road Initiative connects the Asia Pacific economic circle in the East, and the European economic circle in the West, and there are more than 60 countries along that traditional route,” Mr Xi said in a press conference at 10 Downing Street.“We are talking about global connectivity, and this initiative will bring about more opportunities for mutually beneficial cooperation among countries in the region.”

“And this initiative is warmly received by countries along the route in larger areas. And the UK side has expressed a strong interest in participating in the construction of this initiative,” he said. “This is great news…We know that, when everyone adds wood to the fire, the flame will go high.” Mr Xi linked his initiative with the UK’s “Northern Powerhouse” project, which aims to revitalise the economy of Northern England via improvement to trade links and other initiatives. During his visit, £30bn worth of Chinese investments in the UK are expected to be announced. As such, One Belt, One Road is turning into the most brilliant slogan in the marketing campaign for Chinese exports.

Source: L & X Ship Brokering

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Shipping markets show mixed emotions
By total
Published: 2015.09.10

The dry bulk market has managed to show marginal improvements over the past few days, with the Capesize segment faring better than smaller dry bulk segments, like the Handy and Supra markets. Similarly, the market for Gas Carriers has quieted down after a very busy week. Meanwhile, in the newbuilding market, things may have picked up in the past couple of weeks, but still activity is deemed as rather low.

Commenting on the Capesize market, shipbroker Fearnleys noted that “after a positive start to the week with increased number of cargoes particularly in the east, rates were improving. West Australia to China was up from usd 5,00 to usd 5,50 in short time. However, with a lack of cargoes out of Brazil, the Pacific rates were again under pressure. Period activity has been more or less non existing”.

Meanwhile, in the Panamax market, Fearnleys noted that “so far a relatively quiet week for Panamax with rates coming off in the Atlantic basin. Few fresh requirements and more open tonnage pushing rates down. Alantic rounds pending around USD 6000 midweek and the trend still weakening. ECSA and also USG grain has been the main driver in the fronthaul market and USG paying high 12000 + 270/280 bb this week. Some iore also done lately but same has unfortunately not had any visible impact on the rates. The eastern hemisphere also weakening with less orders activity and falling rates. Indo india coal paying typically 7k, Nopac maybe tic more. Limited period activity, weak paper forecast and expectations it will remain low keep the players off the field”.

In the Handy segment, Fearnleys added that “the handy and supra markets have been sliding the last couple of weeks. We still see the same tendency, but the market seems more positional this week. Out of the USG we see more cargoes coming up for 2nd half September / beg October. This could again lead to a pressure on rates going forward. ECSA is still active with 12k being done for trips to Med. In the Eastern hemisphere we see the same tendency and more orders coming out for NoPac delivery. Short Indo rounds are concluded in region of USD 5k while longer durations destined for India are fixing with an 8 in front. Period market is still present with shorter periods being concluded in region of 7,5k bss Spore delivery”, the shipbroker noted.

Meanwhile, in the Gas tanker segment, Fearnleys said that “after a busy week in the VLGC market last week, things quieted down somewhat this week. Although much so due to industry functions and events taking market players away from their desks, it has also been a matter of the usual wait for acceptances (both for this week and the next). The somewhat limited number of September loaders available in the Middle-East market prior the start of the week, has been further reduced this week with help from India. Two ships has been placed on subs, and another two cargoes are being worked in time of writing. In the Western market, a West Africa FOB has attracted a few traders attention, and one ship has been put on subs here too pending award. The Baltic reference freight route from AG to Japan has been moving sideways with only an increase of about one dollar W-o-W. The biggest headline this week in terms of newbuilding, is the confirmed order of two Panamax 78’s for delivery in 2017 against 10-year time charters to Phillips66″, the shipbroker concluded.

In the newbuilding market, shipbroker Intermodal noted that “despite the recent pick-up in ordering activity that took place in a traditionally quiet time for the market, the newbuilding industry is still going through difficult times, while expectations that sooner rather than later tanker orders should also slow down are growing. In both China and S. Korea a series of shipyards continue to face severe financial problems and while in most cases extensive restructuring plans are trying to tackle operating losses that skyrocketed this year, optimism is admittedly limited, with the recent cut in all of Hyundai, Samsung and Daewoo’s credit ratings, confirming this adverse reality for the S. Korean yards. In terms of newbuilding orders coming to light last week, Nippon Steel & Sumitomo Metal Corporation’s massive order for 9 firm VLOCs was definitely the most notable one, while the fact that all units ordered by the Japanese firm were done so on the back of long T/Cs, makes the size of the order easy to digest, as it has been long since similar dry bulk orders were being inked with no scheduled employment. In terms of recently reported deals Greek owner, Eletson Gas has placed an order for two firm LPG carriers (38,000cbm) and one firm ethylene carrier (12,000cbm) at Hyundai Mipo, in S. Korea, for $51.0m and $38.0m respectively and delivery set in 2017″, the shipbroker concluded.

Source: Hellenic Shipping News Worldwidede

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Dry bulk market keeps its momentum, as outlook improves
By total
Published: 2015.08.02

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New Suez canal set to open on 6 August
By total
Published: 2015.06.26

Egypt’s Suez Canal Authority has set 6 August as the opening date for the new Suez by-pass, a new 35 km waterway built to boost the capacity of the Suez Canal. The new canal was dug from the existing Ballah by-pass to the Great Bitter Lake. In addition to this, fairways in the Great Bitter Lake and towards the Small Bitter Lake have been dredged to accommodate two-way traffic.

By combining the Ballah by-pass, the new side canal, and the enlarged channels in the Bitter Lakes into one giant by-pass, north and southbound traffic will soon be able to meet over a continuous stretch of 70 km in length. Compared to today’s traffic regime, under which northbound and southbound vessel convoys are only permitted to cross each other in two specific locations (Great Bitter Lake and the existing Ballah bypass), the new super by-pass will allow much longer convoys to travel in the canal in opposite directions.

According to the Suez Canal Authority, the new by-pass will cut the overall time needed for and average transit in half, reducing it from about 22 to only 11 hours. While the passage itself does not get much shorter, the time savings come from shorter waiting times on the Red Sea and Mediterranean anchorages, and in the Bitter Lake. Despite the massive volume, the dredging and digging works for the new canal were completed within a year due to the flat and sandy desert terrain.

Carried out with the help of the Egyptian Army, the $8 Bn project also employed additional civilian labour, as part of Egypt’s economic stimulus package to counter unemployment. The Suez Canal expansion sets the stage for renewed competition with the new expanded Panama Canal which will open for traffic in 2016. The Suez will still maintain its scale advantage as the new Panamax gauge is limited at a length of 366 m, a beam of 49 m and a draft of 15.2 m, while the Suez Canal will be able to accommodate the largest 18,000-21,000 teu containerships of 400 m in length with a beam of close to 60 m and a draft of up 17.1 m. Even larger ships are theoretically possible, though no carrier so far appears to have plans to order container ships which exceed these dimensions.

Source: Alphaliner Weekly

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Record demolition activity bodes well for shipping’s recovery
By total
Published: 2015.05.17

The oversupply of tonnage has long been touted as one the main “culprits” behind the demise of the shipping freight markets, a trend evident across most segments of the market over the years. At the current period, it’s the dry bulk market which has been suffering the most. As such, any news regarding an alleviating of tonnage supply can only be seen as a positive development for the long-term sustainability of the market.

As such, with the dry bulk market having shown signs of oversupply of tonnage since the latter stages of 2014, all eyes have been focused on the development of the active/in service fleet as well as the rate of new contracting, newbuilding deliveries and scrapping. In its latest weekly report, shipbroker Allied Shipbroking noted that “having gone through the first four months of the year, one can say that these fig-ures haven’t disappointed up to yet, despite the limited impact having been seen as to the course of the freight market. But let’s actual compare the additions and removals made to the fleet (vessels over 10,000dwt) during the first fourth months of the year”.

According to Allied’s George Lazaridis, Head of Market Research & Asset Valuations, “new contracting has been limited down to a small trickle with only 87 units have been added to the orderbook over the past 4 months (this is equivalent to 6.15 million dwt) and to put these figures into further perspective, the respective figures for the first 4 months of 2014 and 2013 were 410 vessels (35.17 million dwt) and 233 vessel (19.6 million dwt). This is a significant drop and one that, as all shows, will likely continue to remain close to these new limited levels for the remainder of 2015″.

Lazaridis added that “as new contracting is only relative to the future growth of the fleet, we most look at a metric that is more influential to the fleet growth that is currently occurring. Deliver-ies of newbuildings is such a metric and as all has seen has also been on the downward slide. However things haven’t been as exciting here, as the current slowdown is only a small percentage compared to previous figures of the same 4 months. To be more spe-cific, in 2015 we had 241 vessels delivered (equal to 18.94 million dwt) were as in 2014 and 2013 we had 248 (19.97 million dwt) and 311 (25.89 million dwt) respectively. The main point to keep here is that as most of these deliveries were already close to their completion date when the real problems started to emerge in the freight market, it is unlikely that much could have been to halt them from entering active service beyond just small delays. As such the most prevalent decreases in vessel deliveries have yet to be seen and will likely take place closer to the end of the year”.

As such, “the next most influential and one that has a more imminent reaction to fluctuations in the freight market is scrapping and here is where we have seen the most impressive change compared to previous years. Overage units have been offloaded to the breakers at record volumes. During the first 4 months we witnessed 177 vessels (13.27 million dwt) being sold for demolition while during the same periods in 2014 and 2013 we witnessed 77 vessels (4.28 million dwt) and 156 (8.6 million dwt) respectively”.

According to Allied’s analyst, “adding all this together still leaves a total dry bulk fleet that is still growing albeit at a significantly slower pace. At the same time it is important to note that all this has not be on an equal basis throughout all size segments, with segments such as Handysize and Capes seeing a negative growth during 2015. But the key thing is that we will still need to slow things down further in order to properly equalize with the slowdown in trade growth and reach a balance between demand and supply of tonnage quicker. As we move forward, and with the limited number of overage units being left within the fleet, it will be the reshuffling of the orderbook that will start to take primary role in allowing the fleet to properly reflect the demands and needs of the market and in order to set things in line with this we will also start to see further reshuffling and consolidation of the shipbuilding industry as a whole”, he concluded.

Source: Hellenic Shipping News Worldwide

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Tanker owners refrain from newbuilding orders in rare sign of investment restrain
By total
Published: 2015.04.20

They say that old habits die hard. When it comes to the shipping industry, one of the most common old – and bad for that matter – habbit, has been the surge of newbuilding orders each time a shipping market is enjoying an upward cycle. As such, when the said market reaches its peak and starts its inevitable downward path, the consequences are usually aggrevated by the glut of vessels out in the water.

Many analysts and ship brokers were worried that this trend would reemerge once again, as the tanker market has been witnessing a sort of renaissance, with the strong tide of cargo volumes over the past six months, having proved enough to pull the market out of its difficult past. According to the latest weekly report from shipbroker Allied Shipbroking, “rates have resurrected to levels that have not been seen for any longer period of time since 2008. Yet through all this, something out of the ordinary habits seen in shipping, investors have kept their cool, not rushing not pill on an over exaggeration of new contract-ing or a rapid asset price hike for secondhand units driven by buyers competition”.

However, as noted, “the paradox in all this is that earnings have reached way beyond a positive surplus for owners for well over 6 months now. This is all the more evident when you look at the trend in spot rates for VLCCs which have held an average time charter equivalent of US$ 30,000 per day during this period. Thus far however, secondhand asset prices have barely budged, managing to gain only in a few cases a 5 percent increase. At the same time the volume of transactions in the sale and purchase has also been limited. This, one may argue, has likely been as a consequence of the lack of units on offer by sellers who have held back their selling appetite in favour of the improved earnings, while they try to make up any losses made in the past. Yet this can only explain half of the story”, said Mr. George Lazaridis, Allied’s Head of Market Research & Asset Valuations.

He added that “the truth is that despite typical market reactions, investors have been more hesitant to take any bullish view, having been deeply “burnt” over the past five years by the sub-par performance of the freight market. This over cautiousness might not be misplaced either, as the fundamentals are still fairly “shaky” for this segment. The basic market mechanisms that lead to this remarkable rise had been quick to establish by an all-powerful oil cartel. The choice to flood the market with crude oil, which inevitably would lead to the drastic decline in the price of the commodity inevitably and inadvert-ently created a strong boost for seaborne trade demand and while the volatility still held, it also heralded a comeback in short term storage with traders finding an oppor-tunity to take on some speculative actions gaining from the quick fluctuations in price. All this could be easily turned on its head however, once and if oil producers decide to eventually cut back production and once again bring up prices close to their pre-summer 2014 levels. In such a case the demand/supply imbalance for crude oil tankers would probably be back to where it was a year ago, leaving their prospects no better than where they were. So all this caution amongst buyers might just be very well placed”.

According to the shipbroker’s analyst, “it is worth pointing out that during similar, but not as long, upturns in the dry bulk mar-ket investors had flocked in the hundreds out bidding in each other while eagerly trying to secure one of the “lucrative” sales candidates in the market. Tanker buyers in this case seem to have a more short term view towards the current highs, with many not sure of the market trends for beyond 2015. This is all fair and reasonable, but as a clos-ing, it is worth noting that the recent freight rally should surely be worth more than a US$ 5 million hike in the price of a 5 year old vessel especially as the spot rate average TCE for 2015 is looking likely to have a difference which is somewhat higher”, Lazaridis concluded.

Source: Hellenic Shipping News Worldwide

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Capesize dry bulk carriers are increasing being “parked” by their owners
By total
Published: 2015.03.23

The fall of the dry bulk market to levels well below operating expenses has started to “sting” Capesize owners, who are increasingly looking for ways to minimize their losses. As such, shipbroker Intermodal said in its latest report, that more and more of the larger European ship owners of Capesizes are starting to “park” their ships, at least until rates pick back up.

According to the shipbroker’s report, “while we have seen various correctional signals for the wet sector (especially for the MR and VLCC segments), the dry market has had very few reasons to be hopeful. The BDI has been fairing at historical lows over the past few months and this had created a climate of widespread anxiety among dry bulk shipowners as there are limited hints of a recovery in the short-term”.

Mr. Linos Kogevinas, Marketing – Harbour Towage & Port Agency, Cotzias Intermodal Shipping Inc. said that “with current cape spot market rates being significantly below OPEX levels, it seems that the patience of many Cape owners has finally begun to run out. As a result, they are left with a few options on how to proceed. There are two value-maximizing (or rather loss-minimizing) options; one is of course scrapping the vessel, almost certainly at a loss compared to the initial capital investment. With the scrap market revolving predominantly around bulk carriers and container vessels during the past weeks, it seems that many owners have selected this option”.

He added that “on the other hand, some of the largest European Capesize players have selected the alternative route of parking their capes. A number of them have selected Kaohsiung, Taiwan as the ideal place to park their capes until rates pick up from the current depressing rates. Eastern Pacific has reportedly parked a number of their capes in anchorages (favoring the Kaohsiung anchorage). Navios is also reported to have alluded to following the same route even going as far as suggesting that cold layups are the next step in order to cut what costs they can. The effects of such decisions on the market are hard to predict unless they are followed by a bigger number of owners, therefore for now it is expected that there will be a minor and more importantly temporary (lasting only until they’re back in the market) support in the market”, Kogevinas noted.

However, as has been the case back in 2008-2009 when similar layups occurred, one has to wonder how sustainable will this strategy be? Kogevinas said that “while the larger owners (many of whom have diversified fleets, thus hedging their exposure to the dry market troubles) may be able to sustain themselves long enough to survive through the current market slump, smaller players and those primarily invested in the cape segments will most definitely have trouble surviving where the situation is to persist for long. With current conditions pushing more and more vessels out of the market, owners are awaiting Q2 in order to decide on their future moves. While short-term prospects are dire, the Indian coal market together with the Chinese steel import market, are possible candidates to partially help in the medium-long term recovery/ revival of the dry market sector”, he noted.

Concluding his argument, Cogevinas said that “as always, the amount of new orders that will be placed during the next quarters will play a determining role in the segment’s recovery, but given how quiet the newbuilding market for Capes has been since the summer of 2014, we believe that this should currently be the least of our worries”.

Meanwhile, in the demolition market this week, Intermodal said that “demo prices were unchanged last week, with a firm number of dry candidates continuing to find its way into the demo market, while despite this recent price stability, sentiment hardly improved. Let’s not forget that very recently, a similar short-lived stability period took place, only to be followed by a sudden drop in prices, which is what the current market fundamentals are also implying for the weeks ahead. The situation in the Indian market remains extremely fragile, with the pressure exerted both in local steel prices and the Indian Rupee increasing and weighing down on sentiment across the entire subcontinent, while cheap Chinese scrap steel is still trying to be absorbed pushing global steel prices further down. Prices this week for wet tonnage were at around 230-395 $/ldt and dry units received about 215-370 $/ldt.”

Source: Hellenic Shipping News Worldwide

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Newbuilding ordering activity drags on, as owners are looking for lower prices
By total
Published: 2015.02.11

Ship owners appear to be waiting for lower prices in their dealings with Asian shipyards, as the dry bulk market is at historical lows. According to the latest report from shipbroker Clarkson Hellas, there were “a couple more specialised orders to report in the dry market. US based Vulica Shipping have contracted two firm 68,000dwt Self-Unloaders at Jiangsu Hantong. Pricing was not revealed, however delivery of both vessels is planned for the first half of 2017. Also in China, Ningbo Marine Co. Ltd. has contracted three firm 49,500dwt bulk carriers at Jinling Shipyard with delivery in the fourth quarter of 2016 and first quarter of 2017. Pricing was announced at RMB 170m per vessel (region USD 27m) however this will of course be including a domestic tax. A yet unknown Japanese buyer has also contracted two firm 89,000dwt post-panamax bulkers at Sanoyas with delivery in 2017″.

The shipbroker also noted “continued activity in the large crude market, with clients of Metrostar reported to have ordered two option two 300,000dwt VLCCs at HHI with delivery of the first vessels understood to be in late 2016. It also came to light this week that Meiji Shipping have ordered a single 320,000dwt VLCC at JMU, with delivery from their Ariake facility in the first quarter of 2017. Sincere Navigation also confirmed that they have swapped their two Capesizes on order at SWS to one 320,000dwt VLCC for delivery in 2017. A couple of new orders in gas, starting with DSME announcing an order for one 173,400cbm LNGC for delivery in 2018. This vessel is understood to be a further extension of a series for one of the yard’s existing clients. KSS Line announced a contract with Hyundai Mipo for one 38,000cbm midsize LPG carrier for delivery in 1Q 2017. This order is understood to also include an option for one additional vessel for delivery in mid-2017 if declared.

ADA Shipyard in Turkey have taken an order for two firm 70m double ended ferries from Fjord1 of Norway. The vessels will be based on a design from Multi Maritime with capacity for 199 passengers and 60 cars. Delivery is due in 2016″, Clarkson Hellas concluded.

In a separate report, shipbroker Allied Shipbroking said that “further corrections have been noted in most of the quoted prices by shipbuilders, while it looks likely that with the further softening of steel prices, we may well be set for even further discounts down the line. At the moment many are holding a fairly pessimistic outlook for the order intake that most shipbuilders will be able to secure this year, putting pressure on some of these builders who had shown poor financial performance during 2014 and it will likely lead many them to take under serious consideration further restructuring of the opera-tions. At the same time, some of the S. Korean shipbuilders are fairly worried about the nock on effects from the current depressed oil pric-es, as they expect it will hit one of their most profitable sectors, that of the offshore market, leaving them with fewer orders for these high-ly specialized and often quite significant profit generating orders. This could end up further heating up the competition on the more conven-tional orders, namely tankers and dry bulkers, which in turn could push for even further drops in prices during the next couple of months”.

In the Sale & Purchase market, Allied said that “discounts are still being seen amongst the reported deals, while the gap between premium and non-premium units is getting ever wider. Amongst the reported sales this week and although it is likely an old deal, the Panamax “THALIA” (75k, 2001 blt, Japan) is rumored to have gone to Greek buyers for a price of US$ 9.7m. Further to our last week’s report, it is worth pointing out that the “CAPTAIN V. LIVANOS” (57k dwt, 2011 blt China) has not been sold, while the “YM RIGHTNESS” (78k dwt, 2004 blt Chinese Taipei) achieved its high price due to the inclusion of a lease-back deal back to sellers at a rate of USD 9,000/day for 6 years. At the same time things are getting even more bullish for tankers. With regards to rumored deals this week, the LR2 “SARK” (113k dwt, 2009 blt China) has achieved a price of US$ 40.0m.

Lion Shipbrokers added that “asset values are becoming softer and softer as more and more ships of all sizes are flooding the second hand market, however buying interest is currently low to almost non-existent. Is today a good opportunity to invest in shipping or not? Is the long- awaited recovery near or years away?”.

Source: Hellenic Shipping News Worldwide

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Tanker market in 2015: Which way to go?
By total
Published: 2015.01.14

The tanker market enjoyed a prosperous year in 2014, at least for the most part, with lower oil prices helping towards increasing demand from nations which are looking to increase their strategic reserves at low prices. At the same time, owners are benefiting from the low price of bunkers, which make up for almost 70% of operating costs. According to the latest report from shipbroker Gibson, the first thing to note about the new year, is the fact that it started off with the new maximum sulphur limits introduced into the ECAs from January 1st. It is far too early to see the impact for owners/charterers in terms of operational problems; however the decline in bunker prices has at least softened the blow in the short term”.

Gibson also said that it expects to see “the Ballast Water Management Convention ratified (and implemented 12 months later)at some stage during the year. This convention requires just one moderate sized flag state to sign off the code which will compel owners to invest in expensive treatment systems. Several flag states are known to be keen to sign up to the convention, but are reluctant to be the one to tip the balance”.

At the same time, “2015 should also see the final few single-hull tankers taken out of trade once and for all. While very few are still trading in the conventional sense, mostly in the MR sector and below, this could have an influence on scrapping levels Of course overall crude tanker supply growth slowed considerably during 2014 on the back of low ordering between 2011 and the 1st half of 2013 with the exception of Suezmax tonnage. As a consequence the crude tanker delivery profile for this year is just 50 units (10.6M/dwt). Conversely orders placed for product tankers over the same period will explode rapidly into the clean market during 2015 with just shy of 200 orders (12M/dwt) scheduled for delivery”, said the shipbroker.

Similarly, as with 2013, last year many sectors of the tanker market finished with a flourish. Gibson noted though that “the difference between this year and last is so far that we haven’t seen a proliferation of ordering buoyed by the improvement in the freight market. Investment, for the time being, appears to have largely dried up which for most, must be viewed as good news. OPEC’s decision not to cut production may have had some influence in this area and speculation about how this decision will play out ahead of the next scheduled meeting in June remains rife. The low oil price can be viewed as a double-edged sword, stimulating oil demand but creating downwards pressure in terms of oil production. The oil contango has steeped significantly over the last few days and many protagonists are currently assessing their position ready to take advantage of the situation. Also, any changes to US/Canadian policy on crude exports will also stimulate the market and recent changes in condensate exports legislation may be the first step to achieving this. Finally we make no apologies for using again a famous Donald Rumsfeld quote to open our report which we believe to be apt to describe events as we enter into 2015″, Gibson concluded.

Meanwhile, in the crude tanker market, in the Middle East, Gibson noted that “VLCC Charterers had Owners on the run up to, and through, the Christmas period, but then shopped in concentrated enough numbers to allow for a market U-turn, and a steady upward ramp into the New Year, with further upward pressure threatening as we enter the final phase of the January programme. Further, the crude price Contango has entered ‘green light’ territory to make storage economically viable for traders, and already a basketful of period deals have been concluded. Currently, rates stand at around ws 70 to the East with high 30’s paid to the West. Suezmaxes had a calmer time of it and broadly retained an unchanging front over the period.130,000 to the East moves at ws 92.5 -ish with West runs operating in the mid ws 40’s. Aframaxes dipped initially, but regained to 80,000 by ws 105 to Singapore, and should inflate further over the coming week”.

In the Mediterranean, “Aframaxes had a fairly grim time of it, hovering around the ws 90 mark X – Med, but we are now moving through a busier phase, and Owners will be at least trying to add a bit of fat into next week. Suezmaxes found plenty of festive spirit, and rates up to 140,000 by ws 120 from the Black Sea to European destinations, but the Russian holidays took a little shine off, and the market eased to around ws 105 in consequence”, Gibson concluded.

Source: Hellenic Shipping News Worldwide

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Dry Bulk: Second hand vessel prices edge down by the day on the back of weak freight market
By total
Published: 2014.12.28

The gradual fall of the dry bulk freight market over the course of the past couple of months was enough to erase the rally which preceded and in essence dent any hopes that were left about the market staging a sustainable recovery this year. At the same time, as the end of the fourth quarter is approaching, shipbroker Intermodal noted that “we are all witness to the second hand market prices softening day by day. Any new deal surfacing the market is at significantly lower level compared to the previous last done. In this respect, some Owners are accepting these new discounted levels, accepting the new asset level reality, whereas others prefer to withdraw their ships or chose to wait, hoping to find more eager Buyers who can pay their aiming levels”, said the shipbroker Snp Team in its Shanghai office.

According to Intermodal’s data, “for the modern dry bulker tonnages, owners are still holding back and are insisting on asking prices, which in some cases are more in sync with the levels of the market six months ago. Most of them, however, are trying to fix the ships in small period contracts that will help them sit through the bad market in the next few months, hoping that by the end of the contracts they will face a better market. Some unrealistically priced sale candidates, which still remain in the market, have created a small increase in the supply of tonnage for sale which does not help the more serious Sellers to get a good or at least a decent price for their vessels”.

At the same time, in yet a worrysome sign, “demolition prices are softening every week and the period of time where the prices were around 480-500 usd/ldt for bulkers is well behind us. Today, we can see Owners receiving figures at around 420-430 usd/ldt basis delivery in Bangladesh or West coast of India. Many people in this industry are pessimistic and they don’t expect any increase in demo prices in the near future, with some expecting average demo bids to fall below the 400 usd/ldt mark sooner rather than later. The iron ore and steel price remain on a downward slope, while the continuous imports of cheap Chinese scrap steel is still the main hurdle faced by demo breakers in the Indian subcontinent”.

Intermodal added that “the softening of the demo market has had a big impact on the selling prices of the early/mid 90s built dry bulk carriers since their value calculation is usually based on the demo price plus a premium. This is most notable on Panamax and Handymax dry bulk tonnage, which have lost significant value during the past months and all this doesn’t seem to be changing soon, as the vessels on the market are too many and the majority of the Buyers are based in China, who is well accustomed in being patient in order to get something cheap. Chinese Buyers already seem to be attracted by the present lows of the market and there is definitely some warming up of activity here. However, as everybody has a feeling that prices will most probably keep dropping, as a result of the continuously softening demo prices, most potential Buyers chose to wait a little further before they invest in second-hand tonnage. The logic behind this is that instead of acquiring now a low-mid 90’s blt ship, there might be an opportunity in the very near future to purchase, at a similar value, a late 90’s blt tonnage”.

Finally, the shipbroker noted that “hopefully, these bad market conditions will come to an end soon. If this situation persists for long enough though, everybody involved in the industry will start facing problems. On the other hand, this hasn’t had a significant effect on Tanker Owners who are trading in a significantly improved freight market, ever since oil prices dropped and demand of oil increased. But whether this perfect storm will continue to favor the tanker market is the million dollar question here”, Intermodal concluded.

Source: Hellenic Shipping News Worldwide

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