Intermodal Weekly Market Report

Market insight  


By Costas Hardalis, SnP Broker


We have just entered February, Chinese New Year holidays are about to start and the SnP market for bulkers is so hot as every seller would dream of. The increased buying interest was evident somehow during September to November of 2020 but that was not a surprise, as it is somehow a seasonal trend for the dry SnP market to be active during q4 of every calendar year. What we have not seen for a long time (maybe since December 2013) was non-stop activity during December and January.


And this is the interesting part now. Over the past 11 years, BDI during every January recorded losses to December of the previous year. On average over the above period, BDI has dropped by -26.0% during January, with Capesize leading the declines. This January was different, with BDI exhibiting a counter-seasonal increase to December (+33.3% m-o-m) for the first time since January 2009, when the index had increased by +21.7% m-o-m. This shift in seasonal dynamics was largely Capesize driven both in 2009 and now, with Cape 5TC in Jan 2021 reaching an all-time high for January and a 7 year high for any Q1 so far.


Since the last week of January, BCI has been on a downward trend, with the Cape 5TC recently correcting below Panamax and Supramax, but still at relatively high levels for this time of year. With the BPI and BSI at multi-year high for this time of year at 1689 and 1149 points respectively (as of 8/feb) buyers appetite seems non-stop. Apart from Handysizes 28k to 32k dwt for which asset values increases are relatively lower, all the other sizes are getting significantly higher numbers.


The Pana/Kamsarmax SnP market particularly has been very firm. In Sep 2020, Panamax MV ELENA II 06’blt with survey due in Q1,2021 concluded at low $8s million; in November, same age MV APOLO sold for low $9s mil basis survey due 01/2021 and just now the 06’ blt MV AJAX got low $10s mil again with surveys due promptly. We saw similar increases also in 12’ blt units with MV CORAL AMBER 78k dwt BWTS fitted getting mid-high $14s in December and sister ship CORAL AMETHYST without BWTS getting $16/low 16s mil by the end of January. For younger tonnage with electronic engines Japanese built we have not seen much activity, with the last being the sale of the MV SAKIZAYA NOBLE blt 17’ at $25.5m with balance of TC attached but clearly a potential buyer cannot repeat a deal at the same levels. Generally, the supply of such modern ships in the market has been limited for some time amid sellers holding back for much better numbers.


Moving on Capes, one notable sale is the MV Ocean Compass (180k/06’blt Japan), which sold in January 2021 at low 17s million, whereas in September the MV Lowlands Erica (176k/07’blt Japan) was sold for about $15m. As it is today, with the lack of many candidates openly in the market for sale and considering all the buying enquiries coupled with many unsolicited indications in attempt to develop private off-market candidates, we would not rule out further increase on prices if the earnings are maintained at the levels we see today. However, considering that the BCI is trading at $12,000/day currently and Panamax Tess 82 index is trading at $15,000/day, we believe that this can’t be maintained for too long and we hope that the CPI will rise and the long anticipated good market will become reality.


Chartering (Wet: Softer / Dry: Softer)

Chinese New Year holidays left the Dry bulk market under pressure for another week with Capesize index underperforming the rest of its counterparts. The BDI today (09/02/2021) closed at 1,306 points, down by 11 points compared to Monday’s (09/02/2021) levels and decreased by 74 points when compared to previous Tuesday’s closing (02/02/2021). The crude carrier market witnessed pressure overall with all sectors witnessing w-o-w declines on their average T/C earnings. The BDTI today (09/02/2021) closed at 497, a decrease of 9 points, and the BCTI at 482, a decrease of 21 point compared to previous Tuesday’s (02/02/2021) levels.    


Sale & Purchase (Wet: Softer/ Dry: Firmer)

Dry bulk secondhand sales had the lion’s share for another week, with buyers showing interest in geared units. In the tanker sector, we had sale of the “MARAN CASTOR” (306,344dwt-blt ‘01, S. Korea), which was sold to Chinese buyers, for a price in the region of $22.0m. On the dry bulker side sector, wwe had the sale of the “ASL MARS” (175,085dwt-blt ‘04, China), which was sold to undisclosed buyers, for a price in the region of $10.0m.


Newbuilding (Wet: Firmer / Dry: Softer)

February kicked off with tanker units attracting most of the owner’s interest. In the gas carriers’ sector, Tianjin Southwest Maritime ordered one LPG fuelled 93,000 cbm unit at Jiangnan shipyard. Price is estimated at around $75.0m. At the same time, NYK Line concluded a deal for two dual fuelled 86,500 cbm vessel at Kawasaki HI with the price remaining undisclosed. In the Container front, Jiangsu New Yangzijiang shipyard secured another huge containership order (10x4,600teu) last week. In the tanker sector, GSI announced an order of four MR vessels from Nanjing Tanker while Greek owner Chandris concluded an order for one firm plus one optional LR2 unit at Daehan shipyard for a price in the region of $50.0m. Vessel will be able to use conventional fuels. In terms of recently reported news, Hyundai announced a substantial orderbook reduction in the crude carrier sector; a total of 10 VLCC units were cancelled due to the owner failure to proceed with the payment.


Demolition (Wet: Softer / Dry: Softer)

The Union budget of India made the headlines in the Demolition realm this past week. Indian government announced its plan to double country’s recycling capacity of 4.5 million LDT by 2024. Furthermore, there was a clear intention to support ship recycling industry by focusing on environmental improvements to meet the European and Japanese unit standards. While such announcements may push the other subcontinent nations to infrastructure improvements, things in the demolition front remain quiet for the time being. Scrap values witnessed another w-o-w decline across all main demo destinations with Pakistani levels now being behind the Indian ones, and Bangladeshi breakers leading the course, yet with average levels now in the low 400s’. Steel plate prices were on a fall as well, with Pakistani cash buyers suffering the sharpest decline of around $20 per ton. Activity in the Turkish market remained quiet as well, with demolition sales almost non-existent. Average prices in the different markets this week for tankers ranged between 245-430/ldt and those for dry bulk units between $240-420/ldt.   

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