Intermodal Weekly Market Report
24-03-2021

Market insight  

 

By Katerina Restis, Tanker Chartering

 

Since the start of the pandemic, the shipping industry has efficiently responded to ensure the continuity of operations and hence the security of supply of goods. We are witnessing an ongoing situation that is still evolving and the effects could be profound and long-term. Accordingly, how the shipping industry will look like post the pandemic is clouded and yet to be seen.

 

With international transport at the cutting edge of trade and dependent on travel and human interaction, the maritime industry has been wedged both directly and indirectly from the covid-crisis.

Focusing on the EU trade it has been reported that the number of vessel calls at EU ports declined by about 10.2% in 2020 compared to 2019. However, in February 2019, there were 50,823 ship calls at EU ports versus February 2021 that there were 51,157 ship calls. Therefore, it has lately been ascertained that the number of calls have increased by 1% in comparison with 2019, as trade activity in certain shipping sectors has rebounded YTD in 2021.

 

The most significantly impacted sectors basis vessel’s calls at EU ports between 2019 and 2021, have been the cruise sector, passenger ships, refrigerated cargo vessels and vehicle carriers. In 2020, the ship traffic from Europe to China and the US has declined when compared to same periods in 2019 while this destructive trend continues in 2021 for certain shipping sectors. The EMSA report has indicated that the Cruises’ sector was the most heavily impacted one by the outbreak. Other sectors were also affected, but in general the trade didn’t cease with the main beneficiary over the past few months being the containers sector. As the epidemic continues to roll, ports have faced an unprecedented number of vessels at anchor and vessels queue-up waiting to discharge with logistics disruptions contributing to multi-year high container freight rates.

 

During 2020, the imports from China to EU were heavily impacted especially since May 2020 and onward with only 36% of their usual volume of port calls coming into the EU from China. In reference to exports from Europe to China the first leading decline occurred in March 2020 with the number of port calls originated by the EU and destined to China, equal to only 58% of the volume of these port calls when compared with May 2019. Furthermore, USA used to be the biggest trading partner of the EU, but volumes were severely impacted, and China emerged instead as its largest trading partner. Asia’s exports to the West have emerged stronger in early 2021 with US containerized imports in particular - from Asia estimated up by approx. 29.0% y-o-y. The trend looks set to continue and is expected to exacerbate container vessels congestion in the west, as demand emerges stronger amid an unprecedented stimulus package in the US.

 

Unluckily, this worldwide outbreak has imposed urgent challenges for both the import and export trade for most of the ports around the globe. In addition, various disputes arose between Charterers and Owners, in reference to vessels’ hire period, lay-time, and discussions of relevant clauses. Repeatedly, the force majeure of the pandemic and the quarantine time prevented the contract completion as initially agreed and accordingly, the hire period agreement was surpassed in many charter parties worldwide. However, in sequence, the multiplier effect to trade from stimuli across the globe, excess consumer savings and increased congestion at ports has led certain shipping sectors to experience multi-year or record high freight rates with the hope that the new upward cycle that has emerged will be sustained.

 

As a general comment, despite the difficulties, commercial ship operations, ports and other maritime transport sectors have continued to operate ensuring the movement of products and proving the strategical value of maritime for our livelihoods.

 

Chartering (Wet: Firmer / Dry: Firmer)

With Panamax rates leading the way, the dry bulk market remained significant healthy for another week. The BDI today (23/03/2021) closed at 2,271 points, down by 48 points compared to Monday’s (22/03/2021) levels and increased by 254 points when compared to previous Tuesday’s closing (16/03/2021). An improved market was witnessed last week for crude carrier sectors, with demand improving overall and building up expectations for further gains. The BDTI today (23/03/2021) closed at 747, an increase of 5 points, and the BCTI at 623, an increase of 70 point compared to previous Tuesday’s (16/03/2021) levels.    

 

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

The love for dry bulk units can easily reflected in the generous number of secondhand sales that materialized during the past week, while a healthy number of tanker deals have also been concluded with Greek buyers being the most active. In the tanker sector, we had sale of the “QI LIAN SAN” (318,348dwt-blt ‘12, China), which was sold to Greek owner, Dynacom, for a price in the region of $44.0m. On the dry bulker side sector, we had the sale of the “UNITED BREEZE” (181,325dwt-blt ‘12, Japan), which was sold to Greek owner, Seanergy Maritime, for a price in the region of $29.5m.

 

Newbuilding (Wet: Stable- / Dry: Stable-)

There has been another strong week for the shipbuilding market with gas carrier orders having the lion’s share followed by a healthy number of containerships confirmed orders. On the gas carrier front, Evalend shipping and Zodiac Maritime inked deals for three dual fuelled VLGC units each at Hyundai Samho and DSME respectively. At the same time, Hyundai Hi secured an order for two 91,000cbm LPG from Cido shipping while Turkish owner Negmar Denizcilik ordered one 40,000cbm LPG at Hyundai Mipo for an undisclosed price. Lastly, it is rumoured that Equator fund concluded an order for a 45,000cbm LNG carrier China Merchant HI with the price remaining undisclosed. On the container realm, the four 13,000teu boxhsips (conventional fuelled & scrubber fitted) ordered at New Times by Greek owner Chartworld are definitely the most notable one. The price for each unit is USD105.0m. The number of deals for the more conventional sectors was lower; two MR units ordered by Thenamaris at Hyundai Vinashin while Anglo American concluded a deal for two LNG fuelled Capesize units at Shanghai Waigaoqiao.  

 

Demolition (Wet: Firmer / Dry: Firmer)

Sentiment in the demolition market remains strong, with prices moving up and fundamentals improving across the Indian subcontinent markets. Bangladeshi breakers are still offering the highest bids which are now hovering close to USD 500/ldt. Both dry bulk and container freight markets have been enjoying impressive earnings which coupled with the expected scarcity of demolition candidates and the continuing increase of steel plate prices have left cash buyers with no choice but to increase their offered scrap levels. Pakistani breakers have also improved their bids, yet they are still lagging behind their Bangladeshi competitors. In India, cash buyers are also chasing their respective market share especially the one coming for their favourite HKC candidates, by increasing their offered levels. Average scrap prices in the different markets this week for tankers ranged between 255-480/ldt and those for dry bulk units between $250-470/ldt.    

Please click here to open Intermodal's Market Report for the week 11,2021

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