Intermodal Weekly Market Report
16-04-2019

Market insight

By Giannis Andritsopoulos

SnP Broker

Once again we are faced with the situation of the Dry Baltic Index being below 1,000 points. In a market where the feeling of insecurity is almost a given, the continuous decline in the dry bulk rates has stopped any ambitions owners might have had for SnP transactions.

 

With the American President announcing new tariffs on iron ore imports and his aspirations to strengthen the US steel industry, concerns are rising in the market. On the other hand, cause for concern is caused by China weakening after a number of years when the oversupply of raw materials as well as global trade as a whole were largely dependant on the growth of Chinese growth rates. Therefore, the only possible solution for the recovery of the shipping market is scrapping. Fortunately, the current scrap value for dry bulk carriers is around $430/ldt for small tonnage vessels up to $470/ldt for big tonnage vessels. Increasing scraping activity is a visible solution that could give a future boost in the dry bulk market. To put things into perspective, the first signs with regards to scraping for the q1 2019 are positive, together with a small decline in dry NB orders, when comparing in both markets with the q1 2018. 

 

The correction on values in the dry bulk market has created some expectations that we might witness the same levels in asset values as in 2016. However, the freight market is not at the same levels like 2016 and with the new regulations coming into force, this specific scenario does not look like it will be easily materialised, as the variables are vastly different. However it is worth analysing where the market currently stands in every segment.    

 

In the Capesize sector it is indicative that vessels of any age do not to have any buying interest, and last week we had the first sale of a capesize in 2019.

 

In the Panamax/Kamsarmax sector we are seeing a lot of interest especially from Greek buyers, for vessels build from 2004 to 2008, as they possibly anticipate a healthier freight market in the near future or are look to resell when the freight rates increase. A representative example is the Kamsarmax ‘YARRAWONGA’ (82,624dwt-blt ‘08, Japan) were around 10 potential buyers inspected without being sure if the vessel is going to be sold definitely.  

 

In the Supramax sector, we observe specific ship-owners showing interest into Japanese vessels, together with some Greek owners who consider selling their tonnage into more premium levels.

 

Lastly, over the past few weeks, the majority of sales were on the Handysize sector. It has been some time since we saw sales of Chinese vessels since the Carval deal where, even though it was an en-bloc deal, despite the minimal buying interest shown in the specific vessels, they were sold in line with the last done deal of December ‘BONNIE VENTURE’ (32,500dwt-blt ‘12, China).

 

 

Chartering (Wet: Soft- / Dry: Stable-)

Sentiment remains soft in the dry bulk market with little excitement for the weekly increase in Capesize rates that still remain at depressed levels. The BDI today (16/04/2019) closed at 749 points, up by 11 points compared to Monday’s (15/04/2019) levels and increased by 24 points when compared to previous Tuesday’s closing (09/04/2019). Despite the fact that the crude carriers market remains under pressure, improvements in certain routes last week could be signaling that the bottoming out of the market is close. The BDTI today (16/04/2019) closed at 643, increased by 25 points and the BCTI at 574, a decrease of 26 points compared to previous Tuesday’s (09/04/2019) levels.  

 

 Sale & Purchase (Wet: Firm+ / Dry: Firm+)

SnP activity keeps firming on a weekly basis, with MR tonnage remaining particularly popular in Buyers investing in the sector at the moment, while on the dry bulk side we had the first Capesize sale for 2019, which compared to the last done back in November indicates a discount of almost 13%. In the tanker sector we had the sale of the “SCF ALTAI” (159,417dwt-blt ‘01, S. Korea), which was sold to Greek buyers, for a price in the region of $13.5m. On the dry bulker side sector we had the sale of the “OCEAN WIND” (76,585dwt-blt ‘06, Japan), which was sold to Greek buyers, for a price in the region of $9.75m.

 

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

Healthy activity continues to be reported in the newbuilding market with absence of tanker deals in the most recently reported orders. At the same time the dry bulk sector has seen a fair number of orders, with focus remaining exclusively on vessels of up to Kamsarmax size, while LNG vessels still remain popular year to date, with further deals surfacing on the past days. In terms of recently reported deals, Chinese owner, ICBC Leasing, placed an order for four firm Kamsarmax bulk carriers (81,200 dwt) at COSCO Yangzhou, in China for a price in the region of $27.0m and delivery set in 2020.   

 

Demolition (Wet: Stable+/ Dry: Stable+)

An impressive number of demo salew took place last week, with Indian cash buyers being behind most of them and reaffirming as a result their effort to catch up with their Bangladeshi counterparts. Prices out of India have also shown strength in the past days, while the sentiment and appetite in Pakistan has also been firming although local offerings are still way below competition in the region. We expect to see equally strong activity in the short term, with increased competition in the Indian subcontinent continuing to support prices at the same time. Average prices in the different markets this week for tankers ranged between $280-450/ldt and those for dry bulk units between $270-440/ldt.   

Please click here to open Intermodal's Weekly Market Report for the week 15,2019 

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