Allied Weekly Shipping Market Report – Week 37,2023

Markets at a glance:

Newbuilding market — The quietest week for reported transactions so far this month, although news broke of several options being declared from dry bulk orders seen in recent months. Interest in the tanker sector remained more consistent week on week thanks to five vessels ordered at Chinese yards, including an MR order at the recently troubled Sainty Shipyard.

Secondhand market — In the dry bulk sector, the flow of transactions prevailed relatively robust for yet another week, with recent trend from the side of spot earnings may as well provide further support in overall buying appetite in the near term. In the tanker sector, the market indicated some sluggish liquidity patterns again, echoing the imbalances in the current market regime.

Ship recycling market — There could be signs of a the demolition market entering a quieter phase, following the recent excitement when Pakistani breakers acquired their first vessels in months, as dry bulk earnings rise and potentially limiting recycling candidates from the market sector which has accounted for 50% of sales (by DWT) so far this year.

Whether this happens or not, Indian yards are offering prices above their Sub-Continent neighbours for the first time in months, putting them on a good-footing for the near future.

Dry bulk

Capesize – A bullish week for the whole dry bulk sector took place, with BDI figure reaching four-month-high levels. The Capesize market took the lead at this point, amidst a turbulent scene in China’s property market. In the Pacific, overall activity moved on a good pace, with coal demand providing fair support, especially at the early part of the week. In the Atlantic, we noticed a tighter tonnage availability, that helped build better momentum in terms of rates in most areas. Reflecting this, the BCI TCE closed the week with gains of 24.3%.

Panamax – The panamax market had a fairly robust week too, as spot rates across all key routes posted gains on week-on-week basis. At the same time, BPI TCE rose by 11.1%, climbing at US$ 14,906/day.

Supramax – A bullish week took place in the Supramax market as well, with BSI-TCE reaching a four-month high at US$ 13,426/day at the end of the week. Healthy demand levels across most key regions have helped overall sentiment remaining on an upward trajectory at this point.

Handysize – The demand for smaller size segment remained fairly robust for yet another week. Especially in the Atlantic arena, firmer numbers were recorded, with Skaw-Rio earnings leading this trend, with a rise of around 40% on w-o-w basis. Moreover, BHSI TCE reached on Friday at $US 11,420/day, trading slightly above its trailing 12 month average figure.

Tanker

VLCC – Another disappointing week took place in the biggest size segment, which saw its benchmark TCE figure losing a further 21.3% of its value, trading close to the minimum levels noted over the past 12 months. On the other hand, period rates remain still intact despite the downward phase prevailing in the spot market, underlying the general good sentiment surrounding this market for some time now.

Suezmax – Things in the Suezmax market moved on the positive side as of the past week, albeit marginally. WAF-UKC numbers continued on an upward trend, noticing some further gains of 12%, while those of BSEA-Med moved on the opposite side. All-in-all, in both trade regions, rising tonnage availability can push sentiment on the negative side in the near term.

Aframax – It was a mixed week for the Aframax market, with most benchmark routes experiencing considerable losses on a week-on-week basis. On the other hand, the Aframax TCE succeeded in a growth of 17%, with the SEASIA-AUS route’s recent upward rally having positively skewed the overall performance within the size segment.

MR — For 3rd consecutive week, we noticed split fortunes across Atlantic and Pacific basins; the former lost another 32.7% of its value, while the Pacific market saw a modest increase of 10.3%, having already resulted in a hefty spread in return levels between the two.

Sale and purchase

New building orders

The quietest week so far in September for new order contracting, with just 16 firm orders rumoured this week – just over half of last week’s number. In the dry bulk sector, Meadway Shipping have returned to Oshima for a Handysize with the same specification as their June order. The yard is now thought to have filled its slots until 2027. Also in the bulker sector, Grieg Maritime have declared two options for 82k dwt pulp-specialised MPP vessels and CMB two options for Qingdao Beihai built Newcastlemaxes.Fresh contracting in the tanker sector was a little lower than last week, but above the level of bulker contracting. Union Maritime has placed 2 orders for LR2 tankers at SWS, bringing their contracting to at least 14 vessels in total this year, all from Chinese yards. Although the price is unknown, last week rumoured LR2 order at SWS from ‘Greek buyers’ at c. $65m could offer a starting point from which to estimate the price. The Algoma Furetank JV ‘FureBear’ intermediate tankers appear to be a near repeat of an order they placed almost exactly a year ago.

Second hand sales

On the dry bulk side, the market continued on a recovery mode, with the number of fresh deals coming to light remaining fairly robust over the past couple of weeks or so. Combined, the Supramax and Panamax size segments lead recent transactions, while being the only segments where their respective TCE figures trading well above theirs’ past 12 months average levels.

On the tanker side, as many interested parties anticipated to some extent, the snp market did not continue on the strong pace of late, with the number of fresh transactions taking place appearing rather limited. Thinking about the current perplexed feelings surrounding spot freight earnings, coupled with the strong asset price levels, buying appetite will remain volatile in the near term.

Ship recycling sales

We appear to have entered a quieter phase in the demolition market, following a few more active weeks and general market excitement over the resumption of recycling activity in Pakistan. Having said that, there haven’t been any further sales to the country in the past week as End Buyers continue to face L/C constraints and several of those with access to dollars have already acquired tonnage. The market in Chattogram has continued to sour and prices have slipped to around US$500/Ldt, well below the prices achievable elsewhere in the Indian SubContinent – note the ‘Abdullah’ was beached last week, with its sale earlier when prices were higher. On a brighter note, improving steel prices in India have helped push up prices above those in Bangladesh and Pakistan for the first time since winter, and this, in conjunction with a strengthening currency, putting the destination on a firm-footing for now. However, the recent improvement in the dry bulk market could restrict the flow of bulkers for demolition, which have made up over 50% of recycled deadweight so far this year.

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