Sailing Ahead: Recent Developments And Projections In The Shipping Industry

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Dry Bulk

Two Kamsarmax, one Post-Panamax and one Ultramax called for offers this week. A Japanese Kamsarmax 2012 Built was  rumoured to have seen levels in the mid $20’s million. Prices for Kamsarmax have increased substantially, a 2013 built  Japanese unit was sold for $22 million four months ago. Appetite for modern Handysize remains robust. Two 2019 built Japanese large handysize were sold in the $28’s million each.

Tankers

Oil prices extended gains on Friday and headed for a second weekly gain, supported by geopolitical tensions in Europe and the Middle East, concerns over tightening supply, and optimism about global fuel demand growth as economies improve.

Brent crude climbed 40 cents, or 0.4%, to $91.05 a barrel by 0425 GMT. U.S. West Texas Intermediate crude was at $86.82 a barrel, up 23 cents, or 0.3%. Both benchmarks settled at their highest since October on Thursday. Brent and WTI are set to notch a more than 4% gain this week, climbing for a second straight week, after third-largest OPEC producer Iran vowed revenge against Israel for an attack that killed high-ranking Iranian military personnel.

According to Lars. H. Barstad of Frontline, VLCC orders stand at 41 vessels, delivery btw now and Dec ‘27. New orders represent less than half of the 90 additional vessels that will be overaged by end ‘27. There are only few building berths left for ‘27 delivery. By December 27 the active trading fleet is expected to shrink to 735 vessels, not seen since ‘17 when vessel demand was 25% below today.

Container

On a w-o-w basis, the SCF and NCF indexes remained relatively stable.

The activity in the chartering market remained healthy with freight rates unchanged. A modern Panamax vessel (4,600 TEUs) fixed at $30k/day for six to eight months, while a bit smaller Panamax (4,250 TEUs) secured employment for eleven to fourteen months, at mid-$26/day. The rates for Feeders remained stable. Recent fixtures show an appetite for such vessels in Mediterranean. Indicatively, four units recorded fixed for various periods between twelve to seventeen months at rates between $13k/day and $17k/day.

The number of idle vessels is less than 1% of the total container fleet in terms of capacity (i.e. circa 780k TEUs), out of which 530k TEUs currently in drydock.

On the SnP front, we noticed a little more activity, especially on the medium sizes. A Swiss liner leading company continued its buying spree with the acquisition of two vintage Korean-built Post Panamaxes (6,200 TEUs) in the region of $45 million en bloc while a Greek-controlled Korean-built Panamax (3,450 TEUs) sold to UAE based Buyers at $17m.

Over the past two years, demand for recycling dropped to the lowest level in 20 years. However, analysts suggest that the recycling market will rebound in the coming years and ships that would have been recycled will proceed to the yards once the circumstances in the Red Sea, Panama Canal and Baltimore passage are restored.

Due to the Baltimore bridge collision, Operators expect the container prices to be increased with projections ranging from 50-100 USD per TEU. Already, some major carrier companies have updated freight rates for all new bookings globally.

For a fourteenth consecutive year, Shanghai remains the world’s busiest port with record throughput in 2023, totalling about 49 million TEUs. Among all ports, Shanghai maintains first place, accounting the 3.6% of the total international trade volume of goods.

In Mediterranean basin, Mersin port, the Turkey’s major container terminal, hit a milestone by surpassing 25 million TEUs while the three container terminals at Piraeus port achieved a 2% increase in total throughput, around 5 million TEUs.

Finance 

Bank of China said its net interest margin (NIM) – a key gauge of profitability – will still face significant pressure this year, according to Reuters. Vice President Zhang Yi made the remarks in an earnings press conference on Tuesday. Five of China’s largest lenders have posted shrinking NIMs, while warning of ongoing property sector risks. Reductions to the benchmark lending rate earlier this year and existing mortgage rates last year have impacted returns from the asset side, said Zhang. “We’ll strive to reduce high-cost deposits this year,” he said. Sheng Liurong, chief finance officer of China Construction Bank Corp said it will further control costs from deposit interest rates, to ease pressure on profitability.

There’s room for further cuts to the benchmark lending rates this year, he added.

Meanwhile, the Bank of Korea is considering overhauling how it provides guidance on the likely future path of interest rates by extending the timeframe and giving visual estimates in a bid to boost transparency. The proposal, however, faces opposition from at least one of the central bank’s seven-member governing board and a senior official, they said, amid concerns telegraphing future policy could undermine public confidence in policy, particularly if conditions suddenly change. Since first flagging the idea during a speech at the Federal Reserve’s Jackson Hole symposium in 2022, Governor Rhee Chang-yong has been developing plans to regularly map out conditional forward guidance on policy interest rates for six months or longer. The move would represent a major change to how the bank produces and communicates policy and be part of a wider push to improve transparency and boost public understanding of its actions. South Korean authorities have been trying to introduce reforms across financial markets as the export powerhouse attempts to improve governance, transparency and communication.

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Source: Capitallink