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Weekly Market Report

Week 34/2018 (20 August – 24 August)

Comment: India’s coal imports

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India’s coal imports

Reuters has reported strong levels of Indian coal imports, with shipments in August estimated to reach around 17.7 million tonnes, roughly in line with the strongest monthly volume in 2018 of 17.4 million tonnes in July, based on vessel-tracking and port data compiled by Thomson Reuters. This is in spite of an 18 percent year-to-date gain in the Australian benchmark Newcastle index, which have risen to multi-year peaks this year as Chinese imports strengthened due to domestic output restrictions and high demand during the hot summer. Indian thermal coal imports had previously been thought to be sensitive to price, and likely to decline if prices moved up. In fact, data from India’s Central Electricity Authority showed that coal imports by on-grid power plants supplying power to the network were actually declining 14 percent in the June quarter. However, Tim Buckley, director of energy finance studies at the Institute for Energy Economics and Financial Analysis (IEEFA), noted that a large part of India’s coal imports are used by captive power plants, including aluminium smelters, cement makers and other industrial users. As the operation of such captive power plants are tied to the production of goods, they tend to be less price sensitive in regards to imports when domestic supplies from Coal India are lacking. Domestic logistical bottlenecks due to train shortages and regulatory changes targeting pollution cuts have also driven higher imports. The country’s captive coal-fired power capacity are estimated to be about 30 GW, which could need around 96 million tonnes of thermal coal a year if they were run at 61 percent capacity – equivalent to around two-thirds of current thermal coal imports. In the first 7 months of the year, India’s coal imports totalled 112.5 million tonnes according to Thomson Reuters data, up around 9 percent year-on-year. Indonesia is the largest supplier shipping 43.4 million tonnes, although their share of imports have declined from 43.8 percent in 2017, to 38.6 percent so far in 2018. Meanwhile, the share of shipments from South Africa and the U.S. have risen, from 17.1 percent in 2017 to 18.1 percent so far this year for the former, and from 7.1 percent to 9.6 percent for the latter. Both countries supply high quality coal with greater energy content than Indonesia, which may make sense for India’s captive-power plant buyers as they maximise the output from their plants. Australia’s share of India’s imports have also risen from 22.6 percent in 2017 to around 23.9 percent in the first seven months of 2018. However, Australia mainly exports coking coal used in steel-making to India. The strong increase in shipments to India likely reflects the country’s rising domestic steel production, and lack of such higher quality coal in the country’s domestic coal production. India threatens to overtake Japan as the world’s second largest producing country, with their steel production increasing 5.1 percent year-on-year to 52.8 million tonnes in the first half of 2018. India’s steel production has been driven by new capacities coming online, with the country aiming to achieve an ambitious 300 million tonnes in steel making capacity by 2030. Strong growth in domestic consumption from construction and infrastructure projects also continue to support steel production increases.

India Power Generation from Coal & Lignite - last 36 months India's Coal Imports by Country in 2017 vs Jan-Jul 2018 (source: India's CEA ; for on-grid power plants ; output in GWh) (sources: Thomson Reuters, as percentage of total coal imports) 100,000 Jan-Jul 2018

95,000 9.8% 90,000 Indonesia 9.4% 85,000 S. Africa 2017 38.6% U.S.

GWh 80,000 23.9% 22.6% 43.8% Australia 75,000 Others

70,000 7.1% 65,000 17.1% 9.6% 60,000 06/2015 12/2015 06/2016 12/2016 06/2017 12/2017 06/2018 18.1% market report - week 34/2018 2 dry cargo chartering banchero costa

Capesize Market Capesize market closed the week with softer mood also due to the middle-week holiday in Singapore which put some pressure on owners with prompt positions to cover. In any case the majority had been thinking that the ground lost would be regained fairly quickly. The West Australia/China route ended up paying $9.30 pmt from Dampier to Qingdao for mid September dates and some thought the bottom had been reached. It has emerged a little activity on the other main Route C3 from Brazil to China but even with a shrinking list of ships in ballast the earlier bidders were pushing the market down to levels around mid usd 22’s pmt or so. The North Atlantic was definitely quiet and only few trades were concluded, like K-Line tbn which was fixed for 150,000/10 Port Cartier to Kwangyang 15-29 Sept at $27.23 pmt account Posco. On period side very little was done, the Semirio was fixed to Pacbulk for 10/12 mos at usd 20,500/d, some other deals done on index basis and some short period at mid/high usd 20,000/d for 4/7 mos.

Rates BCI TC and Capesize 1-YR Period (usd/day) Unit 24-Aug 17-Aug W-o-W Y-o-Y 35,000 28,000 BCI TC Avg. usd/day 23,555 25,373 -7.2% +34.8% 21,000 C8 Transatlantic r/v usd/day 23,425 25,675 -8.8% +34.9% 14,000 C14 China-Brazil r/v usd/day 23,659 25,623 -7.7% +33.4% 7,000 C10 Pacific r/v usd/day 23,315 24,204 -3.7% +37.4% 0 24/8/17 24/12/17 24/4/18 24/8/18 1 Year TC Period usd/day 21,500 20,000 +7.5% +43.3% 1-YR TC BCI TC Panamax Market Panamax market showed a still positive trend during last week, with all routes reporting improving rates. Baltic/Continent round voyages have been fixed in the $17,000’s per day, as well as TransAtlantic RV showing around $14/15,000/d. Fronthaul trades via the Baltic to Indian ocean agreed around $25/26,000/d and something more for redely China, whilst for long trip delivery Cont/Gib via US to Far East have been done in the $22/23,000/d region. USG market was the only market remained steady with no improves, and a Panamax with delivery USG fixed trip to the Cont at $13,500/d + $350,000 bb. Trades from East Coast South America recorded positive performances with a good Kamsarmax fixing $17,000/d plus $700,000 bb. In the East, a strong improvement on Indonesian round voyage has been reported with an increase between $300/d and $500/d every day of the week. A good Kamsarmax or Post-Panamax with China delivery fixed $14,000/d for Australian/China RV, as well NoPac RV increase from $10,500/11,000/d on Monday to $12,500/d of Friday. Post-Panamaxes agreed $15,000/d dely India via SAF to India-China range. Rates Unit 24-Aug 17-Aug W-o-W Y-o-Y BPI TC and Panamax 1-YR Period (usd/day) 15,000 BPI TC Avg. usd/day 13,055 11,898 +9.7% +29.3% 12,000 BPI 82 TC Avg. usd/day 14,360 13,070 +9.9% n.a. 9,000 P1 Transatlantic r/v usd/day 14,505 12,778 +13.5% +45.6% 6,000 P2 Skaw-Gib Trip East usd/day 21,479 19,865 +8.1% +24.9% 3,000

P3 Pacific r/v usd/day 11,326 10,249 +10.5% +17.7% 0 24/8/17 24/12/17 24/4/18 24/8/18 1 Yr TC Period Panamax usd/day 12,250 12,000 +2.1% +22.5% 1-YR TC BPI TC 1 Yr TC Period Kamsarmax usd/day 14,250 14,000 +1.8% +23.9% market report - week 34/2018 3 dry cargo chartering banchero costa

Supramax & Handysize Market

Activity remained sustained in USG/US Atlantic and rates maintained the levels of the previous week around $23,000/d

for Ultramax to Med with petcoke, around $22,000 with grain and around $20,000/d for standard 58,000 dwt tonnage.

Some small increases were spotted on rates to F East with grain to China fixed at $27,000/d on a nice 63,000 dwt.

America The ECSAm market kept increasing, slowly, with Supramax, Tess58-type, getting $17,500/d basis dely aps ECSAm for Atlantic trips to Med and $16,500/d to Continent, Ultramax were some $500/1,000/d higher. Trips from ECSAm to Spore/Japan

US US range were fixed around $14,500/d + 450,000 bb on Supramax and in the high $14,000s/15,000/d + 400/500,000 bb. South South Handies from ECSAm were fixed around $14,500/15,000/d for tips to Cont/Med. The market in Continent remained stable. One Handysize 32,000 dwt for short period was fixed at $10,500/11,000/d

basis dely ARA range and redely Atlantic. There were rumors of similar tonnage fixed around $10,000/d for CrossCont

trips of around 20days duration with coal. On the scrap trade a modern 32,000 dwt achieved $12,000/d basis dely Cont

and redely E Med and a modern 38,000 dwt with same dely was fixed at $16,000/d basis redely W Africa, both fixtures

were with dirty cargoes which deserve a premium compared to coal trips. Supramax were quiet with not many fixtures

reported; so far levels were stable around $13,500/14,000/d for trips with scrap to E Med. No fronthaul fixtures were Europe

N N reported from Cont. In E Med/BSea another strong week was registered driven by many grain enquiries. Handies were

fixed in the $12/13,000/d for CrossMed trips and a few 38,000 dwt were fixed at more than $12,000/d for trips to Cont. Mediterranean Supramaxes were fixed at more than $20,000/d for trips to W Africa via BSea while Handies were done at $16,000/d on the same route. Fronthaul activity from Med was there with an Ultra fixed at $23,000/d for trips to China with grains. With the Eid holidays in the region the activity was restricted to spot prompt ships and cargoes. A 56,000 dwt was fixed in the mid $11,000s/d basis dely aps Mina Saqr for a trip to full India. A 57,000 dwt was rumored in the high $11,000s/d with the same dely for a similar trip via UAE to WC India. Another similar ship was understood to be fixed at mid

$11,000/d to WC India and mid $12,000/d to EC India. A 53,000 dwt got low $12,000s/d basis dely Fujairah for a trip via

Oman to EC India/Bangladesh range. Period activity slowed, but after the holidays Supramaxes are now asking low

$12,000/d for short period. Early in the week a 57,000 dwt was fixed at low $11,000/d basis dely MEG for short period. India

S S Africa From S Africa only a few fixtures were reported, in line with the previous week: a 56,000 dwt was fixed at $11,800/d + 180,000 bb for a trip from Richards Bay Coal terminal to EC India and a 63,000 dwt was fixed at low $12,000s/d + 225/235,000 bb basis dely Durban for a trip to F East. On Friday a 63,000 dwt was rumored to be on subs at $13,000/d + 300,000 bb basis dely Durban, the sentiment in the area is for a market that will improve over next couple of weeks. Larger units trading within Asia and from Asia to MEG enjoyed improving rates. An Ultramax with dely Thailand was fixed at $10,500/d for a trip to China with nickel ore, another Ultramax from Indonesia to China got $14,000/d basis dely near to the loading port and another similar unit was taken at Fang Cheng at $12,500/d via Philippines to China. On the bauxite trade from Indo to China a 56,000 dwt Dolphin-type was fixed at $11,500/d basis aps dely and another

similar unit got $11,000/d for clinker from S China to EC China. Early in the week an Ultramax with dely at load port Surabaya was fixed at $12,550/d for a coal cargo to WC India/Pakistan range, then a Dolphin-type achieved a much

better $13,350/d for loading in the same area from Spore to WC India. A 53,000 dwt with dely Thailand got $10,000/d

Pacific for a trip with coal from Indo to Taiwan, a Tess58 was fixed on a backhaul trip to W Med at $7,000/d for 63 days and Far East East Far $14,000/d balance, not that exciting considering the dely point and that the actual duration is likely to be 60/65 days. An EC Australia round with coal was agreed at $11,750/d on a 60,000 dwt basis dely S Korea and redely Vietnam and a large Ultramax with dely N China got $12,250/d via NoPac to SE Asia. A 63,500 dwt built 2018 with dely EC China was fixed to Cargill at $13,300/d for 4/7 months. Activity on Handysize was still very limited and owners had to agree some minor discounts on rates compared to the previous week. BSI TC and Supramax 1-YR Period (usd/day) Rates 16,000 Unit 24-Aug 17-Aug W-o-W Y-o-Y 12,000 8,000 BSI TC Avg. usd/day 12,102 11,704 +3.4% +27.1% 4,000 S4A 58 USG-Skaw/Pass usd/day 20,672 20,128 +2.7% +50.8% 0 S9 58 WAF-ECSA-Med usd/day 9,171 9,061 +1.2% -0.2% 24/8/17 24/12/17 24/4/18 24/8/18 1-YR TC BSI TC S1B 58 Canakkale-FEast usd/day 21,661 21,371 +1.4% +16.9%

Supramax BHSI TC and Handysize 1-YR Period (usd/day) 12,000 S11 58 Pacific r/v usd/day 9,931 9,525 +4.3% +18.8% 9,000 1 Year TC Period usd/day 12,250 12,250 +0.0% +19.5% 6,000 3,000 BHSI TC Avg. usd/day 8,000 7,945 +0.7% +15.6% 0 usd/day Handy 1 Year TC Period 9,750 9,750 +0.0% +19.6% 24/8/17 24/12/17 24/4/18 24/8/18 1-YR TC BHSI TC market report - week 34/2018 4 dry cargo chartering banchero costa

Dry Bulk FFAs (Baltic Forward Assessments)

Premium/ Unit 24-Aug 17-Aug W-o-W Discount Aug (18) usd/day 25,235 25,340 -0.4% +7.1% Capesize Forward Curve (usd/day) Sep (18) usd/day 23,440 24,540 -4.5% -0.5% 32,000 Oct (18) usd/day 26,520 26,210 +1.2% +12.6% 24,000 Q4 (18) usd/day 26,197 25,797 +1.6% +11.2% Q1 (19) usd/day 15,030 14,350 +4.7% -36.2% 16,000

Capesize Q2 (19) usd/day 16,450 16,070 +2.4% -30.2% 8,000

usd/day Cal 19 20,010 19,610 +2.0% -15.0% 0 Cal 20 usd/day 19,980 19,550 +2.2% -15.2% Aug-17 Aug-18 Aug-19 Aug-20 Cal 21 usd/day 16,700 16,500 +1.2% -29.1%

Aug (18) usd/day 11,860 11,735 +1.1% -9.2% Panamax Forward Curve (usd/day) Sep (18) usd/day 12,560 12,430 +1.0% -3.8% 16,000 Oct (18) usd/day 12,790 12,780 +0.1% -2.0% 12,000 Q4 (18) usd/day 12,772 12,738 +0.3% -2.2% Q1 (19) usd/day 11,800 11,800 +0.0% -9.6% 8,000

Panamax Q2 (19) usd/day 12,900 13,000 -0.8% -1.2% 4,000 Cal 19 usd/day 12,653 12,608 +0.4% -3.1% 0 Cal 20 usd/day 11,990 11,890 +0.8% -8.2% Aug-17 Aug-18 Aug-19 Aug-20 Cal 21 usd/day 10,300 10,150 +1.5% -21.1%

Aug (18) usd/day 11,635 11,610 +0.2% -3.9% Sep (18) usd/day 12,620 12,410 +1.7% +4.3% Supramax Forward Curve (usd/day) 16,000 Oct (18) usd/day 12,879 12,610 +2.1% +6.4% Q4 (18) usd/day 12,835 12,647 +1.5% +6.1% 12,000

Q1 (19) usd/day 11,515 11,370 +1.3% -4.9% 8,000 usd/day Supramax Q2 (19) 12,455 12,320 +1.1% +2.9% 4,000 Cal 19 usd/day 12,445 12,415 +0.2% +2.8% 0 Cal 20 usd/day 11,705 11,735 -0.3% -3.3% Aug-17 Aug-18 Aug-19 Aug-20 Cal 21 usd/day 10,390 10,420 -0.3% -14.1%

Aug (18) usd/day 8,125 8,300 -2.1% +1.6% Handysize Forward Curve (usd/day) Sep (18) usd/day 8,888 9,025 -1.5% +11.1% 12,000 Oct (18) usd/day 9,238 9,313 -0.8% +15.5% 9,000 Q4 (18) usd/day 9,244 9,296 -0.6% +15.6% Q1 (19) usd/day 8,700 8,788 -1.0% +8.8% 6,000

usd/day Handysize Q2 (19) 9,263 9,313 -0.5% +15.8% 3,000 Cal 19 usd/day 9,294 9,338 -0.5% +16.2% 0 Cal 20 usd/day 9,100 9,113 -0.1% +13.8% Aug-17 Aug-18 Aug-19 Aug-20 Cal 21 usd/day 9,038 9,013 +0.3% +13.0% market report - week 34/2018 5 tanker chartering banchero costa

Crude Oil Tanker Market VLCCs showed a positive week for owners in the Middle East Gulf, weather delays and increased cargo availability in the East pushed up rates to ws58.5 to China. Western discharge remained unchanged paying around ws24. West Africa recorded a stable week in term of cargoes went off the market; rates took advantage from the positive trend in the Middle East Gulf peaking up at ws58.5. Even though in the end of the week Unipec paid ws57.5 and rates growth got stuck in. Caribbean market remained steady, with a run to Singapore still paying around usd 3.8 mln. Suezmax market recorded a steady week both from the Black Sea, where Med discharge picked to ws82.5 bss 135,000 Mt, and West Africa, where a voyage to UKCM paid around ws60. Quiet market for the Cross-Med cargoes, the East Med to Spain/Portugal range was covered at ws71/ws75 level. Med/East lane remained substantially unchanged, a run to Ningbo still paid usd 2.85 mln. West Africa rates came under pressure, 130,000 Mt averaged between ws62.5/65, while 140/147,000 Mt stems ex the USG/East Coast Mexico went in the mid/low ws50 to the UKCM. Rates for Basrah/Med remained steady around ws30 for 140,000 Mt stems. Aframaxes recorded a busy week in the Med where rates hovering around ws120 level for Sidi Kerir/Med. Libya stems peaked to ws135 paying a premium of around 10 points. In North West Europe rates moved up and remained at ws110 bss 80,000 Mt ex the North Sea, and ws85 level bss 100,000 Mt ex the Baltic. Rates for stems ex Caribs/US Gulf jumped above ws140 for 70,000 Mt, with ws105 done earlier on for TA. In the Middle East Gulf, rates for Far East discharge reached ws120.

Rates Unit 24-Aug 17-Aug W-o-W Y-o-Y

TD1 MEG-USG ws 24.14 23.55 +2.5% +5.4% VLCC MEG-Far East (usd/day) 32,000 TD1 MEG-USG usd/day -10,522 -10,353 -1.6% -59.6% 24,000 TD2 MEG-Spore ws 57.83 53.29 +8.5% +41.0% 16,000 TD3C MEG-China ws 57.17 52.42 +9.1% +42.3% 8,000 VLCC TD3C MEG-China usd/day 17,898 14,476 +23.6% +201.9% TD15 WAF-China ws 57.25 53.08 +7.9% +18.7% 0 24/8/17 24/12/17 24/4/18 24/8/18 Avg. VLCC TCE usd/day 3,688 2,062 +78.9% +179.4% 1 Year TC Period usd/day 21,000 21,000 +0.0% -16.0% TD6 Suexmax BSea-Med (usd/day) 30,000

TD6 BSea-Med ws 84.50 83.28 +1.5% +11.4% 20,000

TD6 BSea-Med usd/day 9,736 9,828 -0.9% +47.9% 10,000

TD20 WAF-Cont ws 64.77 65.11 -0.5% +5.7% 0

MEG-EAST ws 80.00 65.00 +23.1% +19.4% -10,000

Suezmax MEG-WEST ws 30.00 27.00 +11.1% +11.1% 24/8/17 24/12/17 24/4/18 24/8/18

usd/day Avg. Suezmax TCE 7,521 8,008 -6.1% +21.1% TD19 Aframax Med-Med (usd/day) 1 Year TC Period usd/day 16,500 16,500 +0.0% +3.1% 30,000 20,000 TD7 NSea-Cont ws 108.61 111.94 -3.0% +16.7% 10,000 TD7 NSea-Cont usd/day 7,744 10,771 -28.1% +336.0% 0 TD17 Baltic-UKC ws 83.89 80.28 +4.5% +39.8% -10,000 TD17 Baltic-UKC usd/day 10,483 9,181 +14.2% +2235.0% 24/8/17 24/12/17 24/4/18 24/8/18 TD19 Med-Med ws 122.06 120.83 +1.0% +70.6% 1 YR TC Period (usd/day) TD19 Med-Med usd/day 13,972 14,340 -3% +690.3% 30,000 ws

TD8 Kuwait-China 121.39 114.72 +5.8% +30.8% 25,000 Aframax usd/day TD8 Kuwait-China 8,896 7,647 +16.3% +100.6% 20,000 TD9 Caribs-USG ws 143.61 95.83 +49.9% +57.1% 15,000 TD9 Caribs-USG usd/day 13,511 -502 +2791.4% +708.6% 10,000 Avg. Aframax TCE usd/day 10,879 8,417 +29.3% +535.8% Aug-17 Nov-17 Feb-18 May-18 Aug-18 1 Year TC Period usd/day 14,500 14,500 +0.0% +0.0% VLCC Suezmax Aframax market report - week 34/2018 6 tanker chartering banchero costa

Product Tanker Market Market in the East of Suez experienced a flat week overall. LR2 for a MEG/Japan voyage basis 75,000 tons closed the week at ws95 (equal to about $5,500/d TCE). For MEG/UKC voyages rates moved sideways, setting at USD 1.85 mln. LR1 rates for eastward voyages basis 55,000 tons didn’t move from that ws100 (equal to about $4,000/d TCE). The West of Suez market didn’t change much, as LR1 and LR2 rates only moved sideways, respectively at USD 1.35 mln and USD 1.6 mln for a UKC /Japan voyage. Clean market in the Med for Handysize vessel was still stuck at ws120 and ws127.5-130 for the Cross-Med and the B Sea/Med trades respectively. Handysize in the Cont market recorded good levels of activity but, as for the Med, rates kept same levels again: the Baltic/UKC route averaged around ws125 and the Cross-Cont 10 ws points less on 30,000 Mt. On the Clean MRs market, rates for fixtures from Europe to TransAtlantic destinations ended the week at ws110 basis 37,000 Mt, while backhauls voyages from the USG slowed down a bit closing at ws90 level. The dirty market showed rates for 30,000 Mt on the Cross-Med dropped down to ws140-145 levels at the end of the week 34 due to an amount of spot vessels and just a couple of cargoes to fix in the market. The MRS showed just a few 45,000 Mt cargoes being quoted so, again, the MR ships have been fixing 30,000 Mt stems. Contrary to the Med, the UKC market was busy and the rate for 30,000 Mt on the Cross-UKC or the Baltic-UKC gained points up to ws165-167.5 levels. On the Panamax side the rate for 55,000 Mt from the Med or UKC/TA has been steady at ws117.5 level.

Rates Unit 24-Aug 17-Aug W-o-W Y-o-Y TC1 LR2 MEG-Japan (usd/day) 20,000 TC1 MEG-Japan ( 7 5 k ) ws 95.6 96.3 -0.6% -18.6% 15,000 TC1 MEG-Japan ( 7 5 k ) usd/day 5,638 6,243 -9.7% -52.5% 10,000 TC8 MEG-UKC ( 6 5 k ) usd/mt 22.8 23.0 -1.0% +7.8%

TC5 MEG-Japan ( 5 5 k ) ws 99.4 100.3 -0.8% -19.9% 5,000

TC5 MEG-Japan ( 5 5 k ) usd/day 4,027 4,523 -11.0% -55.6% 0 24/8/17 24/12/17 24/4/18 24/8/18 TC2 Cont-USAC ( 3 7 k ) ws 109.2 119.4 -8.6% +3.4% MR Atlantic Basket (usd/day) TC2 Cont-USAC ( 3 7 k ) usd/day 1,703 3,636 -53.2% -38.7% 25,000 TC14 USG-Cont ( 3 8 k ) ws 95.9 88.4 +8.5% -30.9% 20,000

TC14 USG-Cont ( 3 8 k ) usd/day 310 -462 +167.1% -95.8% 15,000 10,000 Clean TC9 Baltic-UKC ( 2 2 k ) ws 127.5 125.0 +2.0% +2.0% 5,000 TC6 Med-Med ( 3 0 k ) ws 120.0 120.0 +0.0% +4.0% 0 TC7 Spore-ECAu ( 3 0 k ) ws 174.9 176.3 -0.8% -25.8% 24/8/17 24/12/17 24/4/18 24/8/18

TC7 Spore-ECAu ( 3 0 k ) usd/day 9,869 10,348 -4.6% -23.3% MR Pacific Basket (usd/day) TC11 SK-Spore ( 4 0 k ) usd/mt 8.12 8.26 -1.7% -6.5% 20,000 MR Pacific Basket usd/day 6,131 6,685 -8.3% -45.7% 15,000 MR Atlantic Basket usd/day 6,456 6,808 -5.2% -45.5% 10,000 LR2 1 Year TC Period usd/day 14,000 14,000 +0.0% -6.7% 5,000 MR2 1 Year TC Period usd/day 13,500 13,500 +0.0% +0.0% 0 24/8/17 24/12/17 24/4/18 24/8/18 TD12 Cont-USG ( 5 5 k ) ws 115.6 114.7 +0.8% +1.4%

TD18 Baltic-UKC ( 4 0 K ) ws 168.8 163.3 +3.3% +40.6% 1 YR TC Period (usd/day) 16,000 Dirty BSea-Med ( 3 0 k ) ws 165.0 160.0 +3.1% -14.3% 15,000 Med-Med ( 3 0 k ) ws 145.0 160.0 -9.4% -21.6% 14,000 Delays at Turkish Straits for Daylight Restricted Vessels 13,000 Unit 24-Aug 17-Aug W-o-W Y-o-Y 12,000 Northbound days 2.0 1.5 +33.3% +0.0% Aug-17 Nov-17 Feb-18 May-18 Aug-18 Southbound days 1.5 1.5 +0.0% +0.0% LR2 MR2 market report - week 34/2018 7 containers banchero costa

Containership Market The container chartering activity is at reasonable levels for the end of August with the majority of the fixture for new business, even if rates are dropping in mainly all the sectors. It is interest to report that a slightly increased activity in Post-Panamax and Panamax sizes has been showed in the market.

Recent Fixtures

Vessel Name Built TEUs TEU@14 Gear Fixture Period Rates Cap San Lazaro 2015 10,600 7,930 no fixed to Maersk 6 years $40,100/d Jadrana 2014 4,957 3,739 no extended to Gsl 6-8 m $15,750/d Hawk Hunter 2009 4,255 2,811 no extended to Niledutch 5-7 m $13,200/d Sagitta 2009 3,426 2,414 no extended to Hapag L. 5-7 m $11,650/d Protostar N 2007 2,741 2,115 no extended to Oocl 4-6 m $11,750/d Spirit of Cape Town 2000 2,202 1,744 yes fixed to Xpress 4-6 m $10,000/d Box Endeavour 2015 1,714 1,230 no fixed to Gsl 8-10 m $11,250/d Fpmc Container 9 2009 1,118 700 no extended to Cosco 1-2 m $7,300/d

VHSS Containership Timecharter Assessment (source: Hamburg Shipbrokers’ Association) Gearless - 1 YR TC Period (usd/day) 14,000 Unit 23-Aug 16-Aug W-o-W Y-o-Y 12,000 ConTex index 495 498 -0.6% +26.9% 10,000 4250 teu (1Y, g’less) usd/day 12,225 12,248 -0.2% +47.7% 8,000 3500 teu (1Y, g’less) usd/day 11,734 11,781 -0.4% +44.9% 6,000 2700 teu (1Y, g’less) usd/day 11,339 11,412 -0.6% +22.7% 23/8/17 23/12/17 23/4/18 23/8/18 2500 teu (1Y, geared) usd/day 11,267 11,348 -0.7% +30.5% 4250 3500 2700

1700 teu (1Y, geared) usd/day 10,290 10,358 -0.7% +40.0% Geared - 1 YR TC Period (usd/day) 1100 teu (1Y, geared) usd/day 7,503 7,581 -1.0% +21.4% 13,000

11,000 Shanghai Containerized Freight Index 9,000 (source: Shanghai Shipping Exchange) 7,000 Unit 24-Aug 17-Aug W-o-W Y-o-Y 5,000 23/8/17 23/12/17 23/4/18 23/8/18 Comprehensive Index index 902 892 +1.1% +9.8%

Services: 2500 1700 1100

Shanghai - North Europe usd/teu 959 928 +3.3% +3.9% Shanghai Container Freight Index Shanghai - Mediterranean usd/teu 915 909 +0.7% +11.3% 1,000

Shanghai - WC USA usd/feu 2,126 2,086 +1.9% +38.0% 900

Shanghai - EC USA usd/feu 3,329 3,317 +0.4% +37.6% 800

Shanghai - Dubai usd/teu 392 357 +9.8% -17.5% 700 Shanghai - Santos usd/teu 1,448 1,607 -9.9% -43.9% 600 Shanghai - Singapore usd/teu 138 140 -1.4% -9.2% 24/8/17 24/12/17 24/4/18 24/8/18 market report - week 34/2018 8 sale & purchase banchero costa

Newbuilding Market The newbuilding market showed a busy week for container business with several new contracts and options declared for feeder and larger units. Taiwanese owners Wan Hai Lines has selected JMU in Japan and specialist Wenchong for the construction of a series of Bangkokmax, around 1,900 TEUs, with the Japanese yard building 6+2 options and the Chinese 4+2; deliveries are expected within 2020. Major owners XT Shipping have optioned 2 x 1,800 TEUs at HMD bringing the total order to 6 units, basis Tier III scrubber fitted, delivery 1H 2020 priced at close to USD 30.0 mln. Major attention should be pointed to the growing orderbook of LNGs. Chinese trader Jovo firmed 2 x 79,800 cbm at Jiangnan for delivery in 2021 and 2022, no price emerged. Gaslog declared options at Samsung for 174,000 cbm bringing the order to 7 units for a price of about USD 186.0 mln as well as Celsius Tankers optioning at the same yard 2 units for delivery 20200, price reported USD 187.0 mln. In the bulk segment US based Mangrove Partners optioned 2 x 208,000 dwt Newcastlemax at Yangzijiang for delivery March and June 2020, bringing the order to 4 units priced at USD 48.5/49.0 mln each. Some new business emerged from Japan where Shikoku dockyard received a firm order for 3 x 37,900 dwt handy BC from Hsin Chien Marine (Taiwan) for delivery February-March-August 2019, no price reported. Finally EBE is reported behind an order for 2 x 62,000 dwt delivery September 2019 at Oshima, basis Tier II.

Newbuilding Reported Orders

Type Size Built Yard Buyers Price Comment

Bulk 208,000 2020 Yangzijiang Mangrove Part. 49.0 2 units

Indicative Newbuilding Prices (China) Newbuilding Prices (usd mln) 50 Unit 01-Aug-18 M-o-M Y-o-Y

Capesize usd mln 47.5 +0.8% +8.6% 40 Ultramax usd mln 26.0 +0.8% +9.0% 30 Supramax usd mln 22.9 +0.2% +9.0%

VLCC usd mln 82.6 +0.6% +6.9% 20 Aug-17 Nov-17 Feb-18 May-18 Aug-18 LR2 Coated usd mln 45.8 +1.1% +6.4% Ultramax LR2 MR2 MR2 Coated usd mln 33.6 +0.0% +2.0%

Interest Rates USD/Euro Exchange Libor USD Libor Euro Euribor Euro 1.30

6 Months 2.52 -0.31 -0.27 1.25 12 Months 2.82 -0.22 -0.17 1.20 Interest Rate Swaps 1.15 1.10 3 yrs 5 yrs 7 yrs 10 yrs 15 yrs 20 yrs 24/8/17 24/12/17 24/4/18 24/8/18 USD 2.84 2.86 2.87 2.90 2.94 2.95 Euro 0.00 0.28 0.55 0.88 1.26 1.40 Yen/USD Exchange 120 Exchange Rates 115 24-Aug 17-Aug W-o-W Y-o-Y 110 USD/Euro 1.16 1.14 +1.7% -1.8% 105 Yen/USD 111.2 110.5 +0.7% +1.5% 100 SK Won/USD 1,119 1,125 -0.5% -0.8% 24/8/17 24/12/17 24/4/18 24/8/18 market report - week 34/2018 9 sale & purchase banchero costa

Secondhand Market The dry bulk market showed higher activity with more deals reported concluded during last week. In the Cape segment, a German controlled unit “CPO Oceania”, about 180,000 dwt built 2010 Daewoo, was sold at USD 27.4 Mill, as we understand two buyers decided to offer for the vessel. Among the smaller vessels, a Croatian built Handymax “Avlemon”, about 42,000 dwt built 1997 Brodosplit, was sold at USD 3.2 Mill at an auction in China, after that the vessel was stopped in 2016. Furthermore a Chinese controlled Handysize “Newchang”, about 38,000 dwt built 2017 Huanghai, was sold to Berge Bulk at USD 18.90 Mill. In the meantime British bulker was reported to be behind the sale of “Bright Rainbow”, about 28,000 dwt built 2013 I-S Shipyard, where the vessel was committed at USD 11 Mill, which is more or less in line with the sale of “Gloria Island”, about 28,000 dwt built 2012 I-S Shipyard, which was sold one week ago in excess of USD 10 Mill. The tanker sector showed less deals but, among them, a coated LR2 “Glory Crescent”, about 105,000 dwt built 2013 Hyundai Ulsan, was committed at USD 24.5 Mill. to AG Shipping Singapore. This vessel was reported to be uncoiled and has limitation on cargo list trading. In addition a st/st chemical tanker “Yuhua Star”, about 16,000 dwt built 1997 Shin Kurushima, has gone to Chinese buyers at USD 5.7 Mill.

Secondhand Reported Sales

TYPE VESSEL NAME DWT BLT YARD BUYERS PRICE NOTE

Bulk CPO Oceania 179,701 2010 Daewoo Undisclosed 27.25

Bulk Avlemon 42,584 1997 Brodosplit Chinese buyers 3.2 at auction

Bulk Newchang 38,800 2017 Huanghai Shibuilding C. Of Berge Bulk 18.9

Bulk Bright Ranbow 28,397 2013 I-S Shipyard C. Of British Bulkers 11.0

Bulk Vinalines Fortuna 26,370 1991 Hakodate Undisclosed 2.3

Crude Gloric 298,495 2006 Universal C. Of Embiricos 33.0

Prod Glory Crescent 105,405 2013 Hyundai Ulsan C. Of Ag Shipping Singapore 24.5 uncoiled

Chem Yuhua Star 16,026 1997 Shin Kurushima Chinese buyers 5.7

Secondhand Values (usd mln) Baltic Secondhand Assessments 35

Unit 20-Aug 13-Aug W-o-W Y-o-Y 30 Capesize usd mln 36.4 63.3 -42.6% +15.6% 25 Panamax usd mln 21.9 21.9 +0.0% +14.1% 20 Supramax usd mln 18.5 18.5 +0.0% +15.4% 15 VLCC usd mln 61.9 61.9 +0.1% +0.9% 20/8/17 20/12/17 20/4/18 20/8/18 Aframax usd mln 29.9 29.9 +0.2% +1.8% Panamax Aframax MR

MR Product usd mln 26.0 26.0 +0.1% +9.6% SubCon Demo Assessment (usd/ldt) 500 Baltic Demolition Assessment (Subcontinent) 450 Unit 20-Aug 13-Aug W-o-W Y-o-Y 400 Dry Bulk usd/ldt 423.5 419.0 +1.1% +9.1% Dirty Tanker usd/ldt 435.0 435.5 -0.1% +8.5% 350 20/8/17 20/12/17 20/4/18 20/8/18 Clean Tanker usd/ldt 432.0 432.0 +0.0% +8.5% Dirty Tnk Clean Tnk Dry Bulk market report - week 34/2018 10 news banchero costa

Dry Bulk Commodities Turkey steel, lira, tariffs to hit US coking coal, scrap: Wood Mackenzie Turkey's import tariffs on US met coal, the weaker lira's volatility and US steel import tariffs could contribute to lower met coal and ferrous scrap demand in the EMEA region's second-largest steel producer, consultancy Wood Mackenzie said. Turkey has imposed a new tax on US thermal coal of 13.7% and US coking coal of 10%, up from the 5% rate announced in June. "At risk is some portion of the 8 million mt/year of Turkish coking and PCI coal imports which comes primarily from Australia, the US, and Russia. At greatest risk is the 2.5 million mt/year portion from the US," Wood Mac Research Director Andy Roberts said in a report. Brazil's Samarco mine unlikely to restart in 2019 -BHP There is little likelihood that Brazil's Samarco iron ore mine, a joint venture between Vale SA and BHP Billiton, will restart operations next year even though it expects to have all of the required licenses, a BHP spokesman said on Tuesday. The statement confirmed comments made by another BHP official, Bryan Quinn, in an interview with newspaper Valor Economico. Chinese traders ditch cheap U.S. coal for domestic supply as tariffs loom Some Chinese coal traders handling U.S. imports have begun sourcing future supplies domestically, people with knowledge of the matter said, as they await delivery of the last U.S. cargoes to arrive before hefty tariffs kick in on Thursday in a deepening trade row between the world's top two economies. At least six cargoes of U.S. coal were due to arrive this month, Thomson Reuters Eikon shipping data showed, but at least three were still en route or waiting off ports to unload cargo on Wednesday. China's Hebei plans more rail, river freight to cut truck pollution The smog-prone Chinese province of Hebei is aiming to slash road freight in favour of rail and river transport over the next two-and-a-half years as part of efforts to improve air quality, officials said. Hebei, which surrounds the capital Beijing, is on the front line of China's efforts to improve it's poor air quality, and has been under pressure to restrict industrial output, cut coal consumption and curb traffic. Arlon's Brazil freight unit grain shipments seen up 18 pct in 2018 Freight company Sotran SA Logistica e Transporte, a unit of U.S.-based Arlon Group in Brazil, expects its grain shipments to rise 18 percent this year due to Chinese demand for Brazilian soybeans and a strong dollar, an executive said. A trade spat between the United States and China supported demand for grain transportation contracts through September, with Chinese buyers paying a premium for Brazilian soy, helping Sotran stay on target despite disruption from a truckers' strike, Director of New Business Rosler Dallamaria said. India's rapeseed meal exports to jump on Chinese buying -trade body official India's rapeseed meal exports are likely to jump 50 percent in 2018/19 from a year ago to 1 million tonnes as neighbouring China is set to resume imports from New Delhi after nearly seven years, a leading industry official said on Tuesday. China was biggest buyer of India rapeseed meal until it banned purchases in late 2011 over quality concerns. China's July grain imports plunge as tariffs on U.S. supplies bite China's grain imports plunged in July after Beijing imposed hefty tariffs on shipments from the United States as part of its trade conflict and as rising international prices curbed buying, customs data showed on Thursday. China brought in 220,000 tonnes of sorghum in July, down 62.5 percent from 588,364 tonnes a year ago, data from the General Administration of Customs showed. Ukraine grain exports at 4.6 mln T so far in 2018/19 Ukraine has exported 4.6 million tonnes of grain since the season began in July, down from around 4.9 million tonnes at the same point last season, Ukraine's agriculture ministry said on Wednesday. So far in the (July-June) 2018/19 season, Ukraine has exported 2.3 million tonnes of wheat, 1.19 million tonnes of barley and 1 million tonnes of maize, it said in a statement. Brazil's sugar output to fall further as ethanol wins favor -Datagro Brazil's center-south is expected to produce 27.9 million tonnes of sugar this year, 22 percent less than in 2017, as mills continue to strongly favor ethanol production at the expense of the sweetener, Sao Paulo-based consultancy Datagro said on Wednesday. Datagro revised downward its sugar production forecast from an already low number of 28.2 million tonnes released in July as depressed global prices make ethanol a better option for millers. The consultancy increased its projection for ethanol production to 30.1 billion liters from 28.75 billion liters.

Source: Thomson Reuters/ Platts market report - week 34/2018 11 news banchero costa

Oil & Gas China imposes 25% tariffs on US oil products China on Thursday implemented tariffs on a second tranche of US goods, targeting oil products and coal for the first time, in retaliation to US tariffs effective the same day and paving the way for crude oil and LNG to be hit next. Energy commodities including propane, butane, naphtha, jet fuel and coal are on the second list of $16 billion worth of US products that attract 25% additional tariffs from August 23, 12:01 pm Beijing time (0401 GMT), according to China's Ministry of Commerce announcement on August 8. High-sulphur fuel demand outlook jumps as shippers soften stance on scrubbers -FGE Demand for high sulphur marine fuels is likely to see a smaller drop than previously expected by 2020, said consultancy FGE, as changing attitudes to sulphur-stripping technologies from large shippers alter the outlook for use of the fuels. More than 2,100 vessels are now expected to be equipped with exhaust gas cleaning systems, known as scrubbers, by 2020, up from 1,500 ships previously, said Thomas Olney, energy consultant at FGE in Singapore. China defies U.S. pressure as EU parts ways with Iranian oil China, seeking to skirt U.S. sanctions, will use oil tankers from Iran for its purchases of that country's crude, throwing Tehran a lifeline while European companies such as France's Total are walking away due to fear of reprisals from Washington. The United States is trying to halt Iranian oil exports in an effort to force Tehran to negotiate a new nuclear agreement and to curb its influence in the Middle East. S.Korea's Hanwha Total buys U.S., Australian condensate to replace Iran oil South Korea's Hanwha Total Petrochemical Co Ltd has increased imports of condensate from the United States and Australia and is seeking more European cargoes to replace Iranian supplies, two industry sources said on Thursday. The move is in line with other South Korean refiners that have replaced Iranian oil with similar imports. China's Unipec to resume U.S. oil purchases after tariff policy change - sources China's Unipec will resume purchases of U.S. crude oil in October after a two-month halt due to the trade dispute between the world's two largest economies, three sources with knowledge of the matter said. The decision to start buying crude oil again from the United States comes after Beijing earlier in August excluded it from its import tariff list. Surge in Indian buying sends W. African oil flows to Asia to record in August Shipments of West African crude to Asia are set to reach a record high in August, driven by a surge in demand from Indian refiners, who will take more oil from the region than at any time since mid-2015. According to a Reuters survey of shipping fixtures and traders, some 890,000 barrels a day of West African crude will sail to India, compared with 600,000 bpd in July and almost double last August's 460,000 bpd. U.S. imports of Nigerian crude fall in July to 3-year low U.S. crude oil imports from Nigeria in July plunged to the lowest level in three years and are continuing to slip as Asian and European buyers increase purchases, trade flow data from Thomson Reuters and market intelligence firms Genscape and Kpler show. A narrowing spread between benchmark Brent and Oman crude futures, trading at less than $2 a barrel compared with more than $4 in May, has made Nigerian crude more attractive to Asian buyers than U.S. refiners. Nigerian crude exports to Asia hit 664,000 barrels per day (bpd) in July, according to Thomson Reuters trade flow data, the highest in two years. China sells diesel to South Africa as refiners seek new export markets State-run oil company Sinopec is selling diesel as far afield as South Africa as China's refiners seek homes for their surplus fuel in the latest sign of troubles in the domestic refining business. Sinopec said it shipped its first 30,000 tonnes of diesel from its Shanghai refinery heading for South Africa. U.S. crude stocks draw down as refining runs hold near record high - EIA U.S. crude oil stockpiles fell more than expected last week as imports declined and refinery runs held close to record highs, while gasoline and distillate inventories rose, the Energy Information Administration said on Wednesday. India's palm oil imports set to hit 6-year low -industry official India's palm oil imports are likely to fall 15 percent in 2017/18 from the year before to their lowest in six years, hit by a hike in import taxes, a weaker rupee and tighter credit for would-be buyers, a senior industry official told Reuters. Reduced purchases by the world's top importer of the oil, where it is widely used to fry foods such as samosas or bhajis, could pile more pressure on benchmark international futures that are already trading near their lowest in three years.

Source: Thomson Reuters/ Platts market report - week 34/2018 12 commodities banchero costa

Bunker Prices Unit 24-Aug 17-Aug W-o-W Y-o-Y Bunker Prices @ Singapore (usd/t) Rotterdam usd/t 422.5 411.5 +2.7% +41.1% 800

Gibraltar usd/t 455.0 442.5 +2.8% +43.8% 600 IFO 380IFO Singapore usd/t 463.0 454.0 +2.0% +47.2%

Rotterdam usd/t 466.5 454.0 +2.8% +40.9% 400

Gibraltar usd/t 482.0 469.5 +2.7% +47.9% 200 IFO 180IFO Singapore usd/t 497.0 489.0 +1.6% +46.4% 24/8/17 24/12/17 24/4/18 24/8/18

Rotterdam usd/t 629.0 621.0 +1.3% +35.4% IFO 380 IFO 180 MGO

Gibraltar usd/t 700.0 677.0 +3.4% +40.3% MGO Singapore usd/t 673.5 656.5 +2.6% +42.1% Brent and WTI Oil Prices (usd/bbl) 90 Oil & Gas Prices 80 70 Unit 24-Aug 17-Aug W-o-W Y-o-Y 60 Crude Oil Brent usd/bbl 75.8 71.6 +5.8% +44.9% 50 Crude Oil WTI usd/bbl 68.6 65.8 +4.3% +43.5% 40 24/8/17 24/12/17 24/4/18 24/8/18 Crude Oil Dubai usd/bbl 74.4 70.6 +5.4% +46.7% Brent WTI Natural Gas Henry Hub usd/mmbtu 2.91 2.92 -0.3% +0.3%

Gasoline Nymex usd/gal 2.07 1.98 +4.5% +23.2%

ICE Gasoil usd/t 676.8 644.8 +5.0% +38.7% Iron Ore and Coal Prices (usd/t) 120 Naphtha Tokyo usd/t 652.3 643.0 +1.4% +39.8% 100 Jet-Kerosene Asia usd/bbl 87.3 86.1 +1.4% +38.6% 80 Coal Prices 60 Unit 24-Aug 17-Aug W-o-W Y-o-Y 40 24/8/17 24/12/17 24/4/18 24/8/18 Steam @ Richards Bay usd/t 99.5 100.0 -0.5% +14.3% Steam Coal Iron Ore Steam @ Newcastle usd/t 117.9 118.0 -0.1% +20.9%

Coking Coal Australia usd/t 180.3 181.0 -0.4% -8.0% Steel Prices in China (rmb/t) 5,000 Iron Ore and Steel Prices 4,500

Unit 24-Aug 17-Aug W-o-W Y-o-Y 4,000 Iron Ore (Platts) usd/t 67.5 68.0 -0.8% -12.2% 3,500 Iron Ore China @Tangshan rmb/t 503.0 511.0 -1.6% -9.4% 3,000 Rebar in China rmb/t n.a. 4,437 n.a. n.a. 17/8/17 17/12/17 17/4/18 17/8/18 Plate in China rmb/t n.a. 4,442 n.a. n.a. Rebar Plate HR Coil in China rmb/t n.a. 4,424 n.a. n.a. CR Sheet in China rmb/t n.a. 4,781 n.a. n.a. Wheat and Corn Prices (usd/t) 600

Agricultural 500 Unit 24-Aug 17-Aug W-o-W Y-o-Y

Wheat usd/t 512.3 557.5 -8.1% +25.1% 400

Corn usd/t 348.0 365.3 -4.7% +2.8% 300 Soybeans usd/t 834.8 893.8 -6.6% -11.2% 24/8/17 24/12/17 24/4/18 24/8/18 Palm Oil usd/t 541.1 545.6 -0.8% -16.1% Corn Wheat market report - week 34/2018 13 banchero costa network

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