Weekly Market Report th Issue: Week 20 | Tuesday 17 May 2016 Market insight Chartering (Wet: Stable + / Dry: So - ) The Dry Bulk market kept moving south last week, while the perfor- By Panos Makrinos mance of Panamax rates provided a much needed senment boost. The SnP Broker BDI closed today (17/05/2016) at 643 points, up by 30 points compared to Monday’s levels (16/05/2016) and an increase of 49 points when compared to previous Tuesday’s closing (10/05/2016). The crude carri- As we are approaching the end of the first half of the year, there is a number ers market moved sideways last week, with rates for Suezmaxes in the of market parcipants over at the dry bulk sector that have started wonder- MED region and for VLs going east overperforming the market. The ing whether they have missed out on the booming secondhand prices that BDTI Monday (16/05/2016) was at 734 points, an increase of 19 points the market witnessed during the end of last year and throughout the beg- and the BCTI at 475, a decrease of 33 points compared to last Monday’s ging of this one, when the BDI touched its lowest level ever, at 290 points. (09/05/2016) levels. Following this rather extended period of low rates, as the spring season Sale & Purchase (Wet: So - / Dry: Firm + ) kicked off, the steadier demand for dry bulk commodies together with the improvement in owner’s psychology helped the index move above 600 Modern dry bulk tonnage almost monopolized SnP acvity last week, points in April, a er more than five months. The improved market senment with Buyers displaying equal interest to all sizes while “snubbing” ves- has consequently helped second hand prices firm a bit during the past sels built prior to 2000. On the tanker side, we had the sale of the weeks. The posive momentum the market achieved was also helped by a “STAVANGER EAGLE” (45,898dwt-blt 04, Japan) which was sold to Chi- few developments that started drawing a healthier picture of the fundamen- nese owner, Shenlong Marime, for a price in the region of $16.0m. On tals ahead as a number of owners took steps that will more effecvely tackle the dry bulker side, we had the sale of the “KLARA SELMER” the tonnage oversupply issue. (176,000dwt-blt 12, China) which was sold to Greek owner, Marmaras, for a price in the region of $20.0m. From one hand, the intense scrapping that has taken place during this year is certainly pushing things towards the “right” direcon. We have seen ves- Newbuilding (Wet: So - / Dry: So - ) sels younger than what is considered the typical scrapping age being sold for Acvity, prices and senment, are all sll uerly depressed in the new- demolion. As expected, it was the bigger sizes that experienced the most building market that remains week over week in desperate search of impressive increase in demolion volumes. meaningful business volumes, while as industry fundamentals connue More than 230 bulkers have been sold for scrap this year and while in terms to worsen, price details surrounding the few reported deals become less of volumes we are around the same levels when compared to the same and less available to the public. Dry orders remain scarce, as both bulk- period last year, when you look at these volumes in terms of dwt, there is a ers and containerships have yet to shake off the respecve historical 2% increase. This means that bigger vessels are being sold for scrap, while in lows that have shaered senment in both sectors. At the same me, terms of age, the average scrapping age for bulkers has moved from 30 tanker ordering acvity remains comparavely beer but the majority years a couple of years ago to 24 years in 2016 so far. of the few orders that pop up here and there sll concern vessels of smaller dwt. As far as other less convenonal sectors are concerned At the same me, newbuilding acvity or the lack thereof has been dra- things are no beer either. Any newbuilding acvity in these sectors mac. Despite the fact that newbuilding prices are at exceponally low lev- goes hand in hand with specific projects like for example the offshore els, reflecng both the dire straits the industry has found itself in together of trio reported ordered by Topaz Energy, while what all of the above course with the almost non-existent appete for dry bulk ordering, there clearly signals is more consolidaon for the industry ahead. In terms of seems to be no hope for a spark in ordering for dry tonnage. On top of that, recently reported deals, Super Eco Tankers placed an order for two firm the few orders that are being reported are ght to specific projects. MRs (40,000dwt) at Hyundai Mipo, in S. Korea with delivery set in 2017- So despite the historically low rates, long term fundamentals are slowly 2018. improving for the dry bulk market. If high demolion acvity connues throughout the second half of the year and slippage this year remains high, Demolion (Wet: Stable - / Dry: Stable -) we could well see minimum dry bulk fleet growth in 2016 and even negave Buyers in the Indian subconnent are slowly moving towards the side- fleet growth within specific segments like Capes. If this is combined with lines as budget announcement are approaching, prices are stalling and healthy demand for dry bulk commodies from countries like India and a fears that the recent firming of the market can’t be sustained for much gradual strengthening of Chinese momentum that seems to have been lost longer are increasing over at the demolion front. The one thing that during the past year, things should further improve by next year. seems unaffected by all this is the supply of demo candidates that ap- The million dollar queson though is “by how much?” Will demand levels be pears to have totally “ignored” recent market developments and re- finally adequate to overcome the overcapacity issue that is finally being mains as robust as ever. The firm number of container vessels that has tackled by intense scrapping and absent ordering, or will demand be just been heading for scrap recently has also come to add to the once more enough to keep providing lifelines periodically to a market that won’t be increasing supply of bulkers. With dry bulk sector related scrapping able to break above 1,000 points for much longer? stealing the spotlight this year, the remarkable increase in the number of demolion sales of containerships so far in 2016 compared to the same period last year has been somewhat overshadowed. The laer is calculated at 48% in terms of vessels and a jaw-dropping 122% in terms of dwt, while this trend is expected to last at least unl the end of the tradionally weaker for containers third quarter. Prices this week for wet tonnage were at around 190-305 $/ldt and dry units received about 170-295 $/ldt. Tanker Market Spot Rates Indicative Period Charters Week 20 Week 19 2015 2014 $/day -12 mos - 'BRITANIS' 2002 304,700 dwt Vessel Routes WS WS $/day $/day±% $/day $/day - - $42,000/day - Litasco points points 265k MEG-JAPAN 70 60,806 65 54,751 11.1% 65,906 30,469 -24 mos - 'RS TARA' 2016 158,000 dwt 280k MEG-USG 37.5 25,134 37.5 25,381 -1.0% 49,575 17,173 - - $28,500/day - Vitol 260k WAF-USG 67.5 54,330 67.5 55,650 -2.4% 76,251 40,541 130k MED-MED 85 35,297 77.5 32,128 9.9% 50,337 30,950 TD3 TD6 TD9 DIRTY - WS RATES 130k WAF-USAC 67.5 22,998 70 24,014 -4.2% 40,490 24,835 520 470 Suezmax 130k BSEA-MED 86 36,951 77.5 33,177 11.4% 50,337 30,950 420 370 80k MEG-EAST 92.5 17,357 95 22,201 -21.8% 34,131 19,956 320 80k MED-MED 110 29,709 110 29,943 -0.8% 37,127 28,344 270 220 80k UKC-UKC 102.5 18,079 100 16,351 10.6% 39,338 33,573 WSpoints 170 120 70k CARIBS-USG 95 15,848 107.5 21,830 -27.4% 36,519 25,747 70 75k MEG-JAPAN 80 15,991 80 15,916 0.5% 30,482 16,797 20 55k MEG-JAPAN 103 15,036 100 14,446 4.1% 24,854 14,461 Clean37K UKC-USAC 116 10,110 VLCC 120 11,833 -14.6% 19,973 10,689 30K MED-MED 122.5 7,305 140 10,622 -31.2% 24,473 18,707 55K UKC-USG 110 17,489 92.5 13,644 28.2% 27,228 23,723 TC1 TC2 TC5 TC6 CLEAN - WS RATES 55K MED-USG 105 15,258 90 12,615 21.0% 26,083 21,089 270 Dirty Aframax 240 50k CARIBS-USAC 120 17,627 112.5 16,333 7.9% 27,146 25,521 210 180 TC Rates 150 WS points WS 120 $/day Week 20 Week 19 ±% Diff 2015 2014 90 300k 1yr TC 40,000 40,000 0.0% 0 46,135 28,346 60 VLCC 300k 3yr TC 37,000 37,000 0.0% 0 42,075 30,383 150k 1yr TC 29,000 29,000 0.0% 0 35,250 22,942 Suezmax 150k 3yr TC 27,000 27,000 0.0% 0 33,219 24,613 110k 1yr TC 25,000 25,000 0.0% 0 26,808 17,769 Indicative Market Values ($ Million) - Tankers Aframax 110k 3yr TC 22,500 22,500 0.0% 0 24,729 19,229 May-16 Apr-16 Vessel 5yrs old ±% 2015 2014 2013 75k 1yr TC 20,500 20,500 0.0% 0 23,596 16,135 avg avg Panamax 75k 3yr TC 19,500 19,500 0.0% 0 20,580 16,666 VLCC 300KT DH 74.5 75.5 -1.3% 80.9 73.8 56.2 52k 1yr TC 16,500 16,500 0.0% 0 17,865 14,889 Suezmax 150KT DH 52.5 53.4 -1.7% 59.5 50.4 40.1 MR 52k 3yr TC 16,000 16,000 0.0% 0 16,638 15,604 Aframax 110KT DH 39.5 40.0 -1.3% 45.3 38.9 29.2 36k 1yr TC 15,000 15,500 -3.2% -500 16,101 14,024 LR1 75KT DH 35.5 36.0 -1.4% 35.8 33.0 28.0 Handy 36k 3yr TC 15,000 15,000 0.0% 0 15,450 14,878 MR 52KT DH 27.3 27.5 -0.9% 27.3 27.5 24.7 Chartering Sale & Purchase The crude carriers market kept displaying a mixed picture last week, with the posive effects of an overall healthy Middle East on TCE being partly In the MR sector, we had the sale of the “STAVANGER EAGLE” (45,898dwt- offset by increasing oil prices and effecvely more expensive bunkers.