News ID: 78797 |
Publish Date: 10:24 - 19 April 2018

Dry Bulk Prices Up by 18% in March

Despite the fall in activity in the S&P market for dry bulk carriers compared to 2017, prices have continued to edge higher.

Dry Bulk Prices Up by 18% in March
In a recent monthly analysis, with the occasion of the completion of the first quarter of 2018, shipbroker Golden Destiny highlighted the fact that bulk carriers continued their positive trajectory, marking an 18% m-o-m increase, MANA correspondent reported.
However if we see the broader picture, we can observe that compared against March 2017, S&P activity dropped by 21%. This drop in the S&P activity is also observed in 1st quarter figures, where the number of bulkers changed hands dropped by 28%.
By contract, “the newbuilding activity has experienced a sound increase. As per our records bulk carrier orders have doubled since March 2017 and quadrupled within the 1st quarter. However this excessive increment was more due to last year’s very weak order book, and not to the 2018 newbuilding spree. On the commodity side, stagnation is observed in the dry cargo market. Brazilian iron ore exports to China have not kicked in yet, hence affecting the demand for ton-miles. China’s main iron ore importers are Brazil and Australia, providing high quality iron ore. Comparing against March 2017, one tropical cyclone and two tropical storms have hit Northern and Western Australian shores, hence halting the amount of iron exports from Australia, while one severe cyclone (Marcus) has hit Northern shores within March 2018. This could provide an explanation in the decrease of the amount for Brazilian iron ore exports that inevitably reduced the number of ton-miles and the performance of the market during this month. The same principal also applies for the Brazilian soybean exports, that still have not provided a strong support to the market. A worrying factor is that South American weekly spot grain cargoes for the first 3 months of 2018 are reduced by 50% compared to 2017. An indicator showing that current year’s harvest did not outperform last year. On the top of that the imposed steel tariffs from the US and the anticipated soybean tariffs from China, have affected the market sentiment hence keeping the market in low levels”, said Golden Destiny’s Nikolas M. Zannikos, Research & Valuations Shipping Analyst.
On the tanker market he added that “we had a confrontational pattern. The number of vessel’s having changed hands dropped by 41% m-o-m and by 51% y-o-y. At first sight this could be justified by the impaired market situation. However, this merely reveals the truth. On the newbuilding sector the orders have marked an 85% increase m-o-m and a 95% y-o-y increase. This shows two things. Firstly, that market participants anticipate that market will recover sooner than later and secondly that the contracts offered by yards for high spec vessels are very competitive, some of them with attached long time charters. Another striking figure is the increased number of demolitions, that were up 22% from previous month. Apart from VLCC’s that have seen an increased activity of 80% from last month, scrapping levels are also higher for smaller sizes. Aframaxes presented an increase of 40% in scrapping levels compared to February”, said Mr. Zannikos.
Finally, in the container market, “containers new building pace, experienced a 58% drop in the number of orders counting 10 vessels against 24 a month before, while the same figure applies for the number of vessels’ changed hands in the second hand market. This month feeder vessels with less than 900 TEU have been at the center of interest, the majority of them placed at Chinese yards. The slowdown in ordering has without doubt helped the container sector to recover in recent months. However the question mark remains as to where vessels of 14,000 TEU will be employed after the delivery of the ULCV in the major Europe- Asia route”, Golden Destiny’s analyst concluded.
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