Tanker Market to Improve

Clarksons described the markets of tanker, bulker and shipbuilding of last week.

News ID: 80051

Date: 27 May 2018 - 14:49

VLCCs:

It was a more positive week for VLCC owners, with heightened enquiry preventing sentiment from easing. The WAF and USG markets were particularly busy, providing a constant back up option for modern tonnage ballasting back from the East, whilst there was also a steady flow of cargo from the MEG which further supported rates.

Suezmaxes:

The Suezmax market was given an injection of life this week, with firming Aframax rates in the Med resulting in Suezmax owners covering  Aframax stems in the region in search of higher earnings. The positive sentiment had a knock-on effect in WAF, where rates rose, whilst in the MEG rates were generally steadier.

Aframaxes:

It was an exciting week in the Med/Black Sea, where a constant flow of fresh enquiry on top of an already finely balanced tonnage list quickly saw rates rise substantially, with rates on cross-Med routes rising to around WS 165. It was also busy in the North Sea/Baltic, although the market in the region was not as firm as in the Med.

Clean Products:

West of Suez: In the MR market, an increase in fresh enquiry led to the rate on the UKC-USAC route rising from WS 120 to WS 150. The LR1 market saw plenty of activity, although this wasn’t enough to clear up the free tonnage currently preventing rates from creeping up.

Bulkcarrier

Capesize:

Capesize rates softened further this week, as the list of available tonnage for June loading in Brazil continued to grow. The spot rate on the Tubarao-Qingdao route fell to $16/tonne, while average Capesize spot earnings fell 30% w-o-w to $8,934/day

Panamax:

Panamax spot rates generally softened in both basins this week, with sentiment in the sector remaining negative. Rates in the Pacific were undermined by a shortage of fresh cargo availability in key load areas, particularly out of Australia. In the Atlantic, long tonnage lists weighed on rates despite a slight increase in cargo enquiry towards the end of the week.

Handy:

In the Atlantic, Supramax trip rates fell w-o-w reflecting limited availability of fresh cargo, and long tonnage lists in a number of key load areas. In the Pacific, rates generally held steady or softened w-o-w, although backhaul rates firmed slightly reflecting the weaker Atlantic market.

Liner Market News

According to the Shanghai Containerized Freight Index, spot box freight rates on the Asia-N. Europe and Asia-Mediterranean routes increased by 4.0% and 6.7% respectively this week, to reach $825/TEU and $848/TEU. Meanwhile, the rate on the Asia-US West Coast route fell 1.9% w-o-w to stand at $1,283/FEU by the end of the week, while on the Asia-US East Coast route the spot rate stood at $2,271/FEU by the end of the week, down 2.6%.

During April 2018, total container throughput at the ports of Shanghai, Singapore and Hong Kong reached a combined 8.1m TEU, an increase of 4.0% y-o-y. This brings total throughput at the ports in the first four months of 2018 to 31.5m TEU, up 6.6% compared to the same period of 2017. Meanwhile, box throughput at the port of Busan stood at 1.8m TEU in April, broadly steady y-o-y, and bringing total box handling at the port in the first four months of the year to 6.9m TEU, up 3.5% compared to the same period of 2017.

Shipbuilding News

In the bulkcarrier sector, Taizhou Sanfu has received an order for 1 + 1 x 64,000 dwt Ultramax bulkers from Bangladeshi owner Meghna Marine, with the firm unit scheduled for delivery in 2020. Elsewhere, Chengxi Shipyard has received a contract for 1 + 1 x 40,000 dwt self-unloading bulkcarriers from Canadian owner CSL Group. The firm vessel isscheduled for delivery in 2020.

Elsewhere, there is one contract to report in the containership sector. Ezhou Guangda Shipbuilding has won an order for 2 x 1,100 TEU feeder containerships from domestic owner Wuhan Newport Changhai Shipping. The vessels are scheduled for delivery in 2020 from Hubei, China.

A total of 319 vessels have been reported contracted in 2018 so far, representing a 22% year on- year decline on an annualised basis. Meanwhile, the Clarksons Newbuild Price Index currently stands at 128 points, having risen by 3 points since the start of the year.

Despite the month of Ramadan being fully underway, there is still healthy competition in the market. Indian breakers are generally the frontrunners for any available units, apart from larger tankers. The market has remained stable, and current price levels appear to be at a happy medium for both sellers and buyers.

Major Bulk Trades News:

A recent thawing of trade tensions with the US has reportedly seen China’s state grain buyers re-enter the market for US soybeans this week, for the first time in around two months. Chinese buyers had reportedly avoided buying US soybeans, instead favoring imports from Brazil, following China’s threat to impose tariffs on some US goods (including soybeans) in early April.

Crude steel output by CISA member mills reached a record 1.94mt/day in the first 10 days of May, up 8% y-o-y and 2% higher than the average level seen in April. Steel production in China has risen in recent weeks following the end of winter steel production restrictions in late March, and reflecting a seasonal increase in steel demand in the country as construction activity picks up.