BMTI – Trend Experts for Shipping

The chartering world remains a mixed bag of news, albeit one that continues to enrich the owners at any rate. Off the Continent, scrap charterers took a 56,000 dwt at US$ 35,000 daily to the East Med, which fixture is dwarfed by the fixture of a 35,000 dwt at US$ 36,500 to a similar destination WCSA charterers took a 58,000 dwt in the low US$ 40,000 daily for a trip via WCSA and redelivery Cristóbal. From the Black Sea, grain charterers are struggling to cover Handysize cargoes with tonnage tight and rates up. For Nikolayev to Tunisia there has been tonnage concluded at a rate of US$ 62/mt. Even for a 30,000mt grain cargo from less expensive Black Sea ports to the Egyptian Med, rates are somewhat in the US$ 50/mt range. Lau Lau managed to replace a vessel running late with a similar size vessel at US$ 60,500 daily for a trip to the East. Lucky them!

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European steelmakers say they are concerned that the European Commission may soon suspend duties on certain steel products in the same way that it has with proposed to do with Chinese flat-rolled alumi­nium. The commission recently released a proposal to suspend duties on Chinese aluminium for a limited nine-month period. China has returned to being a net importer of aluminium products (instead of a world-leading exporter) due to the impact of environmental regulations on the production of the metal. European steel mills say they now are con­cerned that similar measures will be made for steel products, which would allow increased imports of Chinese steel products, particularly those that have been in relatively short supply across the European Union in recent months. As domestic European de­mand for steel resurged this year, steel prices have simultaneously climbed to multi-year highs. A part of the commission’s logic for reducing duties is to ease the shortage of steel products across the EU, making manufacturing and construction operations easier for European industry at large.

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A typical Monday is marked by a lack of momentum, where dithering prevails. Attempts to cover ECSA stems by taking tonnage in the East are still happening with tonnage now being taken at US$ 33,500 daily. For October, Black Sea grain charterers are facing numbers of US$ 37,000 daily basis Singapore deli­very. Rates off the Continent for Supramaxes have dropped to around US$ 34,000 daily for a trip to the Med with scrap and low US$ 30,000s daily for trips to ECSA. Handysizes are said to be about the same. Handysizes appear to be owners’ cash cows anyway.

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With rates breaking new records, it stands to reason that congestion levels would be at records as well. Indeed, some 16% of the world’s bulk carrier fleet is currently being held up by port queues, according to estimates by Braemar. The broker says bulker queues hit a record 142m dwt at the weekend with China accounting for about a third (52.7m dwt or 6% of the bulker fleet). These levels are 28% higher than a month ago and 23% higher than a year ago. Capesize freights keep climbing, albeit at a slower pace of circa US$ 1,000 day-on-day with TARVs finally hitting US$ 50,000 daily, as expected. Front haul rates are rising by leaps and bounds with high US$ 70,000s of up to US$ 77-78,000 daily expected by midweek.

Atlantic Panamax tonnage is said to be especially hard to come by at the moment, according to several brokers working on the trans-Atlantic trades, with low US$ 30,000s (on TARV rates) moving to the middle-high US$ 30,000s in a few days. Front hauls passed US$ 50,000 on 82,000 dwt ships for the first time in ages while the same rates are only about US$ 500 away for the standard 74-78,000 dwt vessels as well. Indonesia rounds have climbed to US$ 33,000.

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On a typical Monday when all players are positioning their “guns” for the battle ahead of the week, news has been limited. Off the Continent, Handysize owners appear relaxed with an excellent choice of cargo proposals that should lead to higher than last-done numbers. The owners of a 34,000 dwt have been seeing US$ 31,000 daily for a 15-20 day local employment. The rates proposed in general for several Atlantic destinations have been hovering at US$ 30,000 daily anyway. A 56,000 dwt was fixed for a 15-day RV at US$ 34,000 daily. Supramax rates to South Africa are hovering in the low US$ 40,000s. From the Black Sea, a Supramax was rumoured fixed at US$ 48,000 daily for a trip via East Africa and redelivery Durban. This is about US$ 8,000 daily better than done early last week. Clinker charterers have taken a 63,000 dwt ship from the Black Sea to West Africa at US$ 48,000 daily. But a rate of US$ 47,000 daily on a 57,000 dwt vessel with clinker to similar destination is not bad either, is it? Fertilizer charterers last week took a 38,000 dwt for a cargo from Black Sea to Brazil at the equivalent of US$ 36,000 daily.

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Listed bulk carrier companies have seen share prices bounce back in recent days (thanks to a modest rebound in dry bulk freight rates) after declining for the first two weeks of July. Year-to-date (YTD) share prices remain at historically high levels even after fading slightly from their late-June peak. Interestingly, the top performer this year has been a bulker-based fund, the Breakwave Dry Bulk Shipping ETF [BDRY], up by 239% YTD at US$ 26.10 per share, presently. Actual bulk carrier shares, meanwhile, are up by an average of about 150% YTD with Safe Bulkers [SB] leading the pack at US$ 3.40 per share with YTD gains of 162%. Eagle Bulk [EGLE] boasts the higher share price at the moment with US$ 42.34, up 123% YTD.

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Production forecasts were raised by the European Commission for common wheat output in the 27-member bloc of EU countries for the 2021-22 season to 126.2 Mt (from last month’s forecast of 124.8 Mt) or 6.5% higher than the crop of 117.2 Mt registered in the prior season. Forecasts for EU exports of common wheat (soft wheat) were unchanged for the 2021-22 season at 30 Mt (versus 27 Mt exported in the previous season). Predictions for overall wheat stocks were downgraded to 10.8 Mt (from 11.4 Mt) due to increased expectations for use in animal feed.

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Oslo-listed dry bulk operator 2020 Bulkers recently released their first quarter numbers, showing that the company has performed notably better than a year before with total revenue of US$ 17m for Q1-2021 (compared to US$ 7.8m in Q1-2020). Operating profit over the same quarter amounted to US$ 8.2m (versus US$ 2.5m a year before) while net profit was US$ 5.8m. The Bermuda-registered company currently operates a fleet of eight Newcastlemax bulk carriers. Average TCE earnings in Q1 of this year were US$ 23,900 daily, says 2020 Bulkers, while the average for Q2 so far has climbed to US$ 33,700 daily. This week, owners Tor Olav Trøim and Ubon Partners sold over 14% of company shares on the Oslo Stock Exchange for US$ 36m, leaving Trøim with just under 25% of company ownership.

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Many brokers are looking forward to a very likely mesmerizing new week. Expectations are running high, after the Atlantic market changed course towards the end of last week. The bullish Kamsarmax market is supporting the smaller Ultramax tonnage, which many charterers are trying to switch to, if possible. Grain charterers are in lose talks with Ultra owners, indicating their interest at US$ 27-28,000 for a front haul ex-Continent, for which last week Kamsarmax tonnage was covered at US$ 36,000. Handysize rates are recovering with fertilizer charterers rating a 36,000 dwt at US$ 14,500 daily for a trip to ECSA, which is up around US$2,000 daily on last-done. Charterers’ appetite in period tonnage remains unbroken.

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The last day of the first quarter of 2021 brings mixed tidings for the Capesizes with declines having continued to ease from recent sharpness and owners starting to feel better about Q2 prospects after enjoying a (mostly) fruitful Q1. Indeed, owners may have become spoiled, if just barely, after seeing rates keep rising for weeks on end. But still at recent historical highs, Cape freight rates will need to reach a bottom soon (as they are already suggesting) if they want to maintain these highs. Front hauls are already moving in a positive direction with US$ 32,500 at last-done.

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Fundamentals continue to greatly favour owners of tonnage in the northern trades at the moment—indeed the European coaster market at large. Baltic and North Sea-based ships are fetching steadily rising offers and, note brokers, positions are extending to as much as two weeks ahead instead of the usual prompt business that the market has become accustomed to in recent years. A degree of conclusion on Brexit, brokers say, has given UK traders more confidence about forward positions. Charterers are finding it more challenging to get tonnage when they want it. Freights are rising across the board. Westward rates with fertilizers and grains from the Baltic States to ARAG have surged from high EUR 20s/mt into the low EUR 30/mt in little more than a week’s time to approach upwards of EUR 33-35/mt.

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Breathing a collective sigh of relief, Capesize owners see their freights begin the week on a widely positive note (as presaged near the end of last week) with notable gains on the trans-Pacific round voyage in particular. Pacific RV rates on time charter basis rose by some US$ 500 day-on-day over the first session of the week to near low US$ 7,000s on 180,000 dwt ships. Front haul rates are also looking to make a positive reversal with US$ 26,000s moving toward US$ 27,000s. TARVs are hovering at US$ 15,000.

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With the week concluding on a pair of consecutive losses, it would appear that a freight reversal for the Capesizes was more than a flash in the pan. And with losses looking sharper than in the last round of corrections, it would also seem that owners have more to be worried about. Nonetheless, the fact that rates are still trading at relatively high levels bodes well for near term success of the biggest bulkers.

Atlantic grain flows are keeping Panamax owners in demand, if only just enough to keep rates moving steadily in the upward direction. But steady progress is arguably better than explosive gains in the bulker game, so owners are happy to see their sector getting consistent inquiry for once. South America remains the main driver with rounds from the Far East via ECSA and back fetching DOP rates within the US$ 14-15,000 daily range with the lower US$ 14,000s more likely on the standard 76,000 dwt ships and higher US$ 14,000s on the 82,000 dwt moderns.

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