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Allied Shipbroking - Weekly Shipping

12 Ιανουαρίου 2021.

shipyardploi2020Market Analysis

4th-10th January 2021, Week 1

The rally noted during 2020 in the dry bulk commodities has spilled over onto the New Year, with iron ore leading the way as prices continue to soar. Prices for iron ore reached today US$ 172.13 per tonne despite a small drop of US$ 0.93 per tonne, keeping their nine-year high record. This leap into the new year has helped generate considerable optimism in the market, while with all this positive momentum, Capesize bulkers have been quick to capitalize on this trend, with freight rates gaining further this past week. This positive momentum in Industrial metals has gained pace throughout most of 2020, with most having recovered to pre-pandemic levels and looking firm in keeping their price rally at least throughout the first quarter of the year. Yet despite all this optimism there do seem to already be a few backstops in play that could momentarily dampen all this positivity during the course of the coming months.

For one, we have a considerable increase in finished steel prices, which are now also trading at record levels, due to these considerable increases in in core feedstock, namely iron ore. Sooner or later, this rise in steel prices will start to have a negative impact on iron trade, as steel mills see their margins squeezed further and scale back their production slightly. The issue at this stage seems to be that although demand for finished steel products is improving and is set to surpass a 4% growth rate this year, at the moment it seems to be having trouble keeping pace and catching to the quick rise being noted in prices. At the same time and given that all this demand frenzy for iron ore has (more so than usual) been primarily driven by China, this year’s Chinese New Year market dip could be “deeper” than what is typically witnessed (that is excluding last year where we were facing the initial consequences of the COVID outbreak). This is more so proving to be the case as the number of new COVID cases and Deaths continue to rise in both the US and Europe.

Yet despite both of these short-term “backstops” at play, the market fundamentals for dry bulkers seem to be very promising for the year. With demand for industrial metals showing signs of further gains during the year and possibly being leading indicators to the rest of the global economic recovery effort that we hope to see, demand for dry bulkers is likely set for a fast-paced growth. This positive effect may well compound further if we see the US and Europe take further and more aggressive quantitative easing programs during the course of the year, something that will most likely spur further infrastructure investment in the short-run. On top of this, we have seen a very manageable fleet growth take place during 2020, with the total dry bulk fleet having grown by just over 3.09% while the Capesize fleet has increased by 3.4%. Given the current orderbook at play, this number is set to drop further during 2021, given that we have an orderbook to fleet ratio of 7.05% for Capesize vessels and 5.33% for the total dry bulk fleet.

Therefore, given all we are seeing right now it looks as though the “numbers” are stacked in the dry bulk’s favor. Yet given all that we have experienced over the past 12 months, it is easy to see how it is that there are so few in the market right now who wish to throw caution to the wind. Fundamentals can just as easily be turned on their head. There is ample potential, but this is a game of focus and quick reactions and agility are as always a prerequisite.


George Lazaridis

Head of Research & Valuations



Freight Market

Dry Bulkers-Spot Market

4th-10th January 2021


Capesize – The Capes started the year on a positive footing, as the BCI-TCE climbed last Friday to US$21,131. The key bullish factor was the remarkable action noted in Brazil, with plenty of iron ore cargoes being loaded. The rate Brazil to China route increased by approximately 10.5% w-o-w. In the Pacific, routes were also bolstered, thanks to delays noted in Chinese ports due to poor weather conditions. However, with delays likely to drop this could dissipate slightly now.

Panamax – The Panamax freight market moved upwards as well this past month, with the average TCE figure rising above US$14,000 for the first time since September 2020. More and more vessels were fixed during the week, mainly in the EC South America. Meanwhile, the rest of the Atlantic was also providing support, as demand was unexpectedly increased. In the Pacific, things were not equally impressive, but fresh interest was witnessed there as well.

Supramax – The market here lost some ground during these past few days, with the BSI-TCE sliding to US$11,322, about 0.9% lower on w-o-w basis. Demand was not impressive and thus fixing remained at moderate levels in the Atlantic, despite the increased number of enquiries seen from EC South America. In Asia, the freight market moved sideways with no clear direction being shaped.

Handysize – It seems that the rising momentum has now gone, with the freight market losing some steam last week. The BHSI-TCE fell to US$11,805. The Christmas period in the Continent curbed demand in the region, while at the same time action in the US Gulf and EC South America was also subdued this past week. Losses though were trimmed by improved activity in Asia.


Freight Market

Tankers - Spot Market

4th-10th January 2021


Crude Oil Carriers— A stagnant first week for the crude oil freight market, despite the upward movement seen in the BDTI figure (of 11.6%). This misalignment has been due to the downward adjustment in flat rates, with realized earnings slow to react and still under significant pressure. In the VL segment, we have seen a sluggish pace take hold since the beginning of the year. Middle East routes experienced a negative correction in the respective $/day figures. On the other hand, West Africa numbers succeeded in remaining on a slightly positive tone. Rather inline, in the Suezmax market, things were under considerable stress during the past few days. In the Aframaxes, we noticed some contrasting signs across different benchmark trades, with Caribs-USG though succeeding a modest gain.

Oil Products - First, it is important to mention the “difficult” start of the year, given the correction in flat rates, as well as, the increases noted in bunker prices, leaving hardly adequate space for significant margins in realized returns. Both for the DPP and CPP fronts, it was rather an uninspiring and overall negative week.


Sale & Purchase

Newbuilding Orders

4th-10th January 2021


An impressive break period for the newbuilding market, with several new transactions emerging during these past few days. In the dry bulk market, we noticed strengthening interest for Ultramax units, while orders for Kamsarmaxes and Handysizes were also on the rise. The bullish sentiment and the positive momentum being seen in the freight market as of late, in combination with the optimistic projections for 2021 has lead many to re-consider newbuilding activity. The last few months of softening newbuilding prices have also played a role here. We expect activity to continue in this sector, as long as fundamentals continue to its favor. In the tanker market, things were not as equally impressive these past two weeks with minimal activity being noted. The uninspiring freight market that has dominated the whole sector since the summer and the hurt confidence has curbed interest for the time being. We expect appetite to gradually start to revive during the year, as demand is expected to rebound sooner or later, while at the same time the fleet growth has remained at relatively low levels.


Sale & Purchase

Secondhand Sales

4th-10th January 2021


On the dry bulk side, the SnP market started the year on a very positive tone, given the plethora of fresh transactions taking place. Moreover to this, given the dispersion across the different size segments and age groups, we may well anticipate this good momentum to be sustained in the near term (at least). Notwithstanding this, a lot will depend on how things evolve from the side of earnings, given the rather typical softening in freight returns that is expected to take place at some stage in the first quarter.

On the tankers side, things also moved on a strong trajectory in terms of activity noted during the past week or so. The highlight of the week was the spark in the VL market, given the good number of units changing hands, albeit involving only vintage units. However, given where we stand in terms of freight earnings as of late, this came hardly as a surprise. It looks as though that in the short term at least, this will mainly be a bargain “hunting ground” for most.


Sale & Purchase

Demolition Sales

4th-10th January 2021


The last few days of 2020 and the beginning of the new year have seen a ship recycling market that has seemingly been set completely alight, with several new transactions coming to the light and offered prices levels showing very strong gains. Most of the transactions emerged these past few days were placed in Bangladesh. The local breakers there seem to have started the year in an impressive way. Offered prices showed large gains and we expect this positive drive to continue in the coming weeks. At the same time, activity in India also increased, with green recycling being a significant asset for the domestic scrapyards. The offered prices remained at a healthy level, while the strengthening Indian Rupee has has further helped in this regard of late. As such it is likely that local players may well further improve their competitiveness over the coming days. Finally, things in Pakistan did not start off from where 2020 ended. Reported activity was minimal, as was appetite seen from most breakers. We do expect things to firm up slightly in the coming weeks and local breakers to better compete on prices, given that most scrapyards are starting to open up slots and with them local appetite.



















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