Market Commentary:

As the conflict in Ukraine continues for third week, the shipping industry tries to get to grips with the situation.

Ships have been hit by crossfire and seafarers killed and injured, while seafarers of all nationalities are trapped on ships berthed in ports. Following the list of sanctions from U.S. and E.U many service companies are pulling out of Russia. Among them are also shipping companies like Lloyd’s Register (LR) and DNV, which yesterday withdrew services to Russia in varying extents. Meanwhile another blow to the Russian shipping industry was delivered by IACS as it dropped the Russian Maritime Register of Shipping (RMRS) as its member.

Despite the U.S. banning Russian oil and gas imports, European nations and several oil majors continue to buy Russian crude as they fight with increased energy prices and fears of an oil and gas shortage. Oil prices, which have been disrupted to the greatest extent since 1990-91 Gulf War, eased on Friday after climbing over USD 130/barrel, their highest levels since 2013 on 8th March. WTI closed the week at USD 106/ barrel, while the brent traded near USD 109/ barrel. Eni, the Italian energy group, has stopped purchasing oil from Russia and will closely monitor developments in the gas procurement market. At the same time, G7 energy ministers urge OPEC to boost oil supplies to global markets, after the IEA’s decision to release 61.7 million barrels of oil. As economies are looking for alternatives to Russian crude oil, the talks about the lift of Venezuelan & Iranian sanctions are on the spot. Even if Iran can boost exports by 1+ million barrels per day, things in Venezuela are different as years of underinvestment means it would take time to build up exports to a level that could make a meaningful impact on oil prices and tanker market. Although sanctions have not impacted yet the shipping industry directly, it is noteworthy that Aframax & Panamax tankers controlled by Russian companies count 8% of total Aframaxes & Panamaxes respectively. As a result, if sanctions “hit” Russian shipping companies, the Panamaxes’ & Aframaxes’ fleet supply may decrease, and we may see a further boost on those tanker markets. The BDTI closed the week at 1,312 points losing 11% on a weekly basis while the BCTI gained 6.6%, touching 1,054 points, with both indices at levels not seen for more than two years.

The global economy still struggles with the energy crunch and while oil and natural gas prices are still at high levels everyone is trying to find a cheaper and more viable alternative. This is where coal comes back to the stage. Despite the all-time high price of USD 425/tonne during the week, coal’s demand keeps rising with Australia exporting more and more coal to Europe, sending the rate for Capesize bulkers to highs not seen since 21st December 2021. The Capesize index closed the week at 2,676 points, having increased by 64% within the week with the C16 (Asia to Europe) route on Friday shooting up by 141% to USD 14,550 per day. Both Panamax and Supramax markets, are also getting a boost as economies are trying to find alternatives for Russian and Ukrainian wheat. The conflict between Russia, the largest wheat exporter, and Ukraine, the fifth in line, will create a huge anomaly in wheat export. Meanwhile Europe and Asia are searching alternative producers/exporters, mainly in Canada and Australia. Analysts suggest that buyers who typically only place orders a month or two in advance are already tapping Australia merchants for grain in June and July, when they would typically rely on supplies from the Black Sea. The BPI index closed the week at 3,187 points, up by 14.5%, BSI closed at 2,939 points, up by 13.6% while BHSI closed at 1,548 points, 7.3% up.

Wet and dry markets are not the only ones affected by the energy price rises and the invasion of Ukraine, as the LNG market has started to feel the wave of changes. As U.S. has imposed sanctions on oil and natural gas imports and the EU is trying to reduce its energy dependency from Russia, the demand for LNG shipments will gradually rise, possibly boosting the demand for LNG carriers. Taiwan has announced that is going to wind down its LNG imports from Russia as its contract for LNG purchases expires within March and replace them with imports mainly from Australia and Qatar. Despite the positive news for vessel demand, the surge in global LNG prices to record highs and domestic demand destruction may mean that China’s LNG imports growth may be reduced in 2022. As China is increasing Coal usage and with Moscow–Beijing agreement for extra oil and natural gas imports with discount in force, its economy will possibly depend more on pipeline gas imports from Russia and domestic gas and coal production rather than LNG imports.

Capesize: With Europe returning to coal as alternative energy source, the Capesize average of the 5 T/C Routes closed the week firmer by more than USD 8.6k/day at USD 22,195/day. Trip from Cont. to F.East is firmer at USD 41,025/day, Transatlantic Return voyage is firmer by USd 8k/day at USD 23,050/day, while Pacific Return voyage is up at USD 19,633/day. Capesize 1y T/C rate is USD 31,750/day, while eco 180k Capesize is USD 33,250/day.

Panamax: The BPI-82 5T/C route average improved by USD 3k/day and closed at USD 28,685/day. Trip from Skaw-Gib to F.East is up at USD 35,045/day, with Pacific Return voyage being firmer by nearly USD 6k/day up at USD 32,888/day, while Atlantic R/V is improved at USD 23,410/day. Kamsarmax 1y T/C rate is USD 30,200/day, while Panamax 1y T/C is USD 28,025/day.

Supramax: The BSI-58 10T/C route average closed the week about USD 3.8k/day higher than its opening at USD 32,330/day. South China trip via Indonesia E.C.India is up by USD 6k/day at USD 39,525/day, W.Africa trip via ECSA to N.China is USD 27,857/day, Med/Bl Sea to China/S.Korea is softer at USD 19,208/day. Atlantic R/V pays USD 14,075/day, while Pacific Return voyage is firmer at USD 35,250/day. Ultramax 1y T/C rate is USD 31,450/day, and Supramax 1y T/C earns USD 28,250/day.

Handysize: The BHSI-38 7T/C route average closed the week firmer at USD 27,858/day. Brazil to Continent is also improved at USD 27,944/day, S.E.Asia trip to Spore-Japan is firmer at USD 38,094/day, while U.S.Gulf to Continent is up at USD 19,786/day. 38K Handy 1y T/C rate is USD 27,000/day, while 32k Handy 1y T/C is USD 24,000/day.

Crude:

VLCC average T/CE closed the week at USD -23,043/day. M.East Gulf to China trip at USD -10,655/day, US Gulf to China at USD -13,344/day, M.East Gulf to Singapore at USD -8,004/day, W.Africa to China at USD -10,665/day, M.East Gulf to US Gulf at USD -35,431/day. 310k dwt D/H Eco VLCC 1y T/C is at USD 24,500/day.

Suezmax average T/CE closed the week down at USD 57,431/day. Trip from W.Africa to Continent is at USD -3,656/day, Bl.Sea to Med (TD6) is down from USD 145k/day of last week to USD 118,518/day, while Middle East Gulf to Med at USD -20,213/day. 1y T/C rate for D/H Eco 150k dwt Suezmax is at USD 24,750/day.

Aframax average T/CE closed the week down at USD 50,282/day. Trip from N.Sea to Continent is at USD 9,876/day, trip from Kuwait to Spore at USD 5,269/day, trip from Carribs to US Gulf down at USD 6,675/day, and S.E.Asia to EC Australia at USD 8,695/day, while Baltic to UK Continent (TD17) is firmer at USD 262,312/day while Cross Med is at USD 8,868/day. 1y T/C rate for D/H Eco Aframax is at USD 22,750/day.

Products:

The LR2 route (TC1) M.East Gulf to Japan is this week improved by USD12k/day at USD 25,791/day. Trip from Middle East to F.East is USD -2,579/day, while the LR1 (TC5) route Mid.East Gulf to Japan is firmer at USD 20,272/day. Amsterdam to Lome is USD 10,197/day. The MR Atlantic Basket earnings is improved by USD2.5k/day at USD 21,148/day, with MR route from Cont. to USAC at USD 4,112/day, US Gulf to Cont. at USD 8,871/day, US Gulf to Brazil at USD 16,913/day, ARA to W.Africa at USD 7,326/day. TC6 Intermed Route at USD 34,502/day. Eco LR2 1y T/C rate is at USD 20,750/day, and Eco MR2 1y T/C rate is at USD 15,750/day.

Sale and Purchase:

On the Capesize sector, Greek buyers acquired the BWTS fitted “Stella Anita”-180K/2012 Dalian for USD 29 mills. On the Kamsarmax sector, we witnessed the sale of 2x modern units. The Japanese built “Alam Kukuh”-82K/2019 Oshima committed region USD 38.75 mills to Far Eastern buyers, while the 2-year older Chinese built “Agri Grande”-82K/2017 YZJ sold for USD 29.7 mills to Chinese buyers. On the Supramax sector, the BWTS fitted “Nathan Brandon”-57K/2013 Huatai changed hands for USD 19 mills. Chinese buyers meanwhile acquired the “Hai Long”-56K/2007 Mitsui for USD 16 mills, while the 3-year older “Jin Cheng”-53K/2004 New Century was sold for USD 13.9 mills to clients of Perfect Shipping.

Following the previous week’s 4 VLCC’s transactions, it was another dynamic week for that segment. Clients of Euronav sold the “Simone”-323K/2012 STX, the “Sonia”-314K/2012 STX, the “Sara”-323K/2011 STX & the “Sandra”-314K/2011 STX for an undisclosed price to clients of Sinokor Merchant. Furthermore, the VLCC “Eneos Tokyo”-301K/2004 HHI was sold for USD 30.5 mills to Chinese buyers. On the Aframax sector, the “Stena Arctica”-117K/2005 HHI found new owners for USD 14.8 mills. The dirty trading widebeam/shallow draft MR2 “Stena President”-65K/2007 Brodosplit sold for low USD 11 mills to Greek buyers. Finally, the MR2 BWTS fitted “High Priority”-47K/2005 Naikai Zosen changed hands for excess USD 9 mills.