Market Commentary:

On 19th January, oil prices climbed to their highest level since October 2014 with Brent crude futures jumping to USD 89.5/barrel and the WTI increasing to USD 87.1/barrel just before correcting to a slightly lower level of USD 84/barrel.

Oil has appreciated around 30% since the end of November, as strong demand and supply constraints significantly tightened the market. A cut of oil flow caused by an explosion at the Kirkuk-Ceyhan pipeline, near the Southern province of Kahramanmaras and OPEC missing its production targets by 790,000 barrels/day in December as members like West African producers Nigeria and Angola struggled to raise output, were significant factors that helped oil price’s rally. According to IEA’s monthly report, oil demand is on track to hit pre-pandemic levels of 99.7 million barrels/day this year, while Goldman Sachs is forecasting OECD inventories to fall to their lowest level since 2000 by summer affecting the oil price to possible USD 100/barrel. Meanwhile the tanker indices, both the BDTI & BCTI continue to lose momentum everyday with the BDTI closing the week at 692 points and BCTI at 551 points. Since 4th January the BCTI has decreased by 18% and the BDTI by 4%.

On the dry side, the Capesizes continue their downward movement and closed the week at 891 points, the lowest since 9th June 2020. The BCI is down by 71% y-o-y and 92% down since 7th October, when the BCI had climbed to its highest of the past 13 years. Moving down the sizes, the BPI, the BSI & BHSI closed the week at 2,010, 1,749 & 1,103 points respectively, a fall of 15% for Panamax and around 8% for both Supramax and Handysize compared to last week. However, all three indices stand at higher levels y-o-y. Mainly, the BPI is 23% up y-o-y, while for the BSI is up by 54% and the BHSI is 66% up. It’s obvious that Handysize market has outperformed on the long, boosted mainly from large handysizes (38k-39k dwt). Making an impressive investment, clients of Oscar Wehr bought en bloc 12 handysizes, all vessels between 38k and 39k dwt and built in 2016 and 2015, for about USD 280 mills.

Despite the significant correction on the dry market in January, the 2022 outlook for demand is higher than the supply. The congestion in the ports caused by container ships continue to delay bulkers from unloading and re-entering the cargo market, thus limiting bulkers availability and supply. At the same time, multiple infrastructure investment programs are planned to start during 2022 of note the US Army Corps of Engineers has received USD 4 bn in funding through the new Bipartisan Infrastructure Law for fiscal year 2022 to improve ports and waterways. In China the real estate sector seems to be stabilizing while gaining access to cheaper financing and combined with the end of Winter Olympic games after 20th February 2022, will give a fresh start to the country’s growth, providing the necessary demand for dry cargo volumes.

On these 3 first weeks of the year markets have been active and the high freight rates of 2021, have enabled most companies to build capital reserves. At the same time companies have focused on repaying debt, reduce their bank exposure and most have chosen to invest in secondhand tonnage, with a significant number of ships changing hands since the year start, at profits for sellers, as the prices haven’t followed the indices’ downside. Almost 90 bulkers, tankers and gas carriers have changed hands until now, with bulkers constituting around 51%, tankers around 44% and gas only 5%.

Finally, it is worth noting that the race for a “greener” shipping industry is on as major companies have announced plans to achieve net zero emissions in their businesses by 2050 or earlier. During the previous week, A.P Moller- Maersk announced its target to reach net zero emissions by 2040, 10 years earlier than previously announced. The company have set an interim 2030 target of a 50% reduction in emissions per container transported, and a 70% cut in absolute emissions from fully controlled terminals. Meanwhile Torm announced that has brought forward the short-term CO2 emissions reduction target by five years and will aim for a 40% cut in the emissions by 2025 instead of 2030.

Capesize: The capesize 5T/C route average from USD 12,407/day last week was down this week by more than $5k at USD 7,390/day. Trip from Cont. to F.East is USD 27,950/day, Transatlantic Return voyage is USD 11,200/day, while Pacific Return voyage is USD 4,200/day. Capesize 1y T/C rate is USD 23,000/day, while eco 180k Capesize is USD 24,500/day.

Panamax: The BPI-82 5T/C route average started the week above USD 21,376/day and closed the week reduced at USD 18,087/day. Trip from Skaw-Gib to F.East is down by more than 4.5k/day at USD 27,918/day, while Pacific Return voyage is down to USD 16,295/day, while Atlantic R/V is down at USD 17,565/day. Kamsarmax 1y T/C rate is USD 23,500/day, while Panamax 1 year T/C is USD 22,250/day.

Supramax: The BSI-58 10T/C route average closed the week lower than its opening at USD 19,237/day. South China trip via Indonesia E.C.India is at USD 13,750/day, W.Africa trip via ECSA to N.China at USD 29,373/day, Med/Bl Sea to China/S.Korea at USD 27,958/day, Atlantic R/V pays USD 16,241/day, while Pacific Return voyage pays USD 17,171/day. 1y T/C rate for Ultramax is at USD 25,000/day with 1 y T/C for Supramax at USD 22,000/day..

Handysize: The BHSI-38 7T/C route averageclosed the week down too, at USD 19,859/day. Brazil to Continent pays USD 28,467/day, S.E.Asia trip to Spore-Japan at 20,063/day, U.S.Gulf to Continent is USD 21,143/day. 38K Handy 1y T/C rate is USD 21,000/day, while 32k Handy 1y T/C is USD 19,000/day.

Crude:

VLCC average T/CE closed the week at USD -16,039/day. M.East Gulf to China trip is USD - 6,703/day, US Gulf to China is USD -2,750/day, M.East Gulf to Singapore is USD -4,180/day, W.Africa to China is USD -3,445/day, M.East Gulf to US Gulf is USD -25,374/day. 1y T/C for 310k dwt D/H Eco VLCC is USD 23,000/day.

Suezmax average T/CE closed the week at USD -1,816/day. Trip from W.Africa to Continent is
USD -752/day, Bl.Sea to Med is USD -2,879/day, Middle East Gulf to Med is USD -17,449/day.
1y T/C rate for D/H Eco 150k dwt Suezmax is USD 19,750/day.

Aframax average T/CE closed the week at USD -1,816/day. Trip from W.Africa to Continent is
USD -752/day, Bl.Sea to Med is USD -2,879/day, Middle East Gulf to Med is USD -17,449/day.
1y T/C rate for D/H Eco 150k dwt Suezmax is USD 19,750/day.

Products:

The LR2 route (TC1) M.East Gulf to Japan is this week at USD -2,925/day. Trip from Middle East to F.East is USD -10,569/day, while the LR1 (TC5) route Mid.East Gulf to Japan is USD 1,769/day, and Amsterdam to Lome is USD 5,702/day. The MR Atlantic Basket earnings is at USD 6,092/day, with MR route from Cont. to USAC at USD 3,049/day, US Gulf to Cont. at USD -3,751/day, US Gulf to Brazil at USD 4,779/day, ARA to W.Africa at USD 4,878/day. TC6 Intermed Route at USD 8,384/day. Eco LR2 1 year T/C rate is at USD 20,000/day, and Eco MR2 1 year T/C rate is at USD 15,750/day.

Sale and Purchase:

On the dry bulk S&P, the BWTS fitted Kamsarmax “Energy Triton” - 82K/2012 Tsuneishi was sold for USD 25 mills to Chinese buyers. On the Supramax Sector, clients of Eurodry acquired the “Molyvos Luck” - 58K/2014 Tsuneishi Zhousan for USD 21.2 mills basis TC attached at USD 13,250/day till april 2022, while the BWTS fitted “West Wind”- 56K/2008 IHI sold for region USD 17mills to Indonesian buyers. On the Handysize sector, 12x BWTS fitted Handysize vessels, the “Intelrink Audacity” - 39K/2016 Zhejiang Zhengzhou , the “Interlink Affinity” - 39K/2016 Zhejiang Zhengzhou the “Interlink Tenacity”- 39K/2016 build in Taizhou Kouan, the “Interlink Equality” - 39K/2016 Taizhou Kouan , the “Interlink Veracity” - 39K/2016 Taizhou Kouan, the “Interlink Quality” - 39K/2016 Huatai Heavy, the “Interlink Utility” - 39K/2016 Huatai Heavy, the “Interlink Fidelity” - 39K/2015 build in Taizhou Kouan yard, the “Interlink Mobility” - 39K/2015 Taizhou Kouan, the “Interlink Priority” - 39K/2015 Taizhou Kouan , the “Interlink Ability” - 39K/2015 Huatai Heavy, the “Intelrink Probity” - 39K/2015 Huatai Heavy rumoured sold for USD 280 mills enbloc to clients of Oskar Wehr. Furthermore, the BWTS fitted“Ultra Tolhuca” - 37K/2015 changed hands for USD 24.5 mills to undisclosed buyers.

On the tanker side, Hafnia Tankers acquired 12x LR1 modern vessels, the “Sti Providence” - 75K/2016 SPP, the “Sti Pride” - 75K/2016 SPP, the “Sti Prestige” - 75K/2016 SPP, the “Sti Precision” - 75K/2016 SPP, the “Sti Experience”- 75K/2016 STX , the “Sti Exceed” - 75K/2016 STX, the “Sti Excelsior” - 75K/2016 STX, the “Sti Express” - 75K/2016 STX, the “Sti Expedite” - 75K/2016 STX yard, the “Sti Excellence” - 75K/2016 STX yard, the “Sti Executive” - 74K/2016 Stx & the “Sti Excel” - 75K/2015 STX yard for USD 400 mills. 2x MR2s - 50k resales Hyundai Vinashin sold for USD 37 mills each to Danish Buyers. On the Mr1 Sector, the CPP & Ice- class 1B “Kerel” - 37K/2002 HMD &the “Baltic Soul” - 37K/2001 HMD changed hands for low USD 9 mills.