Market Commentary:

As the European security crisis keeps escalating, President Vladimir Putin and President Joe Biden have accepted “the principle” of a summit to ease tensions over Ukraine, capping a series of increasingly urgent diplomatic efforts led by President Emmanuel Macron to defuse the crisis.

But as fears of escalating tensions still persist, commodities prices are maintained at high levels. Crude oil prices are highly impacted & reached almost USD96/barrel, its highest level since 2014. They are still around USD 90/barrel, despite their first weekly decline since the 3rd week of December, supported by rising demand, constrained supply, and falling inventories. US natural gas futures eased to around USD 4.40/MMBtu, slipping from a two-week high of USD 4.80/MMBtu earlier this week after a smaller than expected storage draw but are trading still near 2 year highs. Gold prices consolidated around the USD 1,890 mark on Friday, the highest price since June 2021.

Construction & infrastructure projects ramp up once again, as the worst of USD 670per ldt. Amid scarce demolition tonnage, analysts believe that end-users are pushing up offered levels by USD 15per ldt each week. High scrap prices will attract very old ships and specifically tankers that are inefficient to meet the industry’s environmental requirements.

In the meantime, analysts are turning the lights on the United States and Iran's renewed nuclear deal as it is one more step towards the lifting of Iran sanctions. Iranian crude is unlikely to return to the market in the immediate future to alleviate current supply shortages, as firstly the U.S would need to unfreeze USD 7 billion in Iranian funds held in South Korean banks and Iran would have to agree to suspend further uranium enrichment as well as release US prisoners. If this possibility materializes and Iranian oil returns to above-board trading, about 1 million barrels/day are estimated to be brought back into the market.

The aforementioned surging crude oil prices have also made an impact on bunker prices which during last week hit their highest levels since 2020. Bunkers are becoming increasingly costly as crude prices sustain at levels above USD 90 per barrel. Year to date, the price per tonne of VLSFO has increased by more than 21%, 16% & 22% in Rotterdam (USD 676/tonne), Singapore (USD 735) & Houston (USD 704) respectively. Furthermore, the price per tonne of IFO380 has risen by 17.5%, 16% & 19%, in Rotterdam (USD 510), Singapore (USD 526) & Houston (USD 544) accordingly. The price gap between VLSFO & IFO380 fuel has also shot up above $200/tonne in Singapore and Fujairah in recent days, making scrubbers more cost-effective.

On the dry bulk market, the news gives optimistic prospects for the future. The dominant source of global demand for the dry bulk sector i.e. China’s steelmakers, have just been handed an important extension to peak carbon emissions by 2025 with five more years to finish the costly green transition for mills. China forecasts steel consumption of the real estate market to decline 2.7% in 2022, although the shortfall will be offset by that of infrastructure, which is expected to grow between 5.1% and 7.6%. This means that reliance of China’s steelmakers on iron ore imports, substantial cargo source for large dry bulkers, will also be extended. In addition to this, many countries are rethinking the carbon deadline because of the energy crunch and the surging energy prices. Already EU changed the deadline for coal withdrawal to 2028 instead of 2024. As for the Handysize market, the earnings maintain stability at elevated levels, tempting investors. Furthermore, Supramaxes average T/C rates are up by 6% YTD, and both dry geared segments have been the main sale and purchase choices so far during 2022, as Handysizes represent 40% & Supramaxes 23% of the 84 bulkers sales we have seen in 2022 so far.

Capesize: The Capesize average of the 5 T/C Routes started the week at USD 15,397/day, and closed the week overall down at USD 13,888/day. Trip from Cont. to F.East is up at USD 37,350/day, Transatlantic Return voyage is softer at USD 16,800/day, while Pacific Return voyage is also softer at USD 9,125/day. Capesize 1y T/C rate is USD 26,500/day, while eco 180k Capesize 1y T/C is USD 27,750/day.

Panamax: The BPI-82 5T/C route average closed the week on similar levels to last week at USD 21,375/day. Trip from Skaw-Gib to F.East is softer at USD 29,677/day, while Pacific Return voyage is up at USD 23,244/day, while Atlantic R/V is softer at USD 16,980/day.

Kamsarmax 1y T/C rate is USD 26,500/day, while Panamax 1y T/C is USD 24,750/day.

Supramax: The BSI-58 10T/C route average closed the week about USD 1.8k/day higher than its opening at USD 25,576/day. South China trip via Indonesia E.C.India is firmer at USD 29,208/day, W.Africa trip via ECSA to N.China is now USD 27,779/day, Med/BL.Sea to China/S.Korea is improved at USD 30,354/day, Atlantic R/V pays USD 19,388/day, while Pacific Return voyage pays USD 27,286/day. 1y T/C rate for Ultramax is improved at USD 30,250/day, while 1y T/C for Supramax is USD 26,500/day.

Handysize: The BHSI-38 7T/route average closed the week higher by USD 2k/day at USD 23,130/day. Brazil to Continent pays USD 27,389/day, S.E.Asia trip to Spore-Japan is up by USD 4k/day at USD 28,313/day, U.S.Gulf to Continent is improved at USD 17,821/day. 38K Handy 1y T/C rate is USD 24,000/day, while 32k Handy 1y T/C is USD 21,250/day.

Crude:

VLCC average T/CE ended the week at USD -21,843/day. M.East Gulf to China trip is USD -13,100/day, US Gulf to China is USD -8,273/day, M.East Gulf to Singapore at USD -11,352/day, W.Africa to China is USD -12,274/day, M.East Gulf to US Gulf is USD -30,586/day. 310k dwt D/H Eco VLCC 1y T/C is USD 22,000/day.

Suezmax average T/CE closed the week at USD -1,820/day. Trip from W.Africa to Continent is USD -581/day, Bl.Sea to Med is at USD -3,058/day, Middle East Gulf to Med at USD - 20,565/day. 1y T/C rate for D/H Eco 150k dwt Suezmax is USD 19,000/day.

Aframax average T/CE closed the week at USD 4,411/day. Trip from N.Sea to Continent is at USD -3,000/day, trip from Kuwait to Spore is USD -154/day, trip from Carribs to US Gulf is up by USD 4.6k/day at USD 17,683/day, while S.E. Asia to EC Australia is USD 873/day. 1y T/C rate for D/H Eco Aframax is at USD 19,000/day.

Products:

The LR2 route (TC1) M.East Gulf to Japan is this week at USD -4,768/day. Trip from Middle East to F.East is at USD -13,374/day, while the LR1 (TC5) route Mid.East Gulf to Japan is at USD 223/day, and Amsterdam to Lome is at USD 4,523/day. The MR Atlantic Basket earnings is firmer at USD 15,658/day, with MR route from Cont. to USAC up at USD 9,050/day, US Gulf to Cont. is USD 2,637/day, US Gulf to Brazil is up at USD 13,001/day, ARA to W.Africa improved at USD 11,548/day. TC6 Intermed Route is much firmer this week at USD 34,037/day. Eco LR2 1y T/C rate is USD 19,250/day, & Eco MR2 1y T/C rate is USD 14,750/day.

Sale and Purchase:

On the dry S&P activity, clients of EPS acquired the BWTS fitted “Stella Hope”-180K/2016 Dalian for region USD 41 mills basis T/C attached to RWE at BCI 4TC PLUS 120% till December 2022. The BWTS fitted Ultramax “Ultra Excellence”-61K/2016 Tsuneishi sold for USD 31.3 mills to Greek buyers. On the Supramax sector, Chinese buyers acquired the BWTS fitted “Mandarin Grace”- 57K/2011 & the “Mandarin Trader”-57K/2011 Jiangsu Hantong for high USD 16 mills each. 3x BWTS fitted Handysizes, the “Wuhu”-39K/2014 Chengxi , “Wuchang”-39K/2013 Chengxi & “Wuchow”- 39K/2013 Chengxi were sold for USD 22.3 mills each to clients of Nova Marine Carriers, with T/C attached to sellers.

On the tanker side, the Suezmax “Rineia”-159K/2004 HHI sold for low USD 18 mill to Middle Eastern buyers, with T/C attached at USD 20.5k/day for 3 months. The BWTS fitted LR2 “Orange Stars”- 116K/2011 Samsung was sold for low/mid USD 28 mills to Norwegian buyers, with BB back. Finally, the MR1 “Nord Snow Queen”-38K/2008 GSI changed hands for USD 9.5mills.

During the last month we witnessed an increased volume of vessels going for demolition mainly on the Capesize sector & the Aframax sector. In February we have seen 3 Capesize vessels that have been sold for scrap. For comparison, throughout 2021 we had recorded 6 Capes that were sent for demolition. During the past week the “Alam Cetus”-171K/ 2003 Sasebo (23,982 LDT) sold for demo in the region of USD 620/LDT which equates to high USD 14 mills, while the “Cape Enterprise”-185K/2003 Kawasaki (22,043 LDT) went for demolition in the region of USD 14.3 mills (on the basis of USD 650/LDT) for delivery in India, including about 1000tons of bunkers ROB. Furthermore, earlier this month the “Berge Aoraki”- 172K/ 2000 Nippon Kokan (21,221 LDT) was sold to Bangladesh for USD 640/LDT. Finally, 2x Aframaxes, the “Bull Damai 1”- 115K/ 2004 Hyundai Samho (19,132 LDT) and the “Nusa Merdeka”- 104K/2003 Samsung (17,297 LDT) were sold for demo in Bangladesh for high USD 12 mills (670/LDT) and mid USD 11 mills (670/LDT) respectively.