Market Commentary:

Almost a month after the invasion of Ukraine there is still no light at the end of the tunnel. Ukraine has rejected the Russian deadline to surrender control of Mariupol as talks between Russia and Ukraine continue for an agreement that will announce a ceasefire and the withdrawal of Russian troops from Ukraine. Hostilities create various complications with regards to crew recruitment and shortages as Ukraine and Russia collectively account for 275k of the world’s 1.9mill commercial seafarers, jointly surpassing the Philippines the biggest supplier of maritime workers. As Marine Transport Workers Trade Union of Ukraine announced, about 20% of the 80,000 Ukrainian seafarers which are currently on ships want to go back to defend their country, while many more are thinking of taking a break after the end of their contracts in order to get their families out of Ukraine safely before re-joining as crew onboard. On the Russian side, the sanctions have created huge obstacles paying seafarers salaries as the country’s access to Swift, has been severely curtailed. At the same time, the cessation of many flights out of Russia has made it difficult to bring crew to where they are needed.

Crude oil futures rebounded from the mid-week fall and closed the week again above USD 105 / barrel, as the supply outlook remained tight on the back of reduced Russian supplies and a continued recovery in global oil demand from the COVID-19 hit. The International Energy Agency (IEA) has revised lower its global refinery throughput estimates for this year following Russia's invasion of Ukraine. The estimations about global refinery intake are 80.8 million barrels / day, an increase of 2.9 barrels/day in 2022 but still far below not only from pre-pandemic levels but even below 2017 levels. Furthermore, Asian countries like South Korea, Taiwan and Japan keep suspending any new Russian energy deals including spot purchase of Russian crude oil but this does not seem to have great implications as Russian crude makes up around 3%-5% of major Asian economies' overall refinery feedstock imports, so finding alternative sources shouldn't be too troublesome. On the other hand, Russia is looking to boost its oil exports to India after a dramatic decline in interest for its oil among Western and Asian consumers. In this totally volatile environment, the BDTI index dropped on a weekly basis by 14.1% at 1,127 points, continuing last week’s fall of 11% and the BCTI index lost 1,000 points milestone after 10 days with a weekly decrease of 5.7%.

On the dry market things are also complicated. Russia struggles to continue exports with the sanctions and, according to traders, the unwillingness of many international owners of larger vessels to load cargoes from Russia. Analysts say that Russians are happy to do whatever they can to export a large share of Russian grain even in small cargoes and if not with Panamaxes then with Handysizes or coasters or trains. China's manufacturing activity and steel demand, continue to rise in March and the second quarter, but might not exceed levels seen a year earlier as analysts expected, due to the domestic COVID-19 outbreaks and weakening overseas demand. But there are hopes that strong steel export orders may be triggered by the Ukraine conflict and partly offset the downside, maintaining the momentum for increased coal and iron ore imports. That may be some of the reasons that BHSI show a significant weekly increase of 7.4% at 1,662 points while BSI had a slight decrease of 0.6% at 2,922. Capesize and Panamax indices lost ground this week with 2.7% and 9.8% fall respectively.

Talking about China, the pandemic there has again reached a peak, with factories closing in Shenzhen, a vital export center, causing new supply chain chaos. How this new outbreak affects trans-Pacific container shipping depends mainly whether ports close along with factories, and if so, for how long. If no ports shut down but volumes coming out of factories are reduced that would help normalize supply chain flows without forcing carriers to cancel sailings. If Chinese ports do close, it would be short-term positive for U.S. ports they’d pay the “bill” later. Although Shenzhen has partially eased the lockdown that has paralysed the technology hub bordering Hong Kong by allowing factories & public transport in many parts of the city to resume operations, port congestion is getting worse. Prior to Yantian's closure last year, there were 19 container ships waiting for berths in Los Angeles and Long Beach on average every day in May 2021. The average number of ships waiting inside and outside the port waters has increased by 136% since May 2021 to around 45 ships but is down by 59% since the beginning of the year.

Capesize: Average of the 5 T/C Capesize routes closed the week slightly lower than previous at USD 21,604/day. Trip from Cont. to F.East is down by USD 5k/day to USD 36,250/day, Transatlantic Return voyage is down to USD 20,175/day, while Pacific Return voyage is up by USD 4.5k/day USD 24,133/day. Capesize 1y T/C rate is USD 31,000/day, while eco 180k Capesize 1y rate is USD 32,500/day.

Panamax: The BPI-82 5T/C route average started the week at USD 28,685/day and closed the week down by nearly USD 3k/day at USD 25,868/day. Trip from Skaw-Gib to F.East is down to USD 31,682/day, Pacific Return voyage is reduced by USD 5.7k/day to USD 27,134/day, while Atlantic R/V is at USD 22,875/day. Kamsarmax 1y T/C rate is USD 29,450/day, while Panamax 1y T/C is USD 27,325/day.

Supramax: The BSI-58 10T/C route average closed the week marginally down from its opening at USD 32,147/day. South China trip via Indonesia E.C.India is down this week at USD 36,500/day, W.Africa trip via ECSA to N.China is USD 28,070/day, Med/Bl Sea to China/S.Korea is up at USD 20,267/day, Atlantic R/V is improved at USD 16,631/day, while Pacific Return voyage is USD 32,714/day. 1y T/C rate for Ultramax is USD 32,200/day, with 1y T/C for Supramax at USD 28,250/day.

Handysize: The BHSI index maintains 31 consecutive positive sessions since 4th Feb 2022, with the BHSI-38 7T/C average route closing the week at USD 29,922/day. Brazil to Continent pays USD 38,944/day, S.E.Asia trip to Spore-Japan is at USD 37,488/day, while U.S.Gulf to Continent is at USD 23,286/day. 38K Handy 1y T/C rate is unchanged this week at USD 27,000/day, while 32k Handy 1y T/C is USD 24,000/day.

Crude:

VLCC average T/CE ended the week at USD -20,292/day. M.East Gulf to China trip at USD -10,847/day, US Gulf to China at USD -7,567/day, M.East Gulf to Singapore at USD -8,241/day, W.Africa to China at USD -7,454/day, while M.East Gulf to US Gulf at USD -29,737/day. 310k dwt D/H Eco VLCC 1y T/C is USD 20,250/day.

Suezmax average T/CE closed the week softer at USD 43,831/day. Trip from W.Africa to Continent is USD 2,162/day, Bl.Sea to Med (TD6) is down from its previous USD118/day to USD 85,500/day, Middle East Gulf to Med is USD -15,858/day. 1y T/C rate for D/H Eco 150k dwt Suezmax is USD 24,750/day.

Aframax average T/CE closed the week reduced at USD 35,271/day. Trip from N.Sea to Continent is at USD 9,716/day, trip from Kuwait to Spore is up at USD 9,082/day, trip from Carribs to US Gulf is improved at USD 8,774/day, and S.E.Asia to EC Australia is also firmer at USD 13,005/day, while Baltic to UK Continent (TD17) is down from previous USD262k/day at USD 155,232/day while Cross Med is up this week at USD 15,816/day. 1y T/C rate for D/H Eco Aframax is at USD 21,750/day.

Products:

The LR2 route (TC1) M.East Gulf to Japan this week is at similar levels at USD 25,376/day. Trip from Middle East to F.East is USD -2,585/day, while the LR1 (TC5) route Mid.East Gulf to Japan is at USD 19,488/day, and Amsterdam to Lome is up at USD 13,830/day. The MR Atlantic Basket earnings is firmer for one more week at USD 23,195/day, with MR route from Cont. to USAC at USD 8,274/day, US Gulf to Cont. at USD 9,857/day, US Gulf to Brazil at USD 17,659/day, ARA to W.Africa at USD 13,095/day. TC6 Intermed Route is down at USD 22,625/day. Eco LR2 1y T/C rate is at USD 23,500/day, and Eco MR2 1y T/C rate is at USD 16,250/day.

Sale and Purchase:

On the dry sector, the BWTS fitted Newcastlemax “Azul Libero”-203K/2004 Universal was sold for high USD 18 mills to Chinese buyers. The Kamsarmax “Oceanic”-82K/2007 Tsuneishi, sold basis very prompt delivery, region USD 21 mills, to clients of NGM Energy. On the Supramax sector, Greek buyers acquired the BWTS fitted “Orient Rise”-57K/2010 Qingshan for USD 16.85 mills, also on basis of very prompt delivery. On the Handysize Sector, the BWTS fitted “Venture Team”-39K/2015 Jiangmen Nanyang was sold for USD 24.8 mills to clients of Fratelli D’amato, while the smaller and 3-year older “Ionic Halo”-34K/2012 Dae Sun, sold for mid/high USD 18 mills. Finally, the vintage “Corsair”-35K/2001 Minaminippon sold for USD 11.7 mills to Chinese buyers.

On the wet sector, the only transaction we reported is the Suezmax “Nordic Grace” - 150K/2002 Samho which found new owners for USD 15 mills.

On the gas sector, the “Venture Gas” - 74K/1990 Kawasaki sold for USD 20 mills to Chinese buyers.

Source: Xclusiv Shipbrokers Inc.