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| Higher capesize demand pushes up Baltic index |
| 2016-05-28 |
| The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Friday buoyed by higher demand for capesize vessels. The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, was up five points, or 0.83 percent, at 606 points. The capesize index gained 37 points, or 4.67 percent, at 830 points. Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were up $171 to $6,346. The panamax index was down four points, or 0.68 percent, at 582 points. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased $33 to $4,650. Among smaller vessels, the supramax index rose four points to 579 points, while the handysize index was flat at 347 points. Source: Reuters (Reporting by Harshith Aranya in Bengaluru) Asia Dry Bulk-Capesize Rates Could Climb Freight rates for large capesize dry cargo ships on key Asian routes are likely to rise next week on an increase in coal cargoes and higher fuel prices, ship brokers said. That comes as Brent crude futures breached the psychologically important level of $50 a barrel on Thursday for the first time in nearly seven months. “I’m kind of positive on how the fuel price will drive the capesize and dry bulk markets,” said a Shanghai-based capesize broker. “I think rates from Western Australia to China will hold above $4 per tonne and increase to around $4.50,” the broker added. “If coal prices provide support and there are more cargoes, and with the same amount of iron ore cargoes, then the market can be driven up.” That would follow capesize rates from Western Australia to China falling from last week’s six-month high after a drop in the number of charters to around 23 fixtures in the week to Wednesday, data on the Reuters Eikon terminal showed. “Overall sentiment is depressed but there is a hope we are at the bottom and there will be more demand,” Norwegian ship broker Fearnley said in a note on Wednesday. Ship fuel prices, which are this week pushing close to the highest level since Nov. 11, are set to climb following the increase in oil prices. That will help support freight rates, brokers said. Shipowners with vessels on the spot market pay for their own fuel and add a bunker premium to freight rates if fuel prices move higher, brokers said. Longer term there is more optimism the dry bulk market will improve next year on increased cargo demand and cancelled new ship deliveries. “If demand picks up in 2017 and half the slipped tonnage of 2016 gets cancelled, the market should be better in 2017,” Aristides Pittas, chief executive of New York-listed shipper Euroseas, said in an earnings call. Freight rates for the Brazil-China route fell to $7.84 per tonne on Wednesday, down from $8.46 last week. Capesize charter rates for the Western Australia-China route slipped to $4.05 per tonne on Wednesday, from $4.36 on the same day last week. Charter rates for smaller panamax vessels for a north Pacific round-trip voyage trended lower at $4,700 per day on Wednesday, against $4,829 a week earlier, on lower cargo volumes. Freight rates in the Far East for smaller supramax vessels were again largely unchanged, Fearnley added. The Baltic Exchange’s main sea freight index fell to 605 on Wednesday, down from 642 last week. Source: Reuters (Reporting by Keith Wallis) Low asset prices, scarce financing boost secondhand dry bulk vessel sales Flagging asset prices and limited financing in the dry bulk shipping market have resulted in a spike in the secondhand sale of Supramax and Handysize vessels, a shipbroking and research house said Thursday. The number of resales of Supramax and Handysize dry bulk vessels has more than doubled year on year during the first five months of 2016, data from Athens-based Intermodal Research and Valuations showed. A total of 82 vessels in these categories have changed hands to date this year compared with 39 in the same period last year. Handysize vessels range in size from 20,000 dwt to 40,000 dwt and Supramax size vessels from 50,000 dwt to 60,000 dwt. Dwindling asset prices are fueling interest in older tonnage among shipowners, Intermodal said. While there has been a lot of interest in Supramax and Kamsarmax size ships built during the last decade, buyers were also looking with increased interest at vessels built around the end 1990s/early 2000s, which was not the case in the recent past, said Intermodal sales and purchase broker George Iliopoulos. “To put things in perspective, a 2000 built Handymax with [special survey and dry docking] was sold at around $2.9 million at the beginning of March and a similar ship today could easily fetch $3.5 million or more, which translates to a 21% increase,” he said. Intermodal researcher Eva Tzima said the limited financing available to shipowners currently was also fueling the interest in older and consequently cheaper vessels. Shipowners still benefit from rising values for older vessels even though returns were greater for younger vessels, she added. “The vastness of the dry bulk trade in terms of the number of ports and commodities cannot be just serviced by modern tonnage when you look at commodities other than iron ore and steel,” Tzima said. Supramaxes and Handymaxes have proven extremely resilient in terms of finding employment — their cranes and smaller size enable them to dock at less developed ports. They also service commodities like grains, for which seaborne trade has not been negative, and the parcel sizes they can accommodate are still preferred by a lot of charterers, Tzima added. Around 70% of the current Handymax fleet and 27% of the Supramax fleet was built prior to 2007. Very few older Supramaxes and Handymaxes have been scrapped, indicating owners were still able to find value, said Tzima, adding the two segments have not seen a decline in fixing activity. |
| Posted by:badanov |
| #4 Dale: Right now dry bulk shipping is the cheapest it has ever been. Not even lower fuel prices can counter the effects of a sick global economy struggling against the jackboot of governments worldwide on its neck, and that can be seen in the BDI. |
| Posted by: badanov 2016-05-28 18:36 |
| #3 Impressive Mr. B. Conversions to natural gas on the Supramax and Kamsarmax was supposed to be occurring. Much more efficient I understand. Too big for canals so they go round about to ports that can handle these massive ships. The push has been on for some time now. Upgrade or lose to more cost efficient vessels. |
| Posted by: Dale 2016-05-28 18:24 |
| #2 Thanks for the nice words. |
| Posted by: badanov 2016-05-28 16:17 |
| #1 You really are amazing, badanov. Such a variety of subjects over the years, each with breadth, depth, and perspective ... and sparks of humour and underlying passion. You help make Rantburg the special place it is. |
| Posted by: trailing wife 2016-05-28 15:45 |