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Baltic Exchange Shipping Insights

A roundup of the week's tanker and dry bulk market

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DRY BULK REPORT

Capesize

The Capesize market came to work on Monday, with little expectation, or confidence, that the days ahead were going to bring anything other than fallout from Coronavirus.

While this was a relatively simple assessment to make, it was without comfort.

The magnitude of the fallout to come hammered business markets and civil society around the world, causing widespread fear.

As previously mentioned, if the Capesize market wasn't at precipitously low levels already, it would be on the speed boat there now.

The Capesize 5TC opened the week at $2,542 to close at $2,797.

Voyage rates were hugely affected after the oil crash on Monday, as bunker fuel was discounted heavily.

West Australia to Qingdao dropped -.472 to settle the week out at $4.464.

Meanwhile, the Brazil to China C3 market plunged down to settle at $10.535 from $11.84 earlier in the week.

Iron ore continues to flow to China, with one source mentioning no significant disruptions to flow so far.

While this may not account for all parties, it gives anticipation that the industry infrastructure sectors in China may return to their normal operational capacity sooner rather than later.

Panamax

The week began on a cautious note, with the news of oil prices and stock markets crashing.

Rates stabilised eventually, as market sentiment picked up with fuel recovering.

However, by Thursday, negative sentiment underpinned the market, with many fixtures failing on subjects.

Many ships in the Pacific that were focused on the East Coast South America market were having to rethink their strategy.

The number of vessels in ballast, built up, prompting a mark-down on rates, as well as global markets taking further hits.

Period activity was sparse, but a nicely described 82,000dwt vessel achieved $13,250, plus $14,500 ballast bonus for one option, one-year period.

East Coast South America grains to the Far East tended to be most active over the week, with a mixture of Southeast Asia deliveries and delivery Arrival Pilot Station (APS), plus ballast bonus basis.

An 85,000dwt ship, delivery Cai Mep, fixed at $12,750. An 81,000dwt ship agreed $14,500, plus $450,000 ballast bonus, for grain trips via East Coast South America to the Far East.

Supramax/Ultramax

The Pacific Basin proved firmer this week, predominantly driven by Indonesian coal stems, both into India, and China.

The relevant S8 Indonesia-India and S10 Indonesia-China routes both posted gains of $1,412, and $1,289 on the week, to close at $5,575, and $6,089 respectively.

Period interest remained strong, especially for well-described Ultramaxes, as charterers looked to take advantage of the prevailing macro-economic turmoil.

The Atlantic continued to be patchy, with steady enquiry from the US Gulf and the Black Sea.

At the same time, East Coast South America posted more modest improvements of $383, and $957 on the S5 East Coast South America-fronthaul, as well as the S9 East Coast South America-backhaul routes, as Panamaxes sought to compete.

Handysize

The Handysize sector continued to make gains this week, which led to the Baltic Handysize Index (BHSI) recording its biggest improvement since the beginning of the year.

Higher rates have been reported from key markets, particularly in the Atlantic Basin.

Meanwhile, the Pacific market has remained active, with positive sentiment lending support.

However, due to the Coronavirus it was also reported that some vessels, open in the Mediterranean, were failed on subjects, calling at Italy as last port.

A 39,000dwt ship, open Nemrut, was fixed at $7,250 for the first 50 days for a trip to the US Gulf and $9,500 thereafter.

A 37,000dwt vessel, delivery Hamburg, was fixed for a trip to China at $14,000.

From the US Gulf, brokers reported a tight tonnage list, with a 34,000dwt ship fixed at $13,000 from the Gulf to East Coast Mexico with grains.

In the Indian Ocean, a 32,000dwt vessel was fixed basis Salalah, for a trip to Indonesia at $6,800.

Lastly on the period front, a 32,000dwt ship, open Amsterdam, was fixed at $9,000 for between five to seven months, with redelivery in the Atlantic.


TANKER MARKET REPORT

VLCC

A week ago in the Middle East, the Saudis lowered their April crude Official Selling Price (OSP) and raised production levels by 2.6 million barrels per day (BPD), to 12.7m BPD, with an additional one million BPD coming from the United Arab Emirates.

This caused the oil price to drop over 30 per cent creating a price contango which traders and oil companies alike attempted to capitalise on with storage enquiry.

Over 50 ships were fixed on subjects in the first half of the week alone for voyages, many for US Gulf discharge where rates have taken a meteoric rise.

280,000mt to the US Gulf, via the Cape to Cape routing, was 400 per cent higher at WS167.5 as last done.

For 270,000mt to China, rates have almost tripled to WS180.

In West Africa the trip for 260,000mt to China rates have risen over 225 per cent, to WS160.

The market for 270,000mt US Gulf to China has more than doubled to $15.5m level.

Suezmax

In the West Africa to UK-Continent (UK-C) market, owners rode the metaphorical wave caused by the VLCCs and were able to push rates for 130,000mt to WS135 level, more than doubling last week's rate.

Rates for 135,000mt Black Sea to the Mediterranean have risen 44 points to WS127.5-130 level.

The VLCC impetus has transferred down to the 140,000mt Basrah to Mediterranean market, where gains of 220 per cent were made, to WS112.5 as last assessed. WS150 is reported on subjects.

Aframax

Rates for 80,000mt Ceyhan to the Mediterranean climbed over 30 points to WS135-137.5 level.

In Northern Europe, 80,000mt Cross-North Sea gained 15 points to WS110. 100,000mt Baltic to UK-C shared the same uptick to WS90.

On the other side of the Atlantic, 70,000mt Caribbean to the US Gulf (USG), owners pushed the market up 20 points to WS177.5.

Rates for 70,000mt USG to the Mediterranean increased 35 points, rising to WS165-167.5 level.

Clean

A positive week saw rates in the 75,000mt Middle East Gulf to Japan trade climb from WS125 to sit now at close to WS155.

It was a similar story on the LR1s, which gained 35 points to WS160 region.

In the 37,000mt UK-C to US Atlantic Coast trade, it was a more volatile week, with rates starting in the high WS170s, before dipping down to WS160.

Now there is firming sentiment, especially in light of BP fixing Minerva tonnage to West Africa at WS200.

Rates in the 38,000mt backhaul trade from the USG to UK-C, were steady in the mid to high WS130s.

The 30,000mt clean cross- Mediterranean market was steady at around WS175, before nudging up to close to WS180 currently.


This report is produced by the Baltic Exchange.

The Baltic Exchange, a wholly-owned subsidiary of Singapore Exchange, is the world's only independent source of maritime market information for the trading and settlement of physical and derivative contracts.

Its international community of over 650 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic.

For daily freight market reports and assessments, please visit www.balticexchange.com.