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Baltic Exchange Shipping Insights

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

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DRY REPORT

Capesize

Panic set in in the East as the holiday season approaches, with owners chasing rates lower. Rates on the key West Australia/China route collapsed with business concluded at under $6.00 having touched $9.00 just a week before. Some owners were preparing to sit tight rather than chase rates lower.

There was very little timecharter trading evident, but, brokers suggested rates were nearer the low-end of the teens than the mid. Brazil/China rates also came under pressure, with rates for 1-10 January now under $16.00, with a cargo the previous week fixed at $17.25 for early January.

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The North Atlantic had shown some resilience, with tonnage tight, but the trading here largely focussed on breach cargoes from the St. Lawrence, with the timecharter equivalent here for cargoes going east nudging the near $30,000 daily in mid-week, but easing as the week closed out. Transatlantic rates improved, with a Puerto Bolivar/Rotterdam cargo covered at an improved $9.65, but this was reported to have failed.

Panamax

Last week began in the same vein as the previous week, with expectation of multiple grain stems flooding the market.

However, the reality was more muted, with NoPac activity only increasing towards the end of the week. Despite this, vessels still had to discount to get covered before the holidays.

Minerals into India and Indonesian rounds remained busy, with most owners preferring to fix rather than ballast to South America.

However, rates there remained fairly steady. More transatlantic trades were evident, with Kamsarmaxes now fixing around $16,500 back to Skaw-Gibraltar, but in the North, a lack of fresh enquiry saw some discount for short rounds to cover over the holiday period, with a 75,000dwt vessel booked at $9,500.

Period interest remained, but with FFA values softening at the end of the week, trades slowed.

Supramax

Not unexpectedly the market slowed as the week progressed, with the festive season going into full swing.

Period activity was seen from the US Gulf, with a 57,000dwt open Mississippi River fixed for three to five months trading redelivery Atlantic at $13,500 plus $350,000 ballast bonus. The area also saw the bulk of the week's activity, with other areas such as the East Mediterranean seeing demand.

For transatlantic business, a 63,000dwt was booked for a trip to the East Mediterranean at $21,000. For backhaul business a 63,000 tonner fixed from the East Mediterranean to the US in the mid $10,000s.

The Asian market started with initial excitement, but this declined as the week went on and a 55,000dwt was booked delivery CJK trip redelivery Arabian Gulf at $6,000.

For round business, a 55,000dwt open Machong fixed a NoPac round at $10,500. There was more activity from Southeast Asia whilst rates remained static.

Handysize

It was a very dull week for the Handysize sector.. The trend continued from last week in the key markets with the US Gulf route recording the biggest fall.

Brokers suggested little transatlantic cargo but more inter-Caribbean runs this week with tonnage building up in the US Gulf. The rates also further softened in East Coast South America and the Pacific.

A 38,000dwt fixed from the US Gulf to UK-Continent at $13,250.

A 30,000dwt delivery Recalada was fixed at mid $18,000 for a trip to West Coast South America and a 38,000dwt was booked from the same area to the Baltic Sea at $17,250.

In the East a 29,000 tonner fixed earlier in the week from Busan to redeliver in Singapore-Taiwan range at $6,750. A 34,000dwt open in the Philippines was fixed for a trip via Indonesia to China at $8,500 and another similar-sized vessel was booked from Singapore to move alumina via Australia to East Coast India at $8,000 plus an $80,000 ballast bonus.


TANKER REPORT

VLCC

Middle East Gulf rates shed 3/3.5 points to WS 83/83.5 for 270,000mt to China. Going west, 280,000mt to the US Gulf fixed at WS 33, if basis isCape/Cape, it is down around four points. West Africa to China basis 260,000mt eased 4.5 points to WS 80. SK fixed US Gulf to Ulsan at $7.8 million.

Suezmax

Tighter tonnage availability with less ballasters from the East saw West Africa recover strongly with the market climbing 35 points to WS 135 for 130,000mt to UK-Cont.

Black Sea/Mediterranean rates for 135,000mt firmed from WS 130 to WS 140 plus, with Turkish Straits delays now around 30 days total north and southbound.

Aframax

Against improved tonnage availability, the Mediterranean market for 80,000mt dropped 30 points to WS 180 from Ceyhan, with Black Sea rates easing 15 points to WS 200, before subsequently settling at WS 190.

Baltic rates for 100,000mt climbed 20 points to WS 175. 80,000mt cross North Sea rates eased to the very low WS 200s after peaking at WS 210.

Caribbean rates for 70,000mt from Venezuela to the US Gulf held around WS 215 with WS 220 paid on a replacement cargo.

Clean

Rates for 75,000mt Middle East Gulf/Japan eased 17.5 points to WS 160. By contrast, the market for 55,000mt gained 7.5 points to WS 187.5.

Healthy tonnage availability saw the market for 37,000mt Continent/USAC lose over 50 points to WS 155, with a similar story in the 38,000mt backhaul trade from the US Gulf, with the market down from WS 202.5 to WS 152.25.


FREIGHTOS BALTIC CONTAINER REPORT

Transpacific pricing usually picks up mid-December as importers look to replenish after Christmas. But, wary of trade tariff increases, many importers are already overstocked.

So, it wasn't surprising that the mid-December General Rate Increases (GRIs) were cancelled.

Prices have dropped by just over $100 on each lane ($102 to the West Coast, $109 to the East Coast).

The US-China trade war, not seasonality, is currently driving transpacific prices. The rate of volatility is likely to increase at least until Chinese New Year.

With the uncertainty in tariffs, companies with agile supply chains have already prepared to move production to other locations and may now play with the timing.

Those with less flexibility in sourcing will play with stock levels.

Carriers, who don't have the capacity to react to sudden changes in demand, are now worried that if the tariff trade war escalates again, that they will be facing surplus capacity and plunging prices.

Transpacific pricing usually dips from a mid-November peak (pre-Christmas) to mid-December (when post-Christmas replenishment begins). But, with importers stocking up in advance of the (since postponed) increase in trade tariffs, it wasn't surprising that this year bucked the trend.

The mid-December GRIs were cancelled and prices dropped by just over $100 on each lane ($102 to the West Coast, $109 to the East Coast).

Although transpacific ocean freight prices have eased recently, they are still twice the price of this time last year.

And they should generally hold through January as importers (many of whom are currently over-stocked) replenish after the Christmas sales.

The Freightos Baltic Indices reflect weekly spot rates for 40-foot containers based on 12 to 18 million price points collected every week on 12 main shipping trade lanes.

The data includes a headline index - the FBX Global Container Index (FBX) - a weighted average of the 12 underlying route indexes. This data is published every Sunday. See www.balticexchange.com/market-information/containers/


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.

  • The report is also available online at bt.sg/baltic.
  • There will not be a Baltic report next week. The column will resume in January 2019.