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Baltic Exchange Shipping Insights

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

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DRY BULK REPORT

Capesize

Dashed hopes summed up the first full week of the New Year. A slow start followed by a busy 24 hours of improving rates and a firming FFA market fuelled positive sentiment, only to see both paper and physical sales slide the next day.

West Australia to China rates briefly moved closer to the high $6.00s, but ended the week at $6.25, as a 2002-built vessel fixed at this rate from Dampier. The ship was re-let having fixed on timecharter at $9,000 daily basis Hong Kong delivery. The Australian miners slowed the pace as the week ended with at least one now bidding $6.00.

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Market voices on:

Brazil to China rates improved briefly, with business fixed in the low $18.00s for January, but dropped sharply lower. However,

a 1 to 10 February has now been done at $17.50. Similarly in the North Atlantic, a tighter tonnage supply saw fronthaul rates in the low $30,000s for a 171,000 tonner. There was transatlantic activity, with the BCI C7 Puerto Bolivar to Rotterdam route fixed at $9.00.

Panamax

With a complete return to work for the first full week of the year it was perhaps no surprise that it was very active, with a large volume of trades reported. Despite the increased activity, there remained too many early vessels in the Atlantic, combined with ballasters from the East, forcing rates lower throughout the week, with many having to wait for later laydays. The transatlantic index dropped $2,500 Monday to Thursday and was still considered by many to be overmarked.

South America also softened, with well described Kamsarmaxes fixed at $13,750 plus $375,000 ballast bonus. In the North Pacific saw a busy week but lacked support from the minerals trades, although there was a noticeable increase in cargoes to India during the second half of the week. Indonesia has been disappointing, with rates especially for smaller units hit harder. Some vessels had to wait for later cargoes, but in spite of the weakened spot levels, there were still several short period fixtures concluded.

Supramax

The first full week back after the holidays was not encouraging, with the Baltic Supramax Index (BSI) falling and tonnage supply outweighing demand in many areas.

Limited period activity surfaced, but a 61,000dwt vessel was reported delivery Japan for four to six months trading at $12,500. The Atlantic suffered especially from the US Gulf-US East Coast area where rates fell and a 56,000dwt ship fixed at $14,000 from the East Coast to the Mediterranean. From the Mediterranean, an Ultramax was rumoured fixed in the $19,000s for a trip to the Far East.

The Asian arena had a mixed start. From the Indian Ocean a 60,200 tonner fixed delivery South Africa trip to the Far East at $12,400, plus $250,000 ballast bonus.

A 56,000dwt vessel agreed delivery Kobe for a North Pacific round at $10,000. Limited action in Southeast Asia but a 53,000 tonner open Cebu went for a trip via Indonesia, redelivery Southeast Asia, at $8,000.

Handysize

The first full week back began on a low note, with routes across all areas losing ground. Due to a good supply of prompt tonnage from East Coast South America, and a lack of fresh enquiry from the US Gulf, rates slipped. From East Coast South America a 32,000dwt vessel was booked at around $10,000 for a trip to Morocco. A 33,000 tonner went to a grain house at $9,500 delivery Recalada for a transatlantic run.

The market remained depressed in the US Gulf, a 38,000dwt ship fixed to the Continent at $9,000. From the Continent, mid-size Handysizes were also around $9,000 for trips to the Mediterranean. In the East, the market lacked impetus.

From the North a 38,100 tonner fixed from CJK to Southeast Asia in the high $7,000s. Further South, a 35,000dwt vessel agreed a steels run from South China to Indonesia in the mid-high $7,000s.


TANKER MARKET REPORT

VLCC

In the Middle East Gulf, the market came under renewed downward pressure, with 270,000mt to China fixed five points lower at WS 57.

Going west, rates for 280,000mt to the US Gulf were assessed at WS 24.5, basis Cape to Cape. West Africa to China basis 260,000mt saw little enquiry and the market dropped 6.25 points to WS 53.75. Occidental fixed US Gulf to Singapore to China at $6.15 to 7.15 million respectively while Reliance fixed Jose to Sikka at $5.15 million, although there was talk of $5.7 million having been done here. Rotterdam to Singapore went at $4.95 million, down $150,000.

Suezmax

West Africa saw falling rates, with the market easing to low WS 80s for 130,000mt to UK-Continent, before improved volumes of enquiry saw rates recover to almost WS 93.

Black Sea to Mediterranean rates for 135,000mt held in the low-mid WS 130s, with Turkish Straits delays still around 30 days total north and southbound.

Aframax

UML fixed 80,000mt from Ceyhan at WS 170, with the Black Sea paying mid to high WS 170s. In the Baltic, BP took Sovcomflot tonnage for 100,000mt at WS 85, down almost 25 points. Cross North Sea 80,000mt now sits at WS 105 in contrast to WS 114 the previous week. Healthy tonnage availability saw Caribbean rates for 70,000mt from Venezuela to the US Gulf lose 50 points to WS 150.

Clean

Rates for 75,000mt Middle East Gulf to Japan nudged up around five points to WS 127.5. The market for 55,000mt eventually eased from low WS 160s to WS 152.5.

Healthy activity saw the market for 37,000mt Continent/USAC firm almost 25 points to WS 140. In contrast, the 38,000mt backhaul trade from the US Gulf lost around 11.5 points to WS 113.5 level.


FREIGHTOS BALTIC CONTAINER REPORT

Summary

The 90-day truce on the latest China trade tariff increase caused transpacific pricing to fall through December. A new year, and new price increases - a combination of fuel-related surcharge increases and General Rate Increases (GRIs).

Carriers are seeking to cash in on an uptick in demand caused by post-Christmas replenishment and the looming Chinese New Year shutdown. As a consequence, this week China to US West Coast prices jumped 16% (from $1,722 to $2,003) and China to US East Coast prices jumped 13% (from $2,779 to $3,137).

China to North Europe prices also jumped 13%, with more to come as other carriers have announced Freight All Kinds (FAK) increases for later in the month. Coming into contract renegotiation time at this time, carriers will be hoping that spot prices stay high.

Philip von Mecklenburg- Blumenthal, VP of FBX, Freightos, commented: "Here's the playbook. Transpacific ocean prices drop just before Christmas, and then pick up again early January as logistics managers start replenishing stock. Chinese New Year shutdown causes prices to spike again, but after that, they fall away until next peak season."

"Well, President Trump tore up the playbook. Importers, fearing trade tariff increases, imported early, pushing prices up from early summer. They were already over-stocked before the latest trade tariff got a 90-day reprieve. If the tariffs go back on, prices will go up again."

Analysis

The 90-day truce on the latest China trade tariff increase had caused transpacific pricing to fall through December. That changed this week when a combination of GRI and fuel-related surcharge increases saw China to US West Coast prices increase 16% (from $1,722 to $2,003). Similarly China to US East Coast prices jumped 13% (from $2,779 to $3,137).

China to North Europe prices also jumped 13% and more carriers will increase their FAK rates during the month. Coming into contract renegotiation time at this time, carriers will be hoping that spot prices stay high. With these three indexes all up, the global index also jumped this week, by 10% to $1,552.

MARKET NOTICE

The five new tanker routes below have been approved by the Baltic Index Council for public trial:

  • TD22 - VLCC 270,000mt USG/China (Galveston O/S lightering area to Ningbo), loading 25-35 days from Index date. 3.75% total comm. (assessed in $ lumpsum)
  • TD23 - Suezmax 140,000mt light AG/Med (Basrah to Lavera), loading 20-30 days from Index date, 2.5% total comm.
  • TD24 - Aframax 100,000mt Russian Pacific/China (Kozmino to Qingdao), 10-20 days from Index date, 2.5% total comm. ([Published with BITR Asia)
  • TD25 - Aframax 70,000mt USG/Med (Corpus to Trieste), loading 10-20 days from Index date. 2.5% total comm.
  • TC17 - MR 35,000mt AG/E Africa (Ras Laffan to Dar es Salaam), loading 15-25 days from Index date, 3.75% total comm.

For more information visit www.balticexchange.com


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.