HANSA 07-2019

Märkte | Markets

Märkte | Markets Smaller boxships under pressure again Largest gearless vessels continue to see strong demand while fixing levels for smaller and midsize ships remain flat. By Michael Hollmann The peak fixing season for container ships in the second quarter was losing steam earlier than expected during June, with tonnage availability in the size classes below panamax continuing to expand. By contrast, big gearless vessels with postpanamax dimensions remain in high demand by liner operators. Thus, rates have been drifting further apart, with large tonnage raking in more gains whereas smaller vessels were facing some pressure. The New ConTex, which captures market activity for vessels with intakes between 1,100 and 4,250 TEU, even registered a slight 1.0% fall over the past four weeks. Further improvements of 1,000–2,000 $/day were seen for ships of 8,000 TEU and larger, with market talk suggesting that the benchmark for standard 8,500 TEU tonnage has progressed to 26,000 $/day basis 24 months. Of note, operators were fixing ships for delivery as far ahead as autumn because of the extreme scarcity of spot/prompt ships. Demand for large vessels kept building since late 2018 already in a clear sign that operators are scaling up and consolidating tonnage where possible to contain the impact of higher fuel prices following the switch to 0.5% low sulphur towards the end of the year. Latest futures prices confirm that the new fuel grades will cost around 200 $ more per ton than today’s high sulphur fuel next year. Given the ongoing high levels of enquity, it is widely expected that hire rates for 8,000 TEU class ships could rise further and that the seasonal slowdown during summer will hardly impact this segment. The smaller postpanamax segment of 5,500 to 7,000 TEU also recorded moderate gains amid tight availability over the past four weeks. Spot supply was down to just one unit during the first half of June, according to Alphaliner, with rates for 6,500 TEU class ships edging up to 19,500 $/day in Asia and for 5,900 TEU ships to 16,000 $/day. This segment also benefited from a recent restructuring of services in the Europe/Central America trade, superseding 2,500–3,500 TEU tonnage. Meanwhile the traditional panamax segment came under increased pressure following another build-up in spot tonnage during the second half of May. As a result, fixing levels dipped below 9,000 $ in early June, but not for long. Another spate of fixtures led to a strong reduction in the spot tonnage list, prompting rates to recover to up to mid-9,000’s $/ day for short periods in the Far East and South Pacific trades. Some of the activity was linked to replacements of other ships disappearing for scrubber retrofits, hence the fairly short periods. In the sub-panamax sectors of 2,500– 2,800 TEU, rates remained steady overall, with popular gearless 2,700 TEU designs such as the Aker 2700’s fixing at low $ 9,000’s and geared 2,500 TEU types achieving mid/high 8,000’s $/day in Asia and mid 9,000’s $/day in the Atlantic. However, towards the middle of June, brokers noted a slowdown in tonnage demand and a severe increase in tonnage coming open 2–4 weeks ahead. In view of the approaching summer holidays, there was little prospect of staving off the anticipated rise in spot availability. Therefore pressure on charter rates is forecast to intensify over the coming weeks. One exception was the modern fuel-efficient SDARI 2100 type (2,200 TEU, geared, »Chittagongmax«) which saw most spot units cleared out following a rash of fixtures, with rate levels leaping by around 10% to mid 12,000’s $/day. Below 2,000 TEU, the scene remained rather bleak. Tonnage demand was reported to be sporadic and mostly for short flexible periods, with rates for the »workhorse« Wenchong 1700 type (1,740 TEU, geared) stagnating at low $ 8,000’s in Asia and mid 9,000’s $/day in the Caribbean. The smaller feeder sectors of 1,000–1,200 TEU got under greater pressure, illustrated by reports of a CV1100 (1,118 TEU, geared) agreeing a short period at a rate just below the $ 6,000 benchmark in Asia. Equally, the smallest feeders below 1,000 TEU were faced with a lull in demand both in the Atlantic and Asia. Fixing activity was still relatively strong in the Mediterranean although the influx of ballasting or positioning tonnage kept rate levels in check, brokers said. n Ab sofort gilt auch für unser exklusives Angebot zu »Raten, Preisen, Indizes«: In unserem neuen Portal HANSA+ vereinen wir eine umfangreiche Übersicht über alle wichtigen Kennzahlen der Schifffahrtsmärkte. Sichern Sie sich den Zugriff auf Fracht- und Charterraten in der Container-, Bulk- und Tankschifffahrt, Bunkerpreise, MPP-, Shortsea- und Umschlagindizes, Ölpreise und vieles mehr … Erfahren Sie mehr über alle Optionen jederzeit unter www.hansa-online.de. 8 HANSA International Maritime Journal 07 | 2019

Märkte | Markets COMPASS Orders & Sales New Orders Container Activity remained calm during this reporting period. Owners stay skeptical regarding further newbuilding investment choices. However, MSC has signed a letter of intent with China’s Yangzijiang Shipbuilding Group for up to 10 container vessels with a capacity of 12,000 TEU each. The order covers seven firm scrubber-fitted vessels, priced at 91 mill. $ each, with options for three more. The agreement was negotiated as a replacement for a series of ships by MSC who feared not being supplied by the competing Chinese yard Jinhai Intelligent Manufacturing. The yard is struggling to complete five containerships that MSC was to take on bareboat charter from SinOceanic Shipping. Secondhand Sales Container Activity for further trading vessels remained on a similar level as in the previous reporting period. While the amount of transacted panamax vessels declined, the number of transactions involving feeder ships increased. Noticeable: the sale of the 12-year-old »Hansa Marburg« to Bohai Shipping of China. The 1,740 TEU vessel was acquired for 6.4 mill. $. A further deal encompassed the three vessels »E.R. Yokohama«, »E.R. Vancouver« and »MSC Ningbo« (7,849 TEU, 2004 Kora built). The London-based owner Global Ship Lease (GSL) paid a combined 48.5 mill. $. Demolition Sales The previous weeks were silent ones for most of the recycling markets. Only ships with a capacity of less than 2,200 TEU were sold for demolition. Scrap prices fell slightly and oscillated between 390 $ and 470 $ on the Indian sub-continent. Currently the Indian market leads the way as Prime Minister Modi’s general election win brought some renewed confidence back to the market. However, with the beginning of this year’s monsoon season slowly approaching, as well as public holidays in several Indian Sub-Continent countries taking place, it is not expected that market transactions will rise sharply during the coming weeks. Jan Göldner DRY CARGO Gains for capesize and handysize bulkers Container ship t / c market 500 450 400 350 Month on Month 398 • - 1.0 % Container freight market WCI Shanghai-Rotterdam 1,459 $/FEU + 2.3 % WCI Shanghai-Los Angeles 1,388 $/FEU +4.0 % Dry cargo / Bulk Baltic Dry Index 1194 + 11.8 % Spot time charter averages ($/day) Capesize 5TC average 16,899 + 36.0 % Panamax 4TC average 8,837 – 14.3 % Supramax 6TC average 8,190 – 3.3 % Handysize 6TC average 6,486 + 10.6 % Forward / ffa front month Jun´19 ($/day) Capesize 180k 17,392 + 28.2 % Panamax 74k 9,617 – 12.0 % MPP 20.12.18 20.06.19 The dry cargo spot market saw significant upward momentum for capesize vessels and also to a lesser extent for handysize carriers. At the time of writing, average time charter levels for 180,000 dwt capesizes have recovered to almost 18,000 $/ day on the back of sustained high iron ore activity out of Australia and strengthening tonnage demand also in the Atlantic. Brazilian miner Vale was reported to be more active again amid efforts to bring back capacity withdrawn after the dam burst at the Brucutu mine at the start of the year. By contrast, rates for bulkers of the panamax segment were caught up in a downward spiral which brokers blamed on sluggish coal demand in Europe and falling demand for animal feed in China due to the spreading of African swine fever. Supramaxes also suffered falls, particularly in Asia where coal shipments ex Indonesia were affected by flooding. Missing soya volumes for China as result of swine fever are believed to have played a role, too. The sector of handysize bulk carriers was lifted by increased demand and growing tonnage shortages in the US Gulf where rates increased by a few thousand dollars. Brokers reported plenty of activity and a variety of business including steels, wood pellets and alumina out of the region especially for larger 38,000 dwt units. The shortsea minibulk trades in Europe continued their softening trend over the past weeks, with long spot tonnage lists and pressure on rates particularly in the ARAG region. By the middle of June, the market showed signs of stabilising, though, as the European Short Sea Index of market research firm BMTI posted its first weekly gain of 0.8%. The slight recovery was based on an uptick in westward (headhaul) business out of the Baltic region and with freights moving from 16 €/t towards 17 €/t, BMTI said. A sustained market revival might not be on the cards until late summer, though, it cautioned. mph June ’18 $ 7,325 TMI Toepfer’s Multipurpose Index June ’19 $ 7,529 12,500 tdw MPP/HL »F-Type« vessel for a 6-12 months TC Tankers Baltic Dirty Tanker Index 676 + 0.6 % Baltic Clean Tanker Index 498 - 4.6 % Shortsea / Coaster Norbroker 3,500 dwt earnings est. 2,300 €/d - 8.0 % HC Shortsea Index 16.08 - 3.0 % ISTFIX Shortsea Index 492 - 2.4 % Norbroker: spot t/c equivalent assessment basis round voyage North Sea/Baltic; HC Shipping & Chartering index tracking spot freights on 5 intra-European routes; Istfix Istanbul Freight Index covering spot freight ex Black Sea Bunkers IFO 380 Rotterdam $/t 349 - 15.0 % MGO Rotterdam $/t 540 - 11.6 % Forward / Swap price Q3 / 19 IFO 380 Rotterdam $/t 337 - 14.0 % Data per 20.06.2019, Alterations within four weeks HANSA International Maritime Journal 07 | 2019 9