HANSA 09-2019

Märkte | Markets Rates

Märkte | Markets Rates sticking to multi-year highs Summer discounts were unavailable for charterers in container shipping and dry bulk. Several factors support markets despite growing world economic gloom. By Michael Hollmann Tramp container ship owners had reason to cheer during August, with hire rates for larger gearless vessels down to 2,700 TEU picking up further. The trajectory of the market defied the odds this year, with no trace of a seasonal slump. The New ConTex was up 4.5% monthon-month as per mid-August, moderated by stagnation in the 1,100 TEU class and only meagre gains for 1,700 TEU and 2,500 TEU type vessels. The Howe Robinson Containership Index that also covers maxi-panamax and post-panamax classes, showed a 5.0% increase. »It’s all topsyturvy this year. In the second quarter momentum remains limited, but come summer rates suddenly take off,« as one Hamburg broker noted. During the past four weeks, it was the larger panamax vessels, wide-beam and smaller post-panamax types of 5,500- 6,500 TEU that were at the fore of the action, with period rates pushing up a few thousand dollars in some cases. Highlights include the extension of »Rio Barrow« (5,500 TEU) for 12-14 months in the Atlantic at 17,400 $/d by Hapag-Lloyd and the fixture of the wide-beam 5,370 TEU »Charlotte Schulte« for 10-12 months in Asia at 19,750 $/d net by TS Lines. Allowing for a customary 2.5% address commission, the fixture would have topped 20,000 $/d. Smaller wide-beam units had previously obtained rates below 17,000 $/d. Clarksons consequently lifted its rate assessment for wide-beam 5,000 TEU ships by more than 10.0% week-on-week to 18,500 $/d. Nine wide-beam 4,800 TEU ships are believed to come open over the next three months and talk among brokers suggests that one or two are close to securing forward cover at more than 20,000 $/d. The classic panamax segment saw rate levels for large 5,000-5,100 TEU ships breach the 15,000-$-barrier after a few quieter weeks. Hamburg’s NSC reportedly fixed its 5,085 TEU »Las Vegas« at 15,500 $/d for 3 months in southeast Asia to Zim. »Last done« for a period in this segment had been around 13,000 $/d. The baby-panamax 4,250 TEU type lost a bit of its momentum following the steep increases during June/July. Fixing levels in Asia edged up from 13,000 to 13,500 $/d, with further gains on the horizon. »Owners with upcoming baby panamax positions will certainly aim for over 14,000 $/d simply to stay in sync with the larger maxi-panamaxes,« a broker explained. In unserem Portal HANSA+ vereinen wir eine Übersicht wichtiger Kennzahlen der Märkte. Sichern Sie sich den Zugriff auf Fracht- und Charterraten in der Container-, Bulk- und Tank schifffahrt, Bunkerpreise, MPP-, Shortsea- und Umschlagindizes, Ölpreise und vieles mehr … Erfahren Sie mehr über alle Optionen jederzeit unter www.hansa-online.de. Spot availability of larger vessels has contracted sharply. As per 12 August Alphaliner counted only one vessel between 4,000 and 5,100 TEU as spot, compared with 4 units one month earlier. Availability of larger vessels remained nil as before. The tightness in the market is all the more remarkable given that the container trades are only experiencing modest growth in the very low single digit range this year. Experts agree that the recent increases are mainly supply-side driven, as the pool of large ships available to carriers gets decimated due to rising numbers of ships undergoing scrubber retrofits. 23 units, mostly big ships, were berthed or docked at the start of August, according to Alphaliner. Given the relatively low liquidity (trading activity) in the larger segments, the impact on rates is believed to be several thousand dollars per day. Dry cargo market rebounding The strength in the dry bulk market faded a little as from mid-/end of July, only to rally once more in August. At 2,067 points at the time of writing, the Baltic Dry Index is in reach again of its 5.5 year high of 2,191 points logged on 22 July. Only the capesize segment corrected down while panamaxes and especially smaller geared vessels made further headway. The latter continue to be buoyed by strong flows of grain cargoes ex East Coast South America, Black Sea and northeast Asia and by rising coal shipments within the Pacific this year. Especially the strength of the market on the East Coast of South America is a recurring theme in the panamax and smaller sectors, with 82,500 dwt vessels fixing more than 18,000 $/d + 800,000 $ ballast bonus for ECSA/Far East and modern supramaxes 15,500 $/d + 550,000 $ for the same route. The panamax market keeps hovering at its highest level since end of 2010 while average rates for supramaxes and handysize bulkers remain at 7-9 month highs. With rates already beginning to cover capital costs and further supply side disruptions likely during the coming months as fuel operations in shipping switch to low-sulphur fuels, there is reason to be optimistic again. The capesize market looks more uncertain. On one hand, scrubber retrofits continue to eat into the fleet, constraining spot tonnage supply. On the other hand, there is growing doubt whether short-term cargo growth can be maintained at this rate. Iron ore volumes recovered notably at the end of the second and start of the third quarter as Brazilian volumes ramped up again. However, iron ore port stocks in China have been trending up for several weeks while steel production growth in China softened in July. Market participants doubt that the country’s iron ore import growth can be maintained over the coming months and that capesize rates have more upside potential. In the FFA market, the 5TC average for 180,000 dwt vessels for the fourth quarter is trading at just 21,500 $/d, far below today’s spot level of 28,500 $/d. n 8 HANSA International Maritime Journal 09 | 2019

Orders & Sales New Orders Container The situation remains unchanged. No orders were placed during this reporting period. Secondhand Sales Container The number of transactions remained on a similar level as in the last publication and most of them were feeder vessels. OEL purchased two 1,155 TEU Orskov Mk VII design ships. The 2005 built »Asiatic Glory« and the 2006 built »Asiatic Jade« were acquired for a combined price of above 12 mill. $. In addition, Tufton purchased the 8,204 TEU vessel »MSC Paris« for 23.6 mill. $ with a 5.5 years’ time charter to MSC. In addition, the company will invest 4,7 mill. $ to install a scrubber. Demolition Sales The price for iron ore decreased sharply during August. After reaching a price of around 7/t in late July, prices started to decline. In line with these developments, scrap prices slumped and oscillate below 0/ldt. Monsoon period, summer break and Eid holidays are currently bearish circumstances for the demolition market and the offered prices from the scrapyards have diminished interest from cash buyers. However, four Evergreen containerships have been taken on an »as is« basis for September/October delivery, which suggest that this buyer is optimistic about future prices. Jan Göldner Container ship t / c market 450 400 350 21.02.19 Container freight market WCI Shanghai-Rotterdam 1,731 $/FEU + 23.7 % WCI Shanghai-Los Angeles 1,456 $/FEU - 8.0 % Dry cargo / Bulk 22.08.19 Month on Month422 • + 4.5 % Baltic Dry Index 2067 - 4.7 % Spot time charter averages ($/day) Capesize 5TC average 28,881 - 12.0 % Panamax 4TC average (74k) 17,402 + 0.3 % Supramax 10TC average (58k) 12,998 + 15.2 % Handysize 6TC average 8,346 + 15.5 % Forward / ffa front month Sep’19 ($/day) Capesize 180k 24,658 - 7.2 % Panamax 74k 14,771 + 2.1 % MPP August ’18 $ 7,216 Märkte | Markets TMI Toepfer’s Multipurpose Index August ’19 $ 7,476 12,500 tdw MPP/HL »F-Type« vessel for a 6-12 months TC Tankers Shortsea / Coaster Norbroker 3,500 dwt earnings est. 1,900 €/d - 20.0 % HC Shortsea Index 15.47 - 1.0 % ISTFIX Shortsea Index 502 + 6.1 % 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 COMPASS Baltic Dirty Tanker Index 649 + 3.8 % Baltic Clean Tanker Index 455 - 7.5 % IFO 380 Rotterdam $/t 278 - 29.5 % MGO Rotterdam $/t 535 - 8.7 % Forward / Swap price Q4 / 19 IFO 380 Rotterdam $/t 248 - 12.4 % Data per 19.08.2019, Alterations within four weeks STAY THE COURSE: WITH MARINE PRODUCTS FOR RELIABLE COOLING UNDER TOUGH CONDITIONS AT SEA. Learn more about BITZER PRODUCTS at www.bitzer.de More on GREEN POINT SERVICES at www.bitzergreenpoint.com HANSA International Maritime Journal 09 | 2019 9