Month: July 2016

Losing less does it mean gaining more?

If we read the other way round, we can find some nice stories and good reasons to believe that our drybulk shipping market is getting much better. See Scorpio who’s declaring a loss of  only USD25m for 2016 second quarter, knowing on the 1st quarter they declared a loss of more than a double, ie USD 58m. Being positive and not being mean, really, then they improved their performance fairly drastically and let’s believe these results are achieved thanks to a better management of their costs and better daily hire obtained on their fleet, in their financial report they are mentionning:

Recent Significant Events

TCE Revenue Earned during the Second Quarter of 2016

  • Our Kamsarmax fleet earned $5,263 per day
  • Our Ultramax fleet earned $5,335 per day

Voyages Fixed thus far in the Third Quarter of 2016

  • Kamsarmax fleet: approximately $6,611 per day for 45% of the days
  • Ultramax fleet: approximately $7,153 per day for 55% of the days

You can also find a summary of their financial report here — franckly speaking too much figures for me!–

Bmti -or others- are wondering why Google or Amazon are starting to sniff around and start to consider  entering into the shipping industry. For Amazon, it’s easy to believe the one of the key off their business is logistic. It’s therefore also fairly easy to believe, view the depressed shipping market, Amazon can start to operate their own ships with a entering price into our industry being fairly low. For Google, eventhough I’m not quite sure how Google can leverage their expertise in shipping, I don’t see any reason why Shipping shall be out of the numeric process. Also to try to provide an answer to BMTI stating about Google and Amazon “The german press, instead of approaching shipping people for comment, approached PWC […] we recommend Amazon and Google to get in touch with Scorpio before sticking their neck out”.  Well, I’m sorry to say, but I don’t see any Owners able to bring a kind off analysis which is proposed by PWC here. transport & numeric – I have not read it all yet, but I’ll do- but this kind of survey is probably what lead Google or Amazon to approach PWC rather than any great Owners. Also we can easily assume, getting into shipping does not only mean necesseraly becoming an owners. And we shall not forget Google and Amazon may also be quite interested in our shipping expertise to find tax heaven territories as Northern Ireland or Luxembourg are about to show their limits.

Having said the above, Handies remains the most resilient size on the chartering market and is the only one keeping going up, going into details, with today’s index which are asf

  • Skaw-Passero trip to Rio de Janeiro-Recalada 28000 4510 +90
  • HS2 Skaw-Passero trip to Boston-Galves ton 28000 4904 +221
  • HS3 Rio de Janeiro-Recalada trip to Skaw-Passero 28000 6524 -51
  • HS4 US Gulf trip via US Gulf or north coas t South America to Skaw-Passero 28000 7600 -25
  • HS5 South Eas t As ia trip via Aus tralia to Singapore-Japan 28000 5221 +21
  • HS6 South Korea-Japan trip via North Pacific to Singapore-Japan 28000 6043 +7
  • Weighted Time Charter Average (HS1, HS2, HS3, HS4, HS5 & HS6) 5758 +36

The routes value movements clearly showing on the Atlantic side a change on the back/front haul concept with the origin Skaw Passero being the place to be for owners looking after money. Going further, for the skaw-pass to Wafr charterers, they have the double pain. Origin is where the market is, ECSA is where owners don’t want to go. Hence, charterers have 1st to find a ship keen to go to WAFR, once found, they have to consider to pay a premium as ballasting to ECSA is, for time being, the losy place.

Also in such market where a penny is a penny and to try to outperform Scorpio results, traditional owners are deeply considering to play around on the demurrage/despatch. With today’s information being available with a couple of clicks, owners managing to know if the trade proposed are despatch or demurrage business. And they do not hesitate to ask for different conditions  at load and at disch in order to ask for what’s in their advantage. Despatch being usually introduced to owners asf “Mate, be happy, your ship will be back on the market quicker than expected if we are able to manage to load/disch quicker than the contract says, quicker than expected means you’ll be able to chase for the money quicker”… today owners, even when open in continent/baltic are not really bitting this incentive anymore and the longer the ship stay busy, the better.

On the grains as we are in the harvesting process in northern hemisphere

  • from continent, it’s an open secret now, the wheat crop which is currently harvested in France is showing very deceptive results in terms of quality and quantity especially in the northern part of France. As a result in terms of shipping, the European Atlantic facade (French atlantic basically) is likely to become a quiet area (at least on the wheat and in the few weeks to come) and traders, unless they are finding solutions, will have to consider Baltic or blsea origin for their wheat. For sure so far in France only 17% of the wheat is harvested, same time last year it was 53% (source FranceAgrimer)
  • Canada is said to expect a lovely grain production and for once the logistic there (rail companies) are declaring to be fully ready and dedicate to ensure the grains to go from the fields to the silos/ports with the whole efficiency we can expect. See more info here canada
  • from Blsea, we can read rumors about the russian wheat tax export being cancelled

and generally speaking, should you wonder about the quality of the wheat you aim to load in your ship, find here an interesting analysis

remaining at your disposal once I have bought my baguette or fixed my super short period on which I’m still working

 

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Reinventing the shipping?

Bmti is reinventing today the concept of “PERIOD” in shipping. As we can read in their PERIOD section (in the list of fixtures) they are reporting this fixture “Dely Geelong ppt 10/15 days coastal trade / unknown chrtrs fixed mv ‘Hamburg pearl’ 39’500dwt blt 16 done @ $11,000″. 10/15 days, let’s call it a Super Short Period which may explain the money obtained from owners. We can wonder then if the ship would have been fixed for a Short TCT if the money would have been the same. For sure 11kusd is kind of very good money and surely owners took advantage of being open at the right time at the right place with no competitor around.

On the chartering side, we can pretend being super busy, fixing ships, doing Super Short periods, Tct, Voyages and being surrounded by cargoes from everywhere with owners hot to fix and thanks to some magic mojo, all goes quickly and smoothly. But the reality is bit less exciting I have to admit. And I don’t think the situation we are facing in our shop is unique, (eventhough I like to believe Pelagos is unique). After a rally up, all the players are checking the index, all are seeing the movement down on the supras and bigger and now it’s charterers’ time to play the clock and wait for market to calm down. Surely also we are last week of July and shipments which had to be made for July are covered, if not, paying $2 extra on the freight won’t anyway make the ship coming quicker at the loadport.

Appart from that on the chartering side, not much to add. Nothing new, unless you’re a short Sea/Coaster player. We can note they feel like Black Sea momentum is about deflate or if not, stopping to go up. We tend to agree with this, and as an example -and we know that one fixture does not set the market- on a Front Haul with a supra/ultramax tonnage with grains, to be shipped first half august about 30 ships were technically able to consider and charterers have managed to cover fairly quickly this stem at their level (or close to) which according to our tce is giving bit less than touch below 11’000usd daily dely Canakkale redel spore Japan range, our calculations being based on a modern nice ultramax.

For your benchmark today’s index are at on supras S1B Canakkale trip to Singapore-Japan 52454 11804 -121 / on panamax P2A_03 Skaw-Gibraltar trip to Taiwan-Japan 74000 10708 -238

In addition to the above, Bunkers prices is likely to go down, in the weeks, months to come. And if you’re willing to believe what’s Morgan Stanley has to say about this, you can find some more input here: petrol at $35 with for instance “While Morgan Stanley doesn’t say exactly where it sees oil bottoming this year, it seems safe to assume that “mid-30s” suggests a price of around $35 per barrel.”

It’s also interesting to read on one hand, that “Glencore CEO Confident of Revival in Commodities Market” with some explanations on the reasons why mister Ivan Glasenberg is keen to smile in this article dtd 25th july 2016. glencore smiling? While same Company, Glencore, is said by Reuters on tuesday 26th with article titled: “Looming price falls may force big miners to speed up asset sales” with the introduction sentence in the article being “[…] with a recent rally in commodities prices seen as short-lived.” Full article here glencore not smiling for too long

In short, I would be tempted to tell you not to believe what you read but then it will means no point for more Pelagos market review… Which to be positive would also mean for me more time to reinvent the shipping world and try to fix Extra Super Short Period. I’ll tell you tomorrow how I managed. Shall you want to be the owners/ charterers involved in this nice fixture, please call.

Connecting (commodities to) people

A slow start of the week to end up with this month. Never mind, we all know and we are all convinced we are working in a big industry, enabling most of the world population to eat, to be warm (or cold), to build up houses and a bit like NOKIA would have said back in the 90’s with their statement “Nokia: connecting people” we could say “shipping connecting commodities to people“. If you’re note convinced about this, then please read this report below, http://www.lcnewsgroup.com/just-how-big-is-an-economy-without-borders/. With few interesting data’s such like:

2016: daily average earning being at $9’733/day, aggregating this to the 22’000vessels at sea equal to $77bn // same but back in 2007: daily average earning being at $33’060/day, across over 15’600ships at sea this was equal to $189bn.

Unfortunately this is another similar statement with NOKIA. From sky is the limit market to let’s find ways to survive.

On the chartering side, which is probably more about your daily concern we can wonder if the congestion on the Coal loading in the port of Newcastle, in Australia being up to 21 ships will in a way or the other dry up the availility of big ladies on the market, hence drive the market up on this area. See more info here: http://www.platts.com/latest-news/shipping/sydney/ships-in-queue-at-australias-pwcs-coal-terminals-27633187 More or less in the same vein, China shortage of coal is driving up the local panamax activity. However, reading this platts comments we can notice it was published on 23rd july, talking about fixtures done on the week before. quote ” According to ship broker Banchero Costa, during the week ending 17 July, a 74,000-dwt Panamax bulker was fixed to ship coal from Indonesia to south China for USD6,250/day, while a 76,000-dwt Panamax bulker was fixed at USD6,500/day to ship coal from the east coast of Australia for delivery in the China-Japan-South Korea range.” when today’s BPI is in decline, quite sharply, -166pts on the P3A_03. Another good example of the volatility of the markets on which we are.

On the ECSA, we could read last Friday in Baltic report a “39,000 tonner was on subjects for Recalada to Tunisia with grains in the region $8,250 daily”,this  converted into a kind of standard cargo asf 30’000 10pct bulk agri prods 1sp upr 7000satnoonshex/ 1sp Tunisia 32′ fri5pm-mond8am ex -considering the ship can load about 31’000mts, this is giving an equivalent on voyage bss at about 26/27usdpmt, same daily hire to end up in algeria 32′ with 2’500x is giving touch below 24usdpmt. Finally to Casablanca 32′ with 5000x, my estimation leading to a freight very close to 20usdpmt. Obviously definitive loading port and vsl’s specs can have quite an impact on the freight and knowing the index on this specific route, bss a 28kdwat, is today at $6’597. For sure, should you need to have an updated freight estimate for these specific trade, it would be worth to go bit deeper in details and check again where the market is.

To conclude today’s report and to take back the comparison with Nokia, technology and shipping, an interesting article was found here, http://fairplay.ihs.com/commerce/article/4271806/cyber-security-challenge-continues-for-insurers?hootPostID=c7cba31464089b0ab2f14c92a2e56b9f

Cyber security is surely an issue which has to be faced by insurers, to protect owners and obviously at some stage charterers goods loaded in ships holds. Article coming with this rather poor conclusion “Marine insurance policies and contracts were not designed in the modern communication age.” We can be sure insurances companies will find ways to evaluate the risks… and the opportunities for additional insurance premia.

what’s behind the scene? (or a fixture)

Let’s take a closer look to this fixture which was reported earlier this week on mv ‘amelie’, said gone asf  2013 34’650 dwt dely Murmansk prompt trip redel Brazil intention fertiliser $8,500 daily which has been a kind of Week 29 hit in the baltic handy market.

The daily hire is quite a nice number, especially to end up in Brazil, compared to BHSI, HS1 on 20 july which was asf Skaw-Passero trip to Rio de Janeiro-Recalada 28000 3990 +220.

But what’s behind the scene?

We understood owners took advantage of charterers being squeezed on the laycan to steer the money up, also the ship was circulated on 4th july “open St Law 9th july”, then on the 11th july “open St law 13/14”, then on the 14th july “open st law today alt Ncont/skaw 25th july” and finally put on subs on the 20th july for the business on which she’s now fixed. The 8’500 usd obtained on aps bss, are equal on DOP St Law basis somewhere touch below 6’000usd, this considering their is no deviation on the ship itinerary. It’s still out performing the index but again this fixture is about to cover opex on the ship but not much more.

Generally speaking, handies are the survivors on the index decline. basis today’s index,  BDI is back touch above 700, BCI back below the 900 mark, BPI in the low 800, BSI back below the 700cap and handies keep going up the hill. “Up the hill” as still need to train a bit and keep going up to consider calling it the Mont-Blanc summit. Trying to give an analysis to this downward correction it seems it’s always the same thing which is happening. Some happy few Owners being open at the right time in the right area are enable to secure quite above market level fixture, the rumor is wispread all over the place, then this area is getting hot, owners keep trying to get the market up, up to the breaking point when charterers / traders have managed to re organize themselves and are in position to temporize and wait for market going down again and get a freight closer to what’s in their books. Alternatively, at least on the grains, traders are struggling to find out their stem being in line with their contract as in the northern continent we are in a transition period, with last year crop being sold out (or so) the fresh crop arriving slowly in the ports’ silos and traders have to check out where they’ll find the right quality/quantity at the right price being available.

if you’re open with a supra or a supra requirement in the med/blsea area, you should read this one Blsea market and incidence on areas around… and if you’re open with a handy or Panamax (ship or requirement) in this area, same, you should read it, but reading between the lines only and call us, if you’re open elsewhere just call us (or contact me on the blog or twitter or by telex… any modern tools are available here).

50yrs old ship going to scrap, a page has been turned

Today’s report is all up and down not to say messy. To start with you’re reading Thursdays 21st july comments and we can easily agree 6.30pm while editing this, means you read it probably in the 22nd july to start your day. Good morning then, take your coffee, with or without milk and enjoy the reading.

To keep up taking things by the tail, let’s start with the end of the BMTI report and the S&P report, mv ‘ALGOMA NAVIGATOR’ Built 1967 finally went to scrap in turkey, she was under Canadian flag, on can find out some nice pictures of her on Marinetraffic.

1967 built! if you’re asking me, I think it’s bit sad that owners decided to get rid off the ship 6 months before she turned 50yrs old. Anyway, I want to salute the last master who took the responsibility of this ship. Rumor on the market says owners decided to scrap her as they could not find coal at ports anymore to run the engine.

When Tufton oceanic is deciding to spend USD75Mio for 7 supras, Manchester United is rumored being ready to spend something like USD120Mio for the soccer player Paul Pogba.

Being curious by nature I went on www.tuftonoceanic.com and was very happy to read their CORPORATE STATEMENT “Tufton Oceanic is committed to being the pre-eminent fund manager for investors in the Maritime, Energy related and the wider global transportation and infrastructure sectors. We offer innovative, solution oriented investment advisory services within our core areas of expertise.” 7 supras,with average age being 10 years, and price averaging each US 10.7Mio the investment advisory is to be put in perspective with the Maple Grove 53kdwat blt 06 Japanese construction being sold to Bengladeshi buyers at USD7.8Mio. The 7 new acquisitions paid en bloc by tufton Oceanic seems bit high but obviously the sense out of this deal is to be seen in the details which i don’t have. Still on Tufton website I also found out the fund is managed by Greek fellows, a shortcut would be to say than even when the buyers of second hands ladies are not greeks, greeks are not that far for sure.

You being curious by nature I let you go on ManU website to find out their corporate statement… probably something looking like “our aim is to make a better world”

On the chartering market the owners’s confidence is starting to dull, one of the signs showing such is when we have owners’ brokers, with whom we mainly exchange circulars only, calling us to check what we can propose for the lady open here or there. Or calling on a specific cargo, on which their ship is too small/big/early/late/old (tick the one you want) and willing to have some sort of guidance on what charterers are seeing and aiming for, for the purpose of running some estimates. Unfortunately this does not prevent owners not standing behind their words and escaping themselves under a skype/phone firm nego because a desperate charterers finally decided to accept owners last in a moment of panic.

Today’s is a free of tce/voyage figures report as you’ll receive this one in the morning, I like to believe it’s good to start the day with a blank page when it comes to numbers.

have a lovely day and should you need some dedicated tce/voyage estimates please call. We’ll do it with pleasure and as accuratly as we believe it shall be, eventhough as said by a friend earlier this Thursday: “should running tce/voyage estimation be something simple, the brokers would have been replaced by computers a long time ago already”… maybe not in 1967, but few days after.

Drybulk chartering market a game of patience

Being full of patience seems to be a good commodity for charterers nowadays, as mentionned by BMTI on the Cape section, “Charterers with cargoes to ship appear to have enough patience to pull back and the market re-correct in a downard direction”. Same apply on the Panamax market with the BPI having probably reached his summit for this week. For sure today’s BPI is down below last monday level, let’s see if the next two days market quotations will follow this route or another one. With no surprise, the big ladies  are cooling down a bit (even the BLSEA origin increase is slowing down) when the Supras and handies are not hit by this movement, yet?

Patience is a nice thing to have, when you can afford to buy time, knowing Owners are also fairly good at playing this Buddha game and without willing to repeat what was said already (Melania did it very well), I don’t think that all the fundamentals on a balanced market can explain the current situation. Still too many ships at sea, still not enough cargoes in ports but at least on the BALTIC/CONT/MED/BLSEA the changes of origins combined with new crops in blsea being available are enough to make the traders swapping their interest and trading market is much quicker than our shipping industry to adapt to new situations. Reading in various reports, the exportations from BLSEA area are by far exceding importation. Talking about market changes surely owners of Four Rigoletto 34kdwt, reported fixed in BDI at 8’000usd daily dely continent to emed have made quite a good deal. Very decent money ex Continent, ending in an area, all going well for them in the middle of August with still cargoes to be moved. From wmed, handies do not hesitate to go towards blsea and can obtain fairly easily 8’000usd daily passing canakkale for intermed trade.

Patience or anticipation is another key to success for charterers from blsea, knowing owners confidence is here but knowing also market fundamentals are remaining the same, getting out with a cargo mid july (ie  last week) for shipment to be done beginning of August onward is a strategy offering the time to take either the spot ballasters from wmed or the ships very likely to be open in the area once the scrap is discharged. On the supra, from Turkish med to South africa via gib, we understood charterers gave away touch below 10’000usd daily on a modern 56kdwt, quite good money for owners with a fairly long shot, asking for the premium to end up in South Africa, where most likely they’ll have to ballast to ECSA, ECSA being quite deceptive market when the S9 is showing 4825 dely wafr to skaw pass via ECSA, index seems to be in line with the Amaggi fixture Recalada to Algeria on Bulk Beothuk done at 8’000usd daily. This fixture was done on 14th july.

Panama canal was the 2016 hit, will the Bosphorus bypass canal be the next one? If bosphorus bypass canal project  becomes real this will surely mean some more ships employements to bring construction material on site. and to end up if you’re still note convince about price of the patience commodity, have a look at this analysis found, for you; patience is a precious commodity

any questions, any comments, any remarks, I’ll reply to you patiently and with all attention requested

 

onions or crocodile tears

Bdi is showing some signals of cooling a bit and even today’s Index is down by 2 points. Mainly driven by Capes correction. Nothing to be too worried about and one could have expected at some stage this small correction.

As discussed with some charterers earlier today, it is always a difficult task to be a broker when the market is changing, especially when the market changing quite drastically. On one side, charterers which have been used to get the market 99% in their favor are failing to understand (and or struggling to face) the change. They are also trying to minimize the change upward which is obviously a fair strategy in order to secure the fixtures at their booking levels. While on the other side, owners are doing the exact opposite and we can hear that the market “is on fire” or “reaching sky high level” and of course owners’ interest are to emphasize this movement up, to secure for once a good fixture, above the opex levels. In summary, I, as a broker, feel like being the onions of the industry. Whenever principals talks to me, they are crying and trying to get me to obtain better from what the market can propose. Depending on how the market is moving I got charterers or owners tears. That’s fine, don’t worry, I cope with this thanks to a nice renewed stock of handkerchief.

I let the shipping experts trying to explain why the market has been moving up, quite quickly and relatively quite high in some segments of our Drybulk sector but for sure market is going due to a lack of tonnage available. But where are all the ships gone? according to my estimates and what we can see/hear/do here, on the handies,

.ex Baltic to Wmed, chrtrs are proposed 7’250/7’500usdpdpr dely skaw,

.ex cont to Wmed, chrtrs are proposed 6’750/7’000usdpdpr dely gib,

.ex cont to wafr, chrtrs are proposed 8’000/8’250 usdpdpr dely gib

.ex Blsea to WMED/cont chrtrs are proposed 6’750/7’000usdpdpr dely canakkale (and we remain very dubitative about the fixture mentionned yesterday and not corrected today on mv ‘sunrise’ 37kdwt at $8’500 dely blsea to USG.)

.ex USG to Med chrtrs are proposed 7’750/8’000usdpdpr aps

Still USG, but on the supras, quite few ships are still open spot there and not sure there will be enough requirements to make them gone for beginning of August. the S4A route being USG to skaw pass is losing today $138 and remain just above the 10’500 daily.

Of course while you read the above the “proposed” does not mean that owners will obtain for sure. It’s not granted neither that charterers chosing the wait and see strategy will get better rates  in the days to come.

If you’re after losy numbers, have a look at the Bmti report attached on the Container market review: “container volume from asia to Ecsa was down 28% in the first five months of 2016. On the Asia route some 30% of capacity has been cut in recent months […] compared to the rates at the same time during the last four years (Asia to South america)

2015 7th july   = 314/TEU   / 14th july = 286/TEU

2012 10th july = 1’907/TEU/ 17th july = 1’875/TEU

At these levels, the difference between losy and morbid is about to be narrowed.

have a nice end of day and again, shall you not be happy with what you are proposed please do not hesitate to ask us to try find something better, alternatively you can still blame me.