“Je suis hanjin” or “je suis Gunter”

heading full speed to bankruptcy

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Good day, good afternoon, good morning,

2008 the banking system (and shipping industry players greediness, maybe) led our industry where it is now. Now it’s time for the payback and owners financial situation is leading banks to face quite hard time. As mentionned by BMTI –see investment review section– Bremer Landesbank’s management was expecting a loss in 2016… but not as much as it is currently. Chief Executive Officer Gunter Dunkel said in a statement “The shipping crisis, which further intensified in the first half of the year, has necessitated impairments that were higher than planned,”(source Bloomberg, here http://www.bloomberg.com/news/articles/2016-08-25/nordlb-boosts-shipping-provisions-five-fold-warns-of-high-loss),

we can invite Gunter to read Bimco Market report, (if we assume BIMCO being a real shipping expert (assuming also BIMCO  is not just about drawing long and incomprehensive clauses to be inserted in our charter parties)).

Alternatively, if Gunter’s company is not a Bimco member, you can tell him to read my few quotes below of this market analysis which you can find on their website (Reports/market analysis section), dtd 1st sept 2016 (Yes, to read it in full you need to be a Bimco Member, alternatively, if you’re not a Bimco member, that’s fine, give me a fixture and I’ll arrange you a copy – Business is Give and Take- right!)

Let’s go through some highlighted interesting facts, like:

  • The dry bulk commodity imports into and exports out of China we have seen in the first half of 2016 are very positive – and nothing short of extraordinary. But, putting it into perspective, compared to the devastating freight rate levels over the same period, it highlights that something is very wrong in the dry bulk market. The market is nowhere near balanced.
  • BIMCO’s data on seaborne iron ore imports into China, shows a growth of 9.6% for H1-2016 as compared to H1-2015.
  • A continued surge in thermal coal imports seems limited, as hydropower electricity generation due to heavy rainfall is likely to squeeze coal consumption (used for power generation) yet again.
  • Also as expected we saw a new record of grain exports out of Argentina during H1-2016. Up by 42.1% year on year.  (and here, if I may make a comment, bankers can wonder then why the routes ex ECSA on H1 2016 on all routes have not been Sky-rocket, can’t they?)
  • Year to date, the Baltic Dry Index is down by 26% on last year’s performance, which was already dreadful.
  • BIMCO expects the industry to be lossmaking for the full year.

Interesting numbers for Gunter again, when he wants to evaluate his future smart loans:

  • A 2010-built capesize ship was valued by VesselsValue.com on 1 August 2014 at USD 49.75 million.
  • Two years later, that same ship had lost 57.3% of its value and is now worth only USD 21.25 million

Gunter, please don’t forget the below, before you think about investing into new buildings

  • 31 million DWT of new capacity has entered into the fleet since 1 January 2016
  • So far in 2016, 23 million DWT has been taken out of the fleet and sold for scrap
  • Focusing on Handymax, the fleet has grown by more than 12% – a net inflow of more than 300 new ships
  • overall new deliveries have better intake capacity than units going to scrap

Having said the above, what’s going on, on the chartering market?

Grains to Algeria on 33’000dwat  (which is kind of new standard size despite The Baltic Exchange index is still based on a 28kdwt )

  • ex Baltic ships are hardly making 8’000usd daily basis dely Skaw, however trust that owners who are open in this area are better off staying there and try to grasp cargoes which will keep on reaching the market either to algeria or to other destination in the Med/blsea Basin. Translated into voyage, this gives something in the 17.50usdpmt bss 30’000 10pct bulk wheat 1sp baltic 8000sshinc at load to 1sp algeria with 32′ draft max and 2’500x out
  • Same size lady in the USG are hardly making more than 6’500usd daily (Today hs4 is at 6’404) (Translated into voyage, this gives something in the 19.50usdpmt bss 30’000 10pct bulk Maize 1sp Miss River at load to 1sp algeria with 32′ draft max and with rather quick terms)
  • Plate to Algeria on a 27500mt stem is said being worth around 20usdpmt, which gives tce at 6’000usd daily (today’s hs3 is at 5706) Translated into voyage, this gives something in the 20usdpmt bss 25’000 10pct bulk maize 1sp plate to 1sp algeria with 32′ draft max)
  • Ex blsea, 6’000usd daily dely Canakkale seems also to be the standard.

 

Finally we were talking yesterday about Hanjin filing for bankruptcy, as an immediate effect, we could see and read that the  “Spot container freight rates on the major routes from Asia soared by up to 42% today following the collapse of Hanjin Shipping, data from the World Container Index reveals.” (source Drewry) ,

Thinking forward for our drybulk segment, the Industry is looking for a candidate, as big player as possible, playing in the drybulk sector mainly, to file for bankruptcy also so the spot freight goes sky rockets. As a broker, I would definitly prefer this to come from an owners who’s not supporting us at all (yes, surprising but true, couple of them don’t support us).

I wish you all a nice and peaceful week-end.

 

 

 

 

 

 

 

 

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