Vienna – center of the oily world –

What’s hot today ? OIL !! + 8% today

For sure, Vienna was the place where you shall put your ears in case you were wondering when to book your next Bunker stem. Opec’s members just announced they found a deal to cut output by 1.2Million barrels / day.  What to do then?

  • Rush to book your bunker stem before oil prices going banana !
  • or wait for the market reaction and non opec’s members declaring they’ll raise their daily production by 1.2Million Barrels/day?

USA might decide as a reaction to increase (bring back to activity) the shale gaz extraction.

Talking about USA, it appears that President Donald Trump has decided who’s going to be his Head Department of Transportation (DOT).

  • Shipping people might be happy to realize, Elaine Chao, the nominee, is well connected with shipping as her father is the founder of Foremost Maritime Corporation, with headoffice based in New York.
  • Some others (such like patriots willing to think AMERICA first), will be probably bit disappointed when they realize, according to equasis, out of the 15 dry bulkers registered 4 are registered under the Liberia flag and 11 under the Hong-Kong, China flag, none being under USA flag! But this is probably just a small point.
  • some others may probably do not even care about who’s the next Head of Department of Transportation.

On the chartering side, on the handies, the world seems to be divided in two main areas. East being fairly « pale » when Atlantic is still a Red hot (chilli peppers). Yes, the bill can be bit spicy for charterers stuck with spot cargoes in the Atlantic side… and spicy also for charterers having fronthaul destinations. USG is by far leading the chartering world today, The 60/65’000mt usg to china stem is reported today being worth US$ 36pmt when back early February similar trade was worth US $ 20. Looking at BHSI, HS3 +169 today heading above the US $10’000 daily mark. HS4 taking the direction to US $12’500/day as +189points today.

Few info related to chartering activity heard/seen on the market today (done here? sorry we don’t report what we do).

  • Glencore 30.000 mts 5% Wheat montreal – algeria 6000x – 2500x early dec seems to have missed the opportunity on friday to book this one in the US$26/27upmt range and are now seeing US$ 32pmt which according to our TCE is giving something along the US$18’000 dely Les Escoumins
  • Cont to med modern 35’000dwat reported being covered in the US $ 12’5000/13’000 dop range to go to Med
  • 25,000/10 corn Niko or Odessa to 1-2sp UK/IRELAND 8000/ 5000 SSHEX BENDS 8/14 dec said fixed & failed at US $ 17.5/mt but no details on the details (loadPort? 1 or 2 dischport) reported

And finally, Vienna will also the be the place where to put your ears end of the year if you’re a fan of classic music. (if not, still surely worth it to attend)

Regards

Jerome

Happy birthday to the shipping world

Happy birthday.

Exactly 8 years ago it was the kick off for the new era, the one which we have been enjoying so far, 8 years ago Lehman Brother collapsed and few days after, confidence in drybulk shipping vanished. We are still wondering where to start to look at to find this shy confidence.

We may start to look at scrapping ships activity and newbuildings’ one.

Scrapping : according to BMTI, 312 bulkers have been scrapped so far in 2016, with respectively

  • Units being Panamaxes (weighting 29% of the ttl demolition)
  • Units being Capes (weighting 23% of the ttl demolition)
  • Units being Handies (weighting 23% of the ttl demolition)
  • Units being supras (weighting 20% of the ttl demolition)

The 5% remaining ? must be either coasters or ghost ships.

Going forward in BMTI report, units going for scrap being reported are all 29yrs old or older. Not sure scrapping only old buckets -which anyway no ones want to charter nowadays – will help the market to recover.

But looking on the other side on the newbuilding activity it’s looking quite promising (for those of us who will be able to go through this market). According to BIMCO, «2016 looks to set record for the lowest newbuilding contracts in more than 20 years ». Going a bit in details, Bimco,Clarksons figures are showing on the CGT (CGT being Compensated Gross Tonnage is the unit of measurement developped for measuring the level of shipbuilding output and is calculated by applying a conversion factor, which reflects the amount of work required to build a ship, to a vessel’s gross registered tonnage).

CGT contracted around the world :

  • In 1996 17Mio
  • In 2016 less than 10Mio
  • At his highest peak, in 2007 it was more than 90Mio
  • 2006 was touch above 70

But,

  • In 2013 about 60Mio was ordered
  • In 2014 about 43Mio was ordered
  • In 2015 about 38Mio was ordered.

If someone can remind me what made owners/investors believing the crisis was over and drybulk market was in need for newbuildings in past 3 years, please to get your input.

Going forward on these figures, it means 2 things

  1. drybulk market will still suffer for too much ships being delivered at sea in the couple of years to come
  2. The hot potato is on the shipyards. And we are not protected against Japanese, South Koreans and Chinese government decisions to saves hundreds of thousands of jobs by cutting their prices down, to keep the yards busy. If such scenario is showing up, we can be sure owners and investors will jump on the bargain, eventhough they don’t need for new ships.

Another data which is not shown is out of the CGT ordered from 2013 to 2015, how many ordered have been simply cancelled or delivery being postponed ?

On the commodity side, as everybody is looking for new opportunities and new routes, it might be a wise thing to be done by Owners to start to reconsider their Iran calling policies for example. I could read on Bloomberg that Iran might need to import at least 1million tons of high Gluten Wheat. 1 million, on the scale of the Billions of tons transported by seaborne every year is not much but trust everything which was considered being a « niche » or a « no go » market/area shall be reconsidered quite closely. Willing to read more ? here it is: iranian bread!

On the chartering side, from ECSA to WMED grains stems seems to be more competitive when suitable for Handymaxes rather than Supras. Today’s in BDI fixtures we can read this 53kdwt build 2002, being fixed as follow on voyage basis : Mv ‘’Elpida S’ 2002 40000 /10 corn Up River /Oran 24 /28 Sep $19 .50 fio 9000 satpmshex/8000 fhex for accnt Louis Dreyfus. Running quickly the tct equivalent, this is very close to the s9 route on the BSI as shown yesterday ie 4’829usd dely Wafr. Knowing this route in today’s index is gaining close to 100pts. When taking same stem but calculated on a handymax, basis the handy index on which we put on tce 6’000 daily (while the HS3 on index type is at 5372), couple of USD can be gained (theorically) on the freight.

From Santos, sugar charterers are reported seeing $15.50/mt on a 35’000mt stem from Santos to Tunisia. Once again this 15.50 shall slightly outperform the HS3 knowing of course perfect ship for this stem will be either a Supra or a handymax ship if no restrictions applies all ends.

Finally, a 34kdwt being reported done ex continent to Morocco at 7’000 usd daily seems to us a bit on the high side, unless charterers were stucked and needed for a spot ship and had to get their ideas up to attract owners. For the sake of running the voyage equivalent, assuming it’s barley, vsl’s loaded with 30’000mt from Rouen with 10’000x to Casablanca at 5’000x the freight on voyage basis is around 12.25usdpmt. Still to morocco, few stems seen in our circular will be interesting to follow –

  1. ADM out with 30,000 / 10 WHEAT BLACK SEA / MOROCCO SEP 28 / OCT 02 8,000 / 5,000
  2. Acct intergrain s.a. 25,000 mt/10 pct bulk wheat stw abt45 wog 1-2sb nika tera, ukraine / 1-2sb agadir, morocco laycan october 08-12, 2016 8000mt sshex eiu (fri 17-mon08) / 5000mt sshex eiu (fri 17-mon08)

Black Sea is said to be cooling down a bit, but we can notice both charterers ADM and Intergrains cargoes are do be done for very end Sept or early October. Getting out as early could be a signal they want to avoid being still open with a dead spot requirement and Owners taking advantage of it.

As usual, please do not hesitate to react, comment or contact me on my twitter account @jeromesorrel for comments, discussions sharing views.

Market report/ black friday promo. 2 for the price of 1 – take your abacus to check discount

Today’s being Black Friday, you have a promo with 2 market reports in the same day.

  • Capers back to where they were early in november.
  • Panamax are not ready yet to follow the big sister path as quite an amount of fresh cargoes shall keep up this segment active in the days to come
  • Supras mainly driven by USG demand.
  • Handies? climbing the trees looking for banana’s.
    • 33kdwat covered at USD 9’000 from Baltic to USG
    • 34kdwat dely cont via baltic /bengladesh redel singapore done at US $11’500 daily
    • 30’000 10pct wheat stem from Constanza to Morocco 7000/4000 @ US $ 13
    • .Handy vessel on subjects delivery Mediterranean tct to USGulf at about US $7,500 daily
    • .37,000-dwt rumored covered dely US Gulf for 1TCT to Continent at a level apparently above $16,000 per day (but exact details remains elusive)
    • 2012 38,109-dwt fixed up river to Algeria at $11,000 per day.
    • 2012 built 38k delivery Brazil trip to Spore/japan range at $15,000.

I’ll switch on my abacus on monday to run some voyage equivalent on some of the above fixtures.

Still few mins to go to make the friday fixing. Anyone?

Jerome

good news often comes with bad news

Good day, good morning,

BMTI guys seems to be sleeping today or digesting the turkey, so no daily report to support my daily thoughts. Luckily, I still have few things to tell you about the market and the way things are going. Good news are also bad news, just a matter of on which side of the mirror you stand, just ask the thanksgiving turkey what their opinion on this.

Cofco Pallice to Tunisia is rumored on the market finally gone at 23usdpmt. Good news or bad news ? If true, it’s 5usdpmt above what charterers were aiming for when out on the market. To put a bit of perspective, it’s $125’000 extra out of charterers pockets, converted into Owners’ mind it’s around $3’300 daily for owners benefit (estimated duration being about 37/38 days -contractual + 3 days extra for wheather/bunkering).

US $3’300 daily was handy continent market value back in feb/march for similar run. Will owners be able to enjoy this money in his bank account ? Not quite sure, it depends from his financial structure and or whether some loans are still in the air financing for the ship. According to Financial Times article, which you can find here,financial times (but need to be Financial Times subscriber) « NordLB warns on €1bn loss for year as shipping loans bite ». €1bn loss in 1 year !

Not in the article, but to cover the loss, NordLB bank is certainly hoping to get 8’000 other similar fixtures from their Owners portfolio in the next 4 weeks. Who knows it may happen. Anyway please don’t worry too much about the bank , the article is concluding with the quote of Dr Gunter Dunkel (the boss of said bank) « despite this […] the bank was aiming to make a profit in 2017 ». The only thing which worries me a bit about NordLB bank is if they gave a loan and long credit line to Cofco in a hedging process, in which case, they’re not out of the woods yet.

Good news also for Owners trading in the Baltic/Black Sea/Med region, they’ll soon have some support from The NATO security Marine, whose ships are going to shift from fighting piracy close to Somalia Coast to come and counter the human smuggling in the Mediterranean area. For owners trading in indian Ocean, this could be a bad news as they might feel bit lonely in case Pirats reading Reuters, and the latters realize they will be left free to do what they want to do in the months to come. Full article here free the somalian pirats

On the handies, USG remains very strong, we understood a 2016 built 37kdwat has been covered on DOP (ecmex) for a tct to Morocco in the US$ 15’500/16’000 usd daily. When bit smaller (34kdwat), older (2012 built) ship covered for similar biz (dop ecmex) at US$ 13’000 daily. Checking vsl’s specs,

  • the 2016 one is giving « 14,2(L)/14,8(B) KN ON ABT 23.9 MT IFO 380 CST »
  • when the 2012 one is burning « ABT 13.8K LDN ON ABT 28.1MT IFO / ABT 14K BLST ON ABT 27.3MT IFO, NDAS ».

Bss today’s IFO 380 price in Houston, @ US$ 261/ MT, on 17 days voyage at sea, the 2016 built lady shall be cheaper on the bunker conso by abt US$20’000. Finally as a comparison, yesterday’s BHSI HS4 US Gulf trip via US Gulf or north coast South America to Skaw-Passero on handy index type (which is still a 28000dwt) was at US$ 11’ 286 with +507 Vs the day before.

The very good news will be when Baltic Dry Exchange will update their Index type Vsl’s and will be more in line with the modern fleet we can see on the water. (this might also help the Baltic panelists !).

Don’t forget today’s is Friday, good news, still few hours to go for the traditional Friday fixing. I’m waiting yours if you don’t want this Friday info turning into a bad news. The ball is on your side !

Regards

Jerome

Chuck would be the only “A1 First class”

What’s up for today ?

By now you shall be well connected in the shipping world and you shall be able to grasp great info on all the digital networks you’re on. No need to paraphrase what’s written by the pros but in summary :

  • Capes rally seems to be over
  • Panamax moving from exciting to boring
  • Supras owners getting tanned under the sun
  • Handy owners getting close to the sun, hope none of them are called Icare.

To start with today’s market comment, I have to release the whole pressure, I can feel you’re fairly tense. YES I did get the subs confirmed hence we are now clean fixed. Thanks for worrying so much, your empathy goes straight to my heart. Having said this,my yesterday’s market comments has been quite contreversial with few reactions coming from Owners, charterers and brokers. (if you missed yesterday’s report, please find it here failing on subs could be a strategy? Nooo!

  •  One Owners challenged the « A1 first class» concept for the charterers I was on subs with.  To make it clear, I will never say from any owners nor any charterers nor brokers, that they are « A1 » or « first class ». Things can change so  quickly in our industry that such statement might be right at the time of fixing and completly wrong at the time of settling the account. And the reverse is right also. Poor performer on the winter can become great ones the next summer. To my opinion, only Chuck Norris could be awarded « A1 first class ». In the event he wants to come to give a hand to our Industry. Chuck, if you’re reading me.
  • Another Owners, made this comment about the subs and the concept of failing on subs, which please find below  Qte “subs is just a misfunctioning of the shipping markets. chrtrs MUST check a vsl workability before even finalizing main terms (not to say before even starting negos). the ‘subs system’ should simply be declined by owners. It is just a FREE OPTION (in the sense of cost-free) in the hands of chrtrs. But in economics, an option has a value which must be rewarded by a price. Unfo chrtrs don’t pay for such a price.” uqte

On which I would just make couple of comments :

  • The sub concept has been in the industry for a while, it’s now a common practice, Owners challenging or even unwilling to work with subs might have some troubles nowadays to enter into  a firm nego.
  • « Charterers don’t pay for such a price» : in the meantime, why would they pay for it if they can have this option for free from another Owners’ competitor ?

I’m not saying it’s a good or bad thing, I’m just mentionning a fact. If you’re willing to know more about these subs, you can have a look here subjects are the subject

  •  Another Owners challenged my calculations Voyage / TCE on this Cofco requirement (Pallice tunisia), after discussing with him and sharing our point of views, we are still appart on the time charter equivalent by some US$ 1’000 daily (which is not peanuts). We are also in the agreement, charterers initial ideas at 18usdpmt are close to US $3’000 daily short versus what they see from the market. (and I have been given to understand, Cofco finally decided to dig in their pockets to come close to owners ideas).
  •  Finally, a friend broker just thanked me for sharing these (almost) daily reports, quote unquote again « […]Fantastic report as usual ! I love it. Your report Is always my small book to read before I go to bed. Thank you very much for sharing this with us[…] ». I’ m sure, once in bed he is reading all Jane Austen’s work, as we all do in shipping right ?

All in all, it’s a pleasure to send you on regular basis these reports, it’s also a pleasure to get reactions back from all of you. Whether it’s positive/negative/challenging/love declaration. I take everything. Don’t hesitate neither to drop me information on what you see/do/hear on the market. Promised if some figures coming to me, I’ll make sure not to report them quote/unquote.

Have a nice afternoon/day.

failing on subs could be a strategy? Nooo!

As we can read COFCO « seeing 22usdpmt and aiming 18usdpmt » we can easily believe this is this cargo seen on the market « 25,000/10 MOLOO BARLEY ABT 52CFT WOG  ROUEN/DUNKIRK/LA PALLICE TO 1-2SB 1SP TUNISIA 32FT SWAD  10,000X/2,000X  1-10 DEC 3.75 ADC », without taking into consideration the stowing factor which seems to us bit short, as French barley is more likely to be around 60’. Anyway, taking a 33kdwat modern dely Gib, redel Tunis basis chrtrs terms, assuming vsl’s going to load 27’000mt, at 18usdpmt the tce ends up at US$ 6’500 daily when at US $22pmt tce ends up at US $ 9’500.

Another comment which we can read on bmti today raised my attention

 « A high amount of failing has been reported in recent business as charters see fit to apply discounts to previously agreed business ».

Really ?! failing on subs can happen once fixed, basis all terms being accepted (money being too high for charterers) and charterers having all their subs in hands but not willing to proceed further as a cheaper ship showed up in between. Then some charterers would not hesitate to drop a ship when another one coming in with few cents less ? How come ! I have been told since I started this business, this can not happen. Maybe time have changed ! Maybe…

It could also be a strategy from charterers when time is getting less in their favor to ‘fail on subs’ just to try to change owners minds and make them losing their confidence and patience. It’s tricky ! and somehow yes very frustrating for all parties involved (putting aside the charterers of course). I won’t make further comments on this specific « failing on subs trick », having right now a ship/cargo on subs, I don’t want to give wrong ideas to my (A1 First class to be confirmed !)  charterers. Waiting for the subs, I feel bit like these men, waiting for their wives, while shopping at Victoria’s secret.

Have a nice evening /shopping if you’re preparing the black Friday.

Regards

have you ever wondered?

In summary, you’ll find some nice numbers for Owners reflecting the chartering market:

  • Capers, Australian rounds surpassing the US$ 20’000 daily
  • Panamax from Baltic to Northern Africa (med) owners seems to get US$ 17/18’000 daily
  • Nopac rounds on Kmx higher than US$ 10’000
  • Blsea front haul on supras, over US$ 14’000 daily
  • 57’000dwt from USG to WCSA booked at us$ 29’000 daily (yes US$ 29’000)
  • Supra from USG to Med, likely to reach US$ 20’000 daily
  • Ex USG 35’000dwt front haul, hovering around US 15’000
  • Mv ‘Pretty team’ 35kdwt blt 2011 dely Puerto Cabello redel Nigeria via USG done at US$16’000
  • Mv ‘Charmey’ 34kdwt blt 03 dely casablanca redel Brazil via st Law done at US$7’300

 

Some others figures are bit less exciting

  • Handy ex blsea to Egypt med being worth something like US$7’500
  • Talking about Blsea, last Friday I was running some estimates blsea to Egypt med being something along the US$ 10’000 daily. I was probably bit too generous with owners while running my TCE and after checking again my maths, my abacus and talking with German Owners, we ended up agreeing my assessment « at 10’000usd daily dely canakkale » was a bit reach, by at least US$ 1’500 daily, in this prospect see this Langlois fixture reported in the bdi Mv ‘First Brother’ 33kdwat dely canakkale via blsea redel Egypt Med at US$ 7’750 daily

For sure, there is a big momentum on the chartering market leading tce and freight moving upward very quickly with almost everybody wondering which are the fundamentals making this market movement going up ?

Seeing good numbers for Owners shall be a welcomed news from all players involved in the shipping market, even charterers who may have to face higher numbers than the one registered in the books. It shall be considered as a good news, in general, bringing bit of fresh air to Owners, Owners able to fix above OPEX levels.

On my side, seeing these numbers, after years and years of shipping turmoil I’m wondering which Key Performance Indicators will the experts and specialists set up to monitor the shipping industry situation and declare the shipping crisis being behind us.

  • Is it when the BDI reach a certain level ? then which level ?
  • Is it when BCI/BPI/BSI/BHSI reach a certain level ? which one ?
  • Is it when owners have recovered from their losses ?
  • Is it when tonnage demand will come to the same level as tonnage offer ?
  • Is it a combination of all the above ?
  • s it when Greek Shiprbrokers association will set up again their diner ?

I don’t think we are already at the end of the tunnel, yes maybe and probably some Owners can see the light at the end of the tunnel but we shall all remain vigilant and not kill the bear too quickly ! Lots remains to be done to be back into a sane shipping environment. To start with, should you need to fix something, we can help, don’t be shy.