performance is nothing (or not much) without endurance. Feast chartering market focus

Good day,

Chartering market still on the upward trend, some brokers are questionning how sustainable can it be in the Far Eastern market arguing « the upward movement has been too fast »… but how quick was that ? Let’s taking a look at some numbers back one month ago compared to today:

Panamax                                                                         13 feb    14 march 

PA3_03 japan South Korea Transpacific voyage     6,645     10,259

PA4_03 Japan South Korea trip to skaw pass          2,782     3,892

Supras

S2 Skorea Japan Australia or pacific round vyge  4,708     8,242

S3 SKorea trip to Skaw-Gib                      2,340     4,400

Handies

HS5 SEASIA trip via Aussie to Spore/japan range  5,261     7,404

HS6 Skorea Japan trip via NPacific to Spore/jpn 4,971     6,979

  • Is it really quick ? Well up to a certain extent yes
  • is the FEAST/SEASIA market now at decent level ? sure if we ask to owners, they’ll still aim for more (and probably still need for more)
  • Was the market very low ? yes and for sure it was very low compared to activity seen in the atlantic Basin.

If we compare with altantic Basin, we all remember the strong upward movement seen from mid november until end December, which finally went back down in january to come back stronger in March.

In both cases the holidays season (Occidental Christmas/new Years Eve on atlantic respectively chinese new year in Feast) are surely key facts influnencing the stop and go on the chartering market.

To the contrary to what’s said above ie « upward movement is too fast (to be sustainable) » I would be tempted to say, it’s not a matter of speed but a matter of understanding what’s behind the up’s and down’s. 2016 Q4, market surge in Atlantic was hardly explained by chartering experts people, which led to a slow down in this area from Jan to Feb (up to some extent, market players being afraid market getting back to the lackustre level experienced in Feb 2016). Back end 2016, Owners just focused on enjoying while charterers just focused on trying to get hurted as smoothly as possible. What’s behind the upward in FEAST is an open question. Is it lack of tonnages who all went after the money in Atlantic Basin ? Is it much more cargoes movements requests? Probably bit of both. FEAST market is surely mainly driven by the big ladies and the Ore cargoes. (see BCI dated today)

according to what we can experience now, the fundamentals off the market (it’s lovely to write down « fundamentals », in a market report, it’s a very expert-like word) remain with an over tonnage supply. BUT I would say the main difference is that now, Owners, wherever they are open (on the handies at least) have the choice on the commodities, destination, charterers counter part, go for period, go for single trip, go for voyage and still manage to get decent money and as a consequence charterers (and their brokers) have to promote bit more the cargoes they have than just « firm, can be fixed clean by cob today », as very limited amount of Owners are now jumping on the cargo to avoid being spot. Owners are now keen to wait for tomorrow and see better numbers, better options. For example

  • Owners of this 2011built 34,000dwt fixed dop Belfast via uk to emed with scrap at $10,800 daily could have get something along $8,000 on grains ex continent to Wmed. They could also have chosen to go to Brazil (surely with ferts) ex Morocco for $5,500 daily, biz which has been covered finally by a 2011built 38,000dwt open in Casablanca. It’s quite well paid for a repositionning business. The money and/ or repositionning was probably worth to consider putting scrap in this modern lady.
  • Owners of this 2012 built 32,000dwt reported (wrongly) fixed aps Novo to West Africa at $9,950 daily could have get something along $7,500/7,750 for a grain cargo ex blsea to EgyptMed. Owners surely believe it’s worth to take a 40/45days duration trip to end up in WAFR rather than go for the quick Egypt trade, while once finished being left with no choice than ballasting again to Canakkale. Especially if then, they can get what’s rumored fixed yesterday on a 34,000dwt aps plate tct redel continent at $13,750 daily. Alternatively, can still get today $7,000 daily from Lagos to Continent (see Amalia fixture reported in today’s index)

Tomorrow we’ll try to get an answer to this PandC clause in 2016. Is it still standing for « Private and Confidential » or standing for the 2.0 era as « Publish and Circulate » as some of our charterers (being very sensitive on the confidentiality of their fixtures) whispered us ?

Regards

Jerome

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