chartering drybulk market to start with week 20

Half of May is behind us and so far, the drybulk market softening is in and shall keep going on, as a comparison :

  • 18th April 2017 (day after Easter Monday) BDI @1,294 / BCI @2,220 / BPI @1,621 / BSI @898 / BHSI @563
  • 2nd May 2017 (day after international work day) BDI @1,073 / BCI @1,668 / BPI @1,140 / BSI @849 / BHSI @550
  • 15th may 2017 BDI @994 / BCI @1,1661 / BPI @978 / BSI @782 / BHSI @508

In this period Capers are the big losers with close more than 550points decline, in less than one month, this is enough to put pressure on all other market segements.

On the fixing side, new handy index type, the 38/39kdwat are managing to get $6,250 daily dely Gib redel ECSA, while for a local run from continent to Algeria, similar size would not even be worth above $5,000 for a dely gib redel Wmed run.

On the handies still, quite few coastal trades have been seen, for instance 28kdwat open Maceio, ballasted for 2,000nautic miles (ie abt 7 days at sea) to be able to grasp « only » $8,500 daily, dely Recalada, for a redely in Brazil. While spot in the Parana River, 39kdwt getting $9,600 for a trip and redely in North Brazil. Finally 28kdwat open WAFR, going through the atlantic on owners’ accnt, to  be delivered aps ECSA, is getting something close to $8,500 for a trip ending in EcMex. Supras, ex ECSA getting $10,000 daily for a redely in Med. Ultramax for similar biz are able to obtain something along $12,500 daily.

While Owners struggling to make money, Charterers fighting on every cents to get the deals done, not sure the principals will welcome the info on Ceo of major shipbroker signing his revenue for last year for more than £3.5Million. Ok, it’s in £, so it’s difficult to anticipate what it will be worth in few months, it remains quite a high number. Let’s believe he deserved it with lot of nice fixtures, Coa, good bargains for his principals, nice treatment for his team.  If willing to invest in real estate in London, probably he can afford this palace

On the future side of our business, autonomous ships, if one day they’ll come, could be the savings for getting ridd of the crew being off set by the costs of making the remotely control system reliable and protected against hackers. As you all have seen this week-end, massive hacking of Private IT system around the world is already in place and as stated in this article, getting remote control of the ships hacked is not anymore a probability that this may happen one day. Question behind this autonomous ships are therefore :

  • Which charterers will be ready to put his million dollars cargo in Captain free ships
  • Which insurers will cover the Captainfree ship ?

Article is here : http://splash247.com/hacked-ships/

For sure, at Pelagos, we are not yet in position to pay ourselves anything close to this $3.5m a year, we are working on it but we sware, as the case may be, you’ll be invited first to a giant unnecessary party to thank you for your support.

Regards

Jerome

 

 

 

 

 

 

 

 

 

 

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Size do not matter ((anymore) in shipping)

Size has never been the key thing generally speaking. Unless you’re a boxer champion in which case it’s easier to be tall and light for example, unless you need to park your SUV in your 1970’s designed Parisian underfloor parking, unless you’re a fisherman competitor, unless (please fill in here with your own “unless”)… .

But in shipping, it’s been slightly different and that’s probably why market has been divided in 6 different categories in the dry at least, namely: Coaster / Handy / Supra/Panamax/Capers with some sub size like Ultras which came in lately.

Nowadays with panamaxes being has handy as supramaxes, Charterers are always finding solutions to keep freights relatively low. They have much more flexibility than Owners and when a size is facing a squeeze of tonnage available, they split the cargo into 2 smaller shipments and of course don’t pay attention to Owners complaints stating the « economy of scale » does not work on the little ship and « charterers shall pay more to enjoy a fixture with the little lady »… but this does not work for owners, as charterers being flexible and smart (most of them are), the key decision driver is the money, and no matter if they have to have more cp’s signed to cover the requirements. Alternatively, charterers don’t really mind if the ship is a quarter full of air due to vsl’s cut size…and booking a supra for a handy requirement.

As a matter of fact, more and more we are seeing cargo requirements being quoted asf « Handymax up to Ultramax », meaning, it’s a nightmare for the brokers to quote on the market (but this is a detail) it also often means charterers have more cargo than a single ultramax can load (which is a good thing for the brokers, but it’s another detail) and the main purpose of this for charterers is to evaluate the pmt cost of transportation and take the cheapest one. (Big responsible charterers will say « the most eco friendly combo », but this actually remains to be seen).

And surely Owners are feeding charterers game by putting at sea ships being year after year able to load more and more cargo with ships being more and more « handy »… by handy I mean fitting into ports restrictions with short loa, reasonable WLTOHC, narrow beam, shallow draft… all of this to the benefit of… charterers.

What’s going on, on the chartering market ? With the above statements, I’m not sure it would be clever to propose you a size by size segment analysis. So I let you, big boys, go and check BDI today’s results to make up your own opinion.

On the grains, if you were in the belief that Uk is a country where it’s always rainning, please read this one and get rid of this « lieu commun »…“I don’t see rain” (quote from a brit expert)

Related to above (ie climate) and being responsible, Cargill’s CEO is gently inviting President Trump to stay in the Paris Climate agreement :  Take it Cargill chartering team are also paying attention to ships consumption when looking for a « handy up to pmx ».

That’s it for today

Rgds

Jerome

 

 

 

 

 

 

 

 

 

making friends is our business?

This statement is true, not only for the beer industry but surely can apply into the shipping business. We need friends to make the deals happen, we also needs countries being friends together to make the commodity moves from port A to port B. We’ve been told Russia and Turkey are friends again and one can import cereals from the others without facing high import taxes. This will surely impact the black sea coaster market fairly quickly and quite probably also impact chartering market on the bigger sizes. As a matter of fact, black sea area is quite difficult to read right now on the chartering market. We can see quite a fair amount of cargoes requirements meantime Owners facing difficulties to bring freight up. Quite few supras, unwilling to end up in SEASIA tried to book MED/Wafr requirement and were ready to discount themselves to get the cargo. As a comparison, supras to wafr are ready to swallow $10,000 dely canakkale for a 40 days trip to West Africa with Grains, when same destination, Dop Wmed is gone at $11,000 daily (probably on clinker).

From the continent, few grains requirements are in the air for handies to Wmed mainly, when the handymax/supramaxes are enjoying a decent activity on the scrap and still fertilizers.

USG, is getting bit of momentum, enough to bring back confidence to owners while ECSA still facing a downturn correction which according to lot of players is somehow an expected movement from the market, as many were failing to understand and explain why ECSA market was getting « rocket high ».

If you’re wondering what’s going on on the commodity side, in short and sweet on the grains, in northern Continent farmers are all focused on the weather, the rain, the freezing which may have some impact on the quality/ quantity of the crops to come

Rgds

Jerome

dreyfus and chartering market info

You need to be a french speaker to get the whole of it, all being about Dreyfus Company and the plans to face market changes, « from farm to fork » could be the way to summarize the article. Few main info/data which you can find :

  • 2011 : 66millions tons moved
  • 2016 : 81 millions (same in 2015)
  • $80million invested in the port facility in Bahia Blanca to be in position to move 2million tons of grains / year (This investment, to anticipate the likely boom by 25/30% of grains production in argentina in the next 5 years.)
  • Opening also a grain terminal in Rostov and take advantage of the Azov sea structure and grains production.
  • Dreyfus = about 10% of overall worldwide agri trades

And the dreyfus « vision 2025 » plan, eventhough not much details in how they want to play, the main objective is to give better visibility to their customers and act with more responsibility… for a sustainable business. The full article is here and the Azov picture, is mentionned in today’s BMTI.

On the spot chartering market, seems the Owners need Dreyfus (and the others) to be even more active to influence positively the index and obtainable money for the latters for renting their ships at a higher rate. Unless the bigger the ABCD’s will be, the more control and influence they’ll have on the market and, by controlling same, they also have the capacity to keep freight market relatively low, to protect their core business, ie trading commodities rather than trading ships.

And French people have to face it, election of their next president did not change much the trend of the BDI today. Still showing losy numbers except on capers. But experts says Macron’s election helped Crude oil price to go up andwe shall keep an eye on OPEC’s decision, today, the Brent crude futures getting back close to $50 (@ $49.82 up by 72cents), May 25, they’ll meet again to decide whether they’ll keep cutting down oil production, to artificially, support gaz price.

Rgds

Jerome

wtf (if I may say) about drybulk chartering market today (and since beg of this week)?

 

 

Can somebody tell what’s going on on the chartering market ?

  • As a French, saying « the shipping world is awaiting to know who’s going to be the next French President before moving in a way or the other» will probably be perceived like being bit arrogant, right ?
  • As a Bimco member, saying « the shipping world is awaiting to recover from 1st May being off as a labor day in more than 115 countries across the world» will probably be perceived like being bit short analysis, right ?
  • As a Broker, saying « market’s showing overall slow down due to surely lack of tonnage demand » would be perceived like being a nice truism, no ?

For sure, today’s index, absolute no size, no route is managing to be in a positive trend. The handy champion’s route, famous HS3 is losing close to 1,000points in couple of days. Handies weighted value is today worth $7,868 when Panamax value is at $8,428, new supras (58kdwat) are worth $9,240 daily… Only conclusion I can propose for charterers, time to fix Panamaxes. It’s a bargain. Also for those of you sitting on a baunch of money, maybe it’s time to invest in DryShips share, which according to splash247 has « lost around 99.4% (not to say 100% ok) of their value since the start of this year. $100,000 invested in the stock a year ago on May 4th 2016 would be worth just $12,72 today »… The thing is, if market decline is gone for a long run, surprisingly, it can still get worth ! Full article here

Investing in traditional oil Companies, does not seems neither to be the best idea, as today Brent oil price is getting back to the level it was during Nov 30 2016 Opec meeting in Vienna (when Opec members decided to cut down production to help oil price going up…)

And appart from these clever advises, not much emerged here today on the fixtures/deal done. Then, what about investing in Coal mines ? nope not a good idea neither

That’s all for todays good news.

Rgds

Jerome

Today are we tomorrow already?

Today is being a Tuesday but pretty much looking like a Monday with market players taking temperature on the market and pretty small movements are seen. Perfect day to buy perfume then.

Today’s BDI is all about red. BHSI is keeping losing slowly momentum, with HS3 losing close to 500points today (but still outperforming all other routes) by more than 2’500points for the closest one (being HS4). Noticeably, Weighted time charter average on the handies, daily value is getting close to the 8,000 mark.

Also, Lloyd’s on line polls put out few questions :

As off now

1/ Can brokers survive online platforms ?

  • 26% replying « no they won’t be needed »
  • 39% replying « yes, they are experts »
  • 35% replying « maybe, what do they do ? »

2/ Should owners should be made criminally responsible for ship safety ?

  • 77% replying « yes take owners to task »
  • 9% replying « no, we all have insurance
  • 14% replying « no, accidents will happen »

3/ Do ship-Owners need to stay Disciplined and stop trying to outmanoeuvre each other in the race for ordering new builds ?

  • 68% replying « yes too much oversupply »
  • 19% replying « yes buy 2nd hand vessels »
  • 14% replying « no I like low prices »
  • 0% replying « no I run a shipyard »

Lloyd’s again, an article about « what role for brokers in digitalisation era ?» which you can find here 

Rgds

Jerome