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Baltic Exchange Shipping Insights

A roundup of last week's tanker and dry bulk market

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DRY BULK REPORT

Capesize

It was an active start to the New Year, with trading from West Australia maintaining momentum during the holiday period. Rates for China hovered around the mid $6.00s, a few cents off the highs seen during the seasonal break. Increased trading was evident from Brazil as the week closed out, with talk of Vale fixing four or five ships direct at around $16.00 for end January/early February loading, Tubarao to Qingdao.

Earlier expectations had been for rates nearer the mid $16.00s. CSN also took tonnage for 14-22 January from CSN to Qingdao, but little else emerged. Trading increased in the North Atlantic, with fresh transatlantic cargo and some negotiations underway for fronthaul at rates possibly a shade lower than previously anticipated. The coming week should produce a clearer picture as more return to their desks.

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Panamax

It was a short week, with many yet to return to the office until this week. The Atlantic was subdued, with a lack of fresh enquiry especially for inter Atlantic trades. A lengthening tonnage profile meant rate levels came under pressure. A number of Continent ready vessels decided to buy some time by fixing short Baltic rounds, with levels dipping below $10,000 on these trades. South America witnessed greater activity, but here too rates softened.

As the week closed out, there was a rumour of $30.00 per metric tonne concluded for 20-29 January dates Santos to China. The Pacific saw relatively good demand particularly from Indonesia and NoPac. However, with South America looking weaker, owners were less inclined to ballast and charterers maintained, with their ideas helped by a softening FFA market.

Supramax

Following the seasonal holidays, a short week saw the BSI move in a negative direction. Charterers made the first move, covering requirements with distressed vessels remaining open from the holiday period. Limited activity surfaced from the Atlantic, but brokers said that demand was low across the basin.

From South America a grain charterer fixed on subjects a 57,900 tonner delivery South Brazil trip via the Red Sea with sugar, redelivery Port Said, in the mid upper $14,000s. A 58,700dwt vessel fixed from the US Gulf to West Coast South America at $24,000.

From Asia there was a steady flow of cargoes but rates were under pressure. A 58,700 tonner was said to be booked delivery Hong Kong trip via Australia, redelivery Singapore-Japan range, at $9,200. The Indian Ocean saw increased fresh enquiry but limited fixtures. However, a 57,000dwt vessel went in the low $11,000s for Arabian Gulf to India.

Handysize

The return to work mid-week after the Christmas and New Year celebrations led to a slow start, with many suggesting that a clearer picture would not emerge for another few days. However, as last week progressed, many routes saw negative movements. Brokers suggested that rates dropped from the US Gulf and East Coast South America due to a lack of fresh enquiry.

A 28,300dwt vessel was fixed delivery North Brazil, for a trip with steels, redelivery West Coast North Pacific, in the mid $12,000s. A 37,800 tonner fixed delivery South West Pass, redelivery West Coast South America, at $13,500.

The Asian routes also remained under downward pressure. A 32,000dwt vessel was rumoured fixed delivery Indonesia trip via Australia, redelivery Thailand, in the low $6,000s. It remained to be seen what the market will trade in the next few days.


TANKER MARKET REPORT

VLCC

The increase in 2019 Worldscale flat rates led naturally to big changes in the rates fixed. Middle East Gulf to China for 270,000mt fixed at around WS 62.5 to China, while 280,000mt to the US Gulf paid around WS 25.5 basis Cape/Cape. West Africa to China basis 260,000mt was assessed at WS 61/62. US Gulf to South Korea went at both $6.5 and $6.3 million. Fuel from Rotterdam to Singapore fixed at $5.1 million, while crude from Hound Point to South Korea went at $6.25 million and subsequently at $5.95 million.

Suezmax

Improved tonnage availability with more ballasters from the East saw West Africa come under renewed downward pressure, with the market nudging below WS 90 for 130,000mt to UK-Continent and the potential to soften further. Black Sea/Mediterranean rates for 135,000mt were steady in the low-mid WS 130s, with the Turkish Straits delays still around 30 days total, north and southbound.

Aframax

UML fixed 80,000mt from Ceyhan at almost WS 165.75, with ENI fixing Black Sea fixed WS 175. In the Baltic, Total took 'NS Arctic' for 100,000mt at close to WS 109.75 while also fixing Tsakos tonnage for 80,000mt, cross North Sea, at WS 114. Caribbean rates for 70,000mt from Venezuela to the US Gulf held at WS 200.

Clean

Rates for 75,000mt Middle East Gulf/Japan hovered in the low WS 120s, with the market for 55,000mt in low WS 160s. Healthy tonnage availability saw the market for 37,000mt Continent/USAC come under renewed pressure, with Exxon fixing Fawley/USAC at around WS 116. In the 38,000mt backhaul trade from the US Gulf, the market initially dipped to WS 115 before recovering to WS 125.


FREIGHTOS BALTIC CONTAINER REPORT

Summary

Transpacific prices continue their slide - China-West Coast dropped $80 in its seventh week of falling and China-East Coast dropped $85 in its fifth week of falling. Transpacific trade is now in the relative lull between stocking up for Christmas and the pre-Chinese New Year bottleneck. With the China-US trade tariff war leaving many importers overstocked; it wasn't surprising that the mid-December General Rate Increase (GRI) was cancelled. But a new factor will see prices rising next week.

"The International Maritime Organization's (IMO's) regulation requiring the sulphur content in maritime fuel to drop from 3.5% to 0.5% comes into force on 1 January, 2020. Several carriers have got into the act a year early. So far, we've seen recalculated bunker adjustment factors, EBS increases and new low-sulphur surcharges. These increases, beginning 1 January, will filter through next week with price rises in the 5%-10% range, depending upon trade lane," said Philip von Mecklenburg-Blumen-thal, VP of FBX, Freightos.

Analysis

Despite recent news that China didn't buy a single US soybean in November, there's been no further talk of trade tariff increases recently. Consequently, transpacific ocean prices continued to fall.

China-West Coast prices fell for the seventh week in a row, this week by $273. They are now only 67% of 11 November when they were $2,582. However, they are still 50% higher than prices this time last year.

China-East Coast prices fell for the fifth week in a row, this week by $85. They are now only 74% of 25 November when they were $3,778. However, similar to West Coast prices, they are still (just under) 50% higher than prices this time last year.

With freight prices also dropping on other key lanes (China-North Europe and North Europe-US East Coast), the net effect on the global index was a 2% drop.


This report is produced by the Baltic Exchange.

The Baltic Exchange, a wholly-owned subsidiary of Singapore Exchange, is the world's only independent source of maritime market information for the trading and settlement of physical and derivative contracts.

Its international community of over 650 members encompasses the majority of world shipping interests and commits to a code of business conduct overseen by the Baltic.

For daily freight market reports and assessments, please visit www.balticexchange.com.