/ CONTENTS Freight Market S&P Market: Transactions and Secondhand Prices Shipbuilding Market: Orderbook, Transactions and Prices Demolition Market: Recycling Activity and Prices Vessel Tracking and Bunkers Bulkcarrier Fleet Monthly Commodities Remarks 0K 2K 2019 2020 2021 Index BHSI BPI BSI 0 5000 2019 2020 2021 Index BCI BDI 0K 20K 40K 2019 2020 2021 Index C5TC HS6TC P4TC S10TC MONTHLY REMARKS IRON ORE - VALE WELCOMES DECISION TO LIFT ITABIRUÇU DAM, CYCLONE LUCAS DISRUPTS PORT OPERATIONS IN AUSTRALIA AS AUSTRALIAN MINERS SEEK REGULATORY APPROVAL TO EXPAND COAL - THE RIPPLE EFFECT OF CHINA'S BAN ON AUSTRALIAN COAL CONTINUES GRAINS - CHINA’S GRAIN BUYING SPREE WANES AS REPORTS EMERGE OF A NEW OUTBREAK OF AFRICAN SWINE FEVER, US CORN EXPORTS FACING TOUGH COMPETITION DRY BULK MONTHLY FEBRUARY ISSUE | Friday 05 March 2021 Dry Bulk Indices - Month/Year Averages Index PTMI LMI CMVI MoMI% 3M%I 6M%I 2021I YoY%I BCI BDI BHSI BPI BSI C5TC HS6TC P4TC S10TC 1,587 1,244 670 1,393 1,033 13,164 10,086 11,203 11,365 2,614 1,658 666 1,592 1,092 21,678 10,024 12,989 12,019 1,535 1,500 819 1,998 1,366 12,733 12,778 16,641 15,030 -41.3% -9.5% 23.0% 25.5% 25.1% -41.3% 27.5% 28.1% 25.1% -3.3% 27.0% 36.5% 55.6% 46.9% -3.3% 44.6% 62.9% 46.9% -34.2% -1.1% 60.6% 22.9% 49.3% -34.3% 77.1% 25.2% 49.3% 2,075 1,579 743 1,795 1,229 17,206 11,401 14,815 13,524 43.1% 48.1% 67.0% 62.8% 65.1% 31.6% 88.9% 72.5% 65.2% Index Dec. Jan. Feb. MoM% 3M% 6M% Avg. 2021 YoY%
Transcript
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CONTENTS
Freight Market
S&P Market: Transactions and Secondhand Prices
Shipbuilding Market: Orderbook, Transactions and Prices
Demolition Market: Recycling Activity and Prices
Vessel Tracking and Bunkers
Bulkcarrier Fleet
Monthly Commodities Remarks
0K
2K
2019 2020 2021
Index BHSI BPI BSI
0
5000
2019 2020 2021
Index BCI BDI
0K
20K
40K
2019 2020 2021
Index C5TC HS6TC P4TC S10TC
MONTHLY REMARKS
IRON ORE
- VALE WELCOMES DECISION TO LIFT ITABIRUÇU DAM, CYCLONE LUCAS DISRUPTS PORT OPERATIONS IN AUSTRALIA AS AUSTRALIAN MINERS SEEK REGULATORY APPROVAL TO EXPAND
COAL
- THE RIPPLE EFFECT OF CHINA'S BAN ON AUSTRALIAN COAL CONTINUES
GRAINS
- CHINA’S GRAIN BUYING SPREE WANES AS REPORTS EMERGE OF A NEW OUTBREAK OF AFRICAN SWINE FEVER, US CORN EXPORTS FACING TOUGH COMPETITION
HandysizeN. China-S- Korea-Japan/ N.China-S. Korea-Japan - HS6N. China-S. Korea-Japan/ S. East Asia - HS7Rio de Janeiro-Recalada/ Skaw-Passero - HS3S. East Asia/ Singapore-Japan - HS5Skaw-Passero/ Boston-Galveston - HS2Skaw-Passero/ Rio de Janeiro-Recalada - HS1USG via USG-ECSA/ Skaw-Passero - HS4
SupramaxCanakkale via Med-BI Sea/ China-S. Korea - S1BN. China/ W. Africa - S3N. China/Australia-Pacific RV - S2S.China via Indonesia/ EC.India - S8S.China via Indonesia/ S.China - S10Skaw-Passero/ USG - S4BUSG/ Skaw-Passero - S4AUSG/China-S. Japan - S1CW.Africa via ECSA/ N. China - S5W.Africa via ECSA/ Skaw-Passero - S9
The BDI Index’s monthly average fall (-9.5%) is attributed to the Capesize market as the BCI showed a rising and falling trend in the second month of the year.
The BCI Index started the month with a declining tendency. While the Chinese New Year approached an expected fall sent the value at low levels. Undoubtedly, the Ox celebrations’ (Year of the Ox) has affected the Capesize segment rates as the steel demand softened, while the index closed the month with 1.079 points less than the previous calendar month. However, we noticed it remained at high levels compared to last year’s average (+43.1%). The Capesize spot rates followed the same declining trend as we spotted a drop between 10.8% to 22.1% for the major routes. On the other hand, the BPI Index movement disclosed an upward direction making the Panamax shipowners remain optimistic about the market dynamics; the BPI closed the 2nd month of the year with an average rise of 25.5% (m-o-m), a growth of 406 points. The route (P8) rose by 18.3% to $41.77, and the (P7) grew by 14.6% to $52.69. Similarly, the Tripcharter rates increased between 15.9% to 28.7%.
The same upward behaviour was noticed in the smaller segments as the BSI and BHSI rose by 25.1% and 23.0%, respectively. The Supramax main routes witnessed a growth between 14% to 47.4%, while the Handys’ voyages showed an increased between 14.9% to 38.8%.
Average of C5 route and Average ofCapesize 6-Months Hire Rate - by Month
0
2
4
6
8
10
12
10K
15K
20K
25K
Jul 2020 Jan 2021
Average of Value Average of Hire RateAverage of C5 Average of Hire rate
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Sale & Purchase Market
Transactions February 2021Week
S&P Sales Age DWT Price (US$) Owner Country of Buyer
88888
8
8888
8888888887
ANGELICAQUA ATLANTICATLANTIC BEARBULK HEROCERULEANPHOENIXCIELO DI SANFRANCISCOEDEN BAYFORTUNE IRISFortune RainbowGIOVANNIBOTTIGLIERIGlobe DanaeGlobe ElectraIndigo SilvaINSPIRATIONKURE HARBOURNavios Marco PoloNord VenusPURE VISIONZHONGYU 89ADIRONDACK
The year began strong in the S&P market and it remains at its best, reaching a new high in terms transactions per month. The sustained interest in secondhand vessels reflects on the opposite state of the newbuilding market, as owners look for prompt tonnage to take advantage of freight levels while facing difficulties to place newbuilding orders.
Following good sentiment in the freight market, eighty-five vessels were sold as Scorpio’s exit strategy continues to float tonnage into the S&P market, being responsible for 14 of those transactions.
Greek owners surpassed Chinese buyers for the first time in three months regarding S&P transactions (27 vs 15 respectively). The attention was focused once again on Supramax, Ultramax and Handysize segments, although we have noticed the rebound of interest in Kamsarmax vessels with 18 transactions recorded (highest count in 3+ years).
As to the preferred age group, the main two categories were again 5-9 years and 10-14 years. However, we noted a shift compared to the last three months since the interest concentrated in ships with 10-14 years of service.
Handysize
Age Group 0-4 years 5-9 years 10-14 years 15-20 years 20+ years Total
Handymax Supramax Ultramax Panamax Kamsarmax Post Panamax Capesize VLBC Total
The activity in shipbuilding continues its downward slide with February orders at the lowest in 3 months. Orders were reminiscent of November 2020 activities with 16 units overall.This represents a 3-unit decrease from last month. Kamsarmax was the most ordered Vessel size this month with 10 units ordered while there were 4 and 2 orders for Capesize and VLBC, respectively. Shipowners are still enjoying the freight rates, although their hands appear to be tied as banks are more frugal with funds as they wait it out to see how environmental regulations and the slew of new technologies been developed and deployed fare in what is essentially a game of who will bell the cat.
Tonnage ordered byyear
0M
5M
10M
2018 2019 2020
8.9M 8.2M8.4M
Size Group January
February
KamsarmaxUltramaxCapesizeHandymaxPanamaxVLBC
58 33
10 4 2
Total 19 16
Size Group Jan '21 Feb '21
2021
0
10
20
30
January
February
/
3.41% 2.27%
Demolition Market
Transactions - FebruaryVessel Week
Vessel Age Location of Delivery USD / LDT LDT (MT) Sale Price
Power LoongVictoriyaKT 02KT 05RigelBARBARABLUE SEA
%GT Count of Vessel by Vessel Age (groups) - 2020 & 2021
30 or Over 25
Less than or Equal to 20
23
27
24 26
28
29
21
22
17.9%
14.7%
14.7%
11.6%
10.5%
9.5% 8.4%
4.2%
4.2%
2.1%
2.1%
Demolition Activity - LDT by Month
0.0M
0.2M
January
FebruaryMarc
hApril May June
JulyAugust
September
October
November
December
Year 2019 2020 2021
Count of Vessels by Location ofDelivery - 2020 & 2021
44.4%
Bangladesh 39.7%
India 11.1%Other 4.8%
Pakistan
Demolition Market CommentsThe month saw subbed demolition market activity. 7 vessels were scrapped in February, a 53% decrease from January. The average age was 25 and all vessels sold were under 30 years old. Bangladesh started the month strong carrying on from January but was soon stalled as Pakistan snapped up all tonnage on the market in Week 8. Nevertheless, Business was evenly split between Bangladesh and Pakistan, as the South Asian neighbours continue to compete for market share. While India prices added USD5/LDT in week 7, it was not enough to attract tonnage owners. Turkey was avoided by Tonnage owners as their LDT prices kept regressing all month. There was a 1.2% net increase in LDT prices in Bangladesh over the month, while Pakistan price increased 3.5% over the course of the month after previously sliding to USD425/LDT at the end of January. Despite the slight price recovery, D&F Shipping Market Analysis believes demolition activity in the months ahead would continue to be lukewarm.
IRON OREVALE WELCOMES DECISION TO LIFT ITABIRUÇU DAM. CYCLONE LUCAS DISRUPTS PORT OPERATIONS IN AUSTRALIA AS AUSTRALIAN MINERS SEEK REGULATORY APPROVAL TO EXPAND Heavy rains exacerbated by Cyclone Lucas led to major port shutdowns in the first week of February. More than 100mm of rain fell in parts of the Pilbara forcing the ports to close between 30-31 January. Ports of Dampier and Cape Lambert were also closed as the rains rendered rail networks that connect the ports to mines impassable. The rain receded and normal service resumed with Rio Tinto, BHP, Fortescue Metals and Rory Hill, cumulatively loading Vessels with capacity of 16.36mn dwt. This is as expected was down from 18.3mn dwt from week ending February 13, and 1.03mn dwt less than last year’s average. Roy Hill loaded vessels with 416,000dwt capacity in the latest week, down from 1.38mn dwt a week earlier and 63pc below its annual rolling average of 1.14mn dwt/week. There is great optimism amongst Australian Miners for demand growth to pre-pandemic levels in the coming months and are unveiling plants to increase production and export capacity. Elizabeth Gaines the Fortescue Metals Group Chief Executive is quoted as saying "ex-China activity is also picking up to pre-COVID levels,". This sentiment is confirmed as BHP asked the Western Australian regulators to grant it more port capacity. If BHP plans are approved, its exports could rise by more than seven percent. Similarly, Roy Hill seeking approval to expand output further to 65mn t/yr, which may help reduce the need for these quarterly shutdowns, the company regularly stops shipping for around a week each quarter with the last shutdown in mid-November. Meanwhile the Iron Ore trade Ongoing supply issues continue with tight supply from Brazil since 2019 and COVID-19-related disruptions at Brazil’s Vale a key factor pulling seaborne iron ore prices to record levels in recent months. Supply from Brazil's top miner Vale has been affected since the 2019 rupture of a tailings dam at Brumadinho, Minas Gerais. There could be easing of the supply issues as emergency level at Vale’s Itabiruçu dam part of the Itabira complex, have been lifted. The Brazilian Iron Ore giant hailed the decision as an "important step" towards meeting its 400mn t/yr iron ore production capacity target for the end of 2022. Vale produced 23.9mn t of iron ore from Itabira complex in 2020, down by 33.5pc from 2019, with December quarter production lower by 24.2pc on the year to 6.1mn t. The potential capacity of Itabira complex is 40mn t/yr, according to Vale.
COALTHE RIPPLE EFFECT OF CHINA'S BAN ON AUSTRALIAN COAL CONTINUES
China imposed an informal ban on Australian coal imports last October, after unloading delays worsened mid-year. Eight vessels of Australian coking coal were allowed to discharge at Jingtang and Caofeidian ports in north China, in what is likely a humanitarian. Recent reports suggest there may be up to 42 vessels still waiting discharge orders at anchorage despite owners’ best efforts to resell the coal on the spot market. The Ripple effect continues to be felt down under with BHP looking to divest its investment in Coal with a possible sale or spin-off been considered its Chief Executive Mike Henry told reporters. China is also moving to boost local production of Coal to forestall a repeat of this year’s winter supply dip with state-owned Longmay Mining reporting increased production of 32% in January from 2.56million tonnes in 2020. Meanwhile, The Sydney Morning Herald reports Hay Point terminal operator Dalrymple Bay Infrastructure’s reported a maiden net loss of $113 Million as coal volumes shipped from its terminal dropped to 55 million tonnes in 2020, down 12 million tonnes from 2019. Nonetheless, Dalrymple Bay Infrastructure’s Chief executive Anthony Timbrell is optimistic saying “the apparent ban of Australia coal exports to China, has caused a bit of a re-casting of coal flows globally” with “more coal going into Europe than what we would ordinarily expect,”. He also believes “traditional customers in Japan, Korea,Taiwan and India have still been shipping significant volumes,” due to “underlying demand strength in the steel industry.” Canberra however forecast exports of metallurgical coal will fall by around 8 million tonnes to 169 million tonnes this year due to lower demand, while thermal coal will fall from 213 million tonnes to 199 million tonnes. Argus Media reports indicate thermal Coal demand will continue to weaken in the coming weeks as a combination of returning nuclear capacity, and rising temperatures continue after severely cold winter months which increased demand for electricity as Power plants in Japan switched to Coal due to higher LNG Spot prices. China’s Meteorological Administration expects a 10-20°C rise in temperature while Japan forecast a 40% chance temperature climbing higher than the monthly average in March.
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CHINA’S GRAIN BUYING SPREE WANES AS REPORTS EMERGE OF A NEW OUTBREAK OF AFRICAN SWINE FEVER. US CORN EXPORTS FACING TOUGH COMPETITION China hog herd rebuild after the outbreak of African Swine fever is under threat due to a fresh outbreak of the disease leading to concerns the second wave could lead to millions of hogs been disposed of. China had continued to buy millions of tonnes of grains as it sort to rebuild its pig herd. Chinese buying has contributed to higher prices for key crops and to food inflation worldwide as concerns about food security during the COVID-19 pandemic drive governments and industry to stock up. In response, Russia announced a new export regime limiting export of key grains following the unexpected ban of Corn exports by Argentina last month which has since been lifted. These export ban pushed "China’s domestic corn prices continue to be at a premium to wheat,” USDA noted in a report. China therefore turned to wheat as a cheaper alternative in making feed for the herd. This has quickly resulted in in higher prices of Wheat in Russia and Ukraine with the EU revising forecast of Wheat exports to 27 million tonnes from 26 million projected in January. However, export estimates are still 10 million tonnes below 2019/2020 estimates with a combination of a shift from China back towards traditional outlets and expected bumper Australian wheat harvest in the later part of the year increasing competition. USDA expects US corn exports to take a hit as the rest of the world look to expand Corn production and boost food security amid the pandemic. China is stepping up its corn planting acreage, China’s Agriculture ministry targeting more than 667,000 hectares adding planting acreage. European Commission data indicate total corn imports into the area reached 10.38 million tons, bulk of the import was from Brazil 40% and Ukraine 38%. The commission also reduced its forecast for 2020/2021 EU Imports from 18.5 million tonnes to 16.5 million tonnes. the USDA admits that increased global production and exports could limit US corn exports with Brazil and Argentina projected to export 73 million mt while improved weather conditions in Ukraine would contribute global corn export volumes. Furthermore, a stronger dollar against Brazilian real, Argentine Peso and the Ukrainian hryvnia will lead to a lower Us corn exports later in the year despite the foregoing, USDA forecast US corn exports to remain strong at an estimated 2.650 billion bushels. Brazilian Soybean farmers harvest were disrupted by heavy rains even as vessels waiting at anchorage continued to increase. This has led to supply shortages in China with industry stakeholders supply troubles could continue up until April as ‘’Bean shipments from Brazil to southern China will be very limited in March. Supplies will be tight’’ said a manager with a major crusher in southern China. Meanwhile Soybean crushers are curtailing operations due to the harvest delays. Sources: Reuter, World Grain
Wheat Price ($/t) -November
220
230
240
250
01 Feb 26 Feb
Soybean Meal Price ($/bl) -November
13.4
13.6
13.8
14.0
14.2
14.4
01 Feb 26 Feb
Corn Price ($/bl) -November
5.4
5.5
5.6
01 Feb 26 Feb
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