Intermodal Report – Week 18 2021

Market insight by Nassos Soulakis, SnP Broker

Tanker S&P is finally back!

For an extended period, Dry bulk & Wet market rates have been diverging, with the SnP deals on each sector more or less tracking the market trend. However, since April, this trend appears to be revoked; despite a lackluster tanker freight market, tanker SnP transactions gained pace tracking the bulkers volumes. It is interesting to note, that older tankers units attracted the majority of SnP interest, contrary to bulkers, where the majority of transactions took place for 10Y old units and younger. Record high steel prices are supporting asset values across the board, despite the tanker market underperforming, with owners positioning for a market recovery, while older units are still relatively undervalued. 

More specifically, analyzing the S&P activity of both sectors since the beginning of this year we would observe that in January, 63 Dry Bulk deals were recorded. Among these close to 40% (25 units) correspond to Supramax vessels while around 20% (13 units) to Panamax/Kamsarmaxes. Handysize and Capesize vessels hold an equal proportion of around 15% (9 units) each whilst 5 Ultramax and 2 Handymax vessels changed hands. With regard to the age distribution, 11% were around 5Y old, 60% 10Y old and 29% around 15Y and older. With reference to Tanker vessels, 29 units were sold; 12 VLCC, 7 MR, 4 Aframax, 3 Handysize and 3 Suezmax vessels. Close to 35% were aged around 5 yrs old and younger, 7% around 10Y old and close to 58% 15Y old and older.

During February 2021, 64 deals in the Dry Bulk sector were reported. More than one-third of them (24 vessels) corresponded to Supramax vessels, Panamax/Kamsarmax vessels hold nearly 25% (15 units) of the entire activity while Handysize units contributed around 20% (13 units). In addition, 4 Capesize, 3 Post-Panamax, 3 Ultramax and 2 Handymax vessels were sold. Around 75% of the vessels committed were aged around 10Y old. As far as the Wet Sector, 25 vessels changed hands; 8 Suezmax, 7 Aframax, 4 VLCC, 4 MR and 1 Handy Tanker. The 80% of them were aged around 15Y old and older.

In March 2021, 86 Dry Bulk vessels were committed. Panamax/Kamsarmax vessels hold a 30% (26 units) of the entire SnP realm followed by Supramax vessels which hold a proportion of 25% (22 units). Handysize totalled 18 (21%) while Capesize vessels contributed 15% (13 units) of the total SnP activity. Finally, 4 Ultramax and 3 Post-Panamax vessels changed hands. Regarding the age of the above mentioned vessels, 18% were around 5 yrs old and younger, 57% around 10 yrs old whilst the rest 25% around 15 yrs and older. Tanker sales amounted at 37; 15 Aframax, 13 MR, 5 VLCC and 4 Handy Tanker vessels. The 13,5% of the Tanker vessels were aged around 5 yrs old and younger while 40,5% around 10 yrs old and 46% around 15 yrs old and older.

In April 2021, 62 Dry Bulk deals were concluded. Panamax/Kamsarmaxes and Handysize sustained a 30% and around 20% of the entire realm while Supramaxes fell to a proportion of around 18%. Capesize amounted at 11 units (18%) while 8 Ultramax and 1 Post-Panamax changed hands. As far as the age distribution, slightly more than 30% were 5Y old and younger, more that 50% around 10Y old and 15% around 15Y and older. In the Wet market, 58 deals were recorded; 23 Aframax, 14 VLCC, 11 MR, 4 LR1 and 4 Suezmax units. Around 21% of them were aged 5Y old and younger, slightly more that 12% around 10Y old and close to 67% 15Y old and older.

Chartering (Wet:

Softer / Dry: Firmer)

Exceptional gains for the dry bulk owners for another week, with the Panamax sector taking the lead in terms of w-o-w improvement followed by the Capesize outstanding performance. Geared size rates have been on a rise as well. The BDI today (11/05/2021) closed at 3,254 up by 97 points compared to previous Tuesday’s (04/05/2021) levels. Rates for the crude carrier sectors remained at disappointing levels for another week with Far Eastern holidays adding to the overall sluggishness of the market. The BDTI today (11/05/2021) closed at 606, an increase of 4 points, and the BCTI at 504, an increase of 42 points compared to previous Tuesday’s (04/05/2021) levels.

Sale & Purchase (Wet:

Stable+ / Dry: Stable+)

Despite the overall negative performance in the tanker freight market, SnP activity for the respective sector remains healthy. In addition, buying interest for dry bulk secondhand units is strong, a trend strongly supported by the robust freight market performance that is blessing bulkers with very high earnings. In the tanker sector, we had the sale of the “JIU HUA SAN” (317,977dwt-blt ’09, China), which was sold to undisclosed buyers, for a price in the region of $37.0m. On the dry bulker side sector, we had the sale of the “JAIGARH” (82,166dwt-blt ’10, Japan), which was sold to Greek buyers, for a price in the region of $19.0m.

Newbuilding (Wet:

Softer / Dry: Softer)

Following the strong volumes of newbuilding contracts that we have been witnessing since the beginning of 2021, shipbuilding activity was significantly softer last week, with non-conventional units monopolizing the owner’s interest. Huangpu Wenchong shipyard secured orders for container and LPG units at a total cost of approximately $290.0 million if all options are exercised. Chinese owner, Tianjin Southwest Maritime, has inked a deal for two conventionally fuelled 5,000 cbm LPG units at a price close to $30.0 million each. At the same time, the Cyprus-based Green World order consisted of two 2,700teu and two 1,900teu box ships for $32.0 million and $26.0 million each respectively while the owner holds the option for two more units across both sizes. Lastly, it came to light that Italian owner Fratelli Cosulich concluded an order for the construction of one firm plus one optional 8,000cbm LNG bunkering at CIMC SOE for $45.0 million.

Demolition (Wet: Stable+ / Dry: Stable+)

Price levels continued to improve for yet another week with some spectacular numbers surfacing on the market. Indeed, average scrap prices across the Indian subcontinent markets are now posted above $500 per ldt; both Bangladeshi and Pakistani breakers are countering each other for the leading role in the region while in India, offered price levels gained a further $10/ldt w-o-w. Whilst steel plate prices supported the aforementioned improvements, ongoing conditions across all demo nations are far from ideal with lockdowns being extended amidst increasing Covid-19 cases. Bangladeshi government announced the extension of their national lockdown up to 16th May while in Pakistan, scrapping yards have ceased their operations. India is struggling due to record highs Covid-19 cases which have led to oxygen supplies deficiency. In the West, Turkish cash buyers also increased their bids on the back of improved steel plate prices. The Turkish lira also managed to stabilize its downward trajectory while the number of cases has been on a decline during the past week. Average scrap prices in the different markets this week for tankers ranged between 275-520/ldt and those for dry bulk units between $265-510/ldt.