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Intermodal Report – Week 30 2021

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Intermodal Report Week 30 2021

Market insight 

By George Kallianiotis,

Valuation Department

Unlike the Dry Bulk and Container sectors where freight rates have surged into 2021, the tankers market continues to experience lackluster earnings hovering at the bottom of the cycle according to analysts’ consensus, as the oil and products inventories destocking cycle is coming to an end.

Tankers Sale & Purchase transactions in number of vessels have underperformed those in dry and containers, however asset values have appreciated regardless, as expectations for a recovery tracking oil demand growth and elevated steel prices have disconnected asset values from the freight market. We expect the trend to continue in the coming months, with further asset value appreciation particularly if a market recovery takes place before the end of the year. Last but not least, over the past two months, we observe tanker deals to be concentrated on the products tonnage, with MRs attracting increased interest.

Below we present a brief overview of the S&P transactions that took place since Q2 2021 up to late July 2021.

During April 2021, more than 50 deals took place in the Tanker sector. Aframax tankers contributed close to 36% of the total deals whilst around half of them were in the 5-year-old mark up to resale. MR Tankers (including Handysize vessels) were responsible for an around 23% of the entire deal landscape whilst VLCCs hold a slightly bigger proportion; most of them in both segments were older than 10-year-old. Finally, Panamax and Suezmax vessels were the less preferable holding less than 15% of the recorded deals.

During May 2021, transactions decreased by at least 50% compared to April 2021. The deals were equally distributed across all segments with circa 5 vessels corresponding to each one. It should be noted that most of the vessels that changed hands were older than 10 years.

In June 2021, we witnessed a further reduction in the number of transactions by an additional 50% comparing to May 2021 with slightly more than 10 deals taking place; half of the vessels that changed hands were MR tankers.

During July 2021, contrary to the past couple of months, transactions increased close to the number that was recorded the fifth month of the year. The deals were congregated in the MR, Aframax and VLCC segment with a rather equal number of vessels to each one whilst Panamax and Suezmax vessels were again the less preferable.

 Chartering (Wet:

Stable- Dry: Firmer)

With Capesize segment paving the way, the dry bulk market noted another positive week. On the other hand, the Panamax sector suffered its fourth consecutive weekly discount. The BDI today (03/08/2021) closed at 3,281 up by 115 points compared to previous Tuesday’s (27/07/2021) levels. The negative performance continues to prevail in the crude carrier market which saw another week of depressed activity and unhealthy rates. The BDTI today (03/08/2021) closed at 604, an increase of 10 points, and the BCTI at 503, an increase of 32 points compared to previous Tuesday’s (27/07/2021) levels.    

Sale & Purchase (Wet: FirmerDry: Firmer)

The SnP activity has finally noted an uptick with the volume of the dry bulk secondhand sales being at healthier levels compared to the prior weeks. However, the Tanker SnP activity remained subdued, a more or less expected outcome if one looks at the poor performance of the freight market. In the tanker sector, we had the sale of the “TSURUGA” (309,960dwt-blt ’09, Japan), which was sold to Greek buyers, for a price in the region of  $39.0m. On the dry bulker side sector, we had the sale of the

“HARK OLDENDORFF” (209,325dwt-blt ’16, China), which was sold to USA based owners, J.P. Morgan, for price in the region of $45.0m.

Newbuilding (Wet:

Stable+ / Dry: Firmer)

The newbuilding market activity witnessed a healthy volume of new contracts with the more conventional type of units finally composing the biggest part of the order list. Starting with the tanker realm, Bihar International exercised an option for two 110,000dwt LR2 vessels at New Times yard. Bulker units had the largest market share last week; Belgian owner CMB inked a deal for two firm plus two optional conventionally fuelled 210,000dwt units at Qingdao Beihai at a price of $61.0 million each. In addition to that, Shandong Shipping ordered two 85,000dwt vessels at DSIC while Nisshin Shipping declared an option for five 82,000dwt Kamsarmax units at Jiangsu Hantong. On the non-conventional sectors, Norweigan owner Knutsen concluded a deal for the construction of two 174,000cmb LNG units at Hyundai HI against a T/C to PGNiG while Zhoushan Changhong secured a deal for the construction of four firm plus two optional conventionally fuelled 5,300teu boxships on behalf of Navios Maritime at a price of $61.6 million each.

Demolition (Wet:

Firmer / Dry: Firmer)

The demolition market activity continues to oscillate between an apparent shortage of supply and historically high average scrap prices. At the same time, steel plate prices across the Indian sub-continent are hovering at strong levels with breakers in India enjoying further export opportunities amid China’s decision to cancel more steel export rebates from the 1st of August. In terms of offered levels, Bangladesh remained the top bidder followed by Pakistan which is showing a steady appetite for new tonnage however with breakers unwilling to reach the levels of their Bangladeshi competitors at the time of writing. The Indian market has made the headlines last week in the demolition front, with a notable increase in offered levels which helped local buyers to finally compete with their more aggressive neighbors. On the other hand, market activity in Turkey remained almost unchanged, with no rises on offered levels compared to the previous week while no fresh units have destined for recycling last week. Average scrap prices in the different markets this week for tankers ranged between 290-595/ldt and those for dry bulk units between $280-585/ldt.

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