Home World Intermodal Report – Week 46 2021

Intermodal Report – Week 46 2021

Please find below the Intermodal market report for week 46 2021.

Market insight 

By Zisis Stylianos,

SnP Broker

Inflation is the word that has dominated the meetings of foreign leaders and finance ministers in recent weeks, as rising energy costs, supply chain disruptions and monetary easing by states to support the economic recovery has in turn triggered concerns over the trajectory of growth from now on.

According to the Financial Times, the consumer price index in the United Sates and the eurozone rose at the fastest pace in 30 years. The global growth rate is expected to come at 5.9% this year, lower than the 6% that the International Monetary Fund predicted in July, but the fund expects inflation to ease in the next year, albeit the path is uncertain as the labor participation rate has yet to catch up, implying that higher inflation will linger some more until that happens.

Upward pressure on commodities has benefitted dry bulk freight rates up to now, but countries are deploying polices to mitigate price rises, with the example of China trying to rein in the coal surge by increasing domestic supply ahead of the heating season, and the United States announcing a while ago the release of oil from the strategic petroleum reserves in cooperation with other countries, namely China, Japan, India, South Korea and the United Kingdom.

The move will be unprecedented as major countries try to tame crude oil prices after OPEC countries rejected US calls for increased production. The move would put these countries against OPEC+, led by Saudi Arabia and Russia, for control of global oil markets and could prompt the group to reassess plans to revive oil supplies at their next meeting in early December, with potential implication on the tankers market that had just started to show signs of life.

While the macro uncertainty and above policies, along with the slow-down in China’s construction sector have been weighing down on dry over the past month– the market is showing signs of stabilization during the current week. It looks like the fundamental drivers of coal demand, increased congestion at Pacific discharge ports and a rebound in iron ore exports are still there to support the market off the recent bottom, before we head into the seasonal weakness of the first quarter

Chartering (Wet:

Softer Dry: Softer)

Losses were extended in the dry bulk market with Panamax sector suffering the biggest discounts w-o-w. The BDI today (23/11/2021) closed at 2,715 up by 124 points compared to previous Tuesday’s (16/11/2021) levels. The crude tanker market ended down last week, with pressure seen across all sizes. The BDTI today (23/11/2021) closed at 753, a decrease of 49 points, and the BCTI at 618, an increase of 10 points compared to previous Tuesday’s (16/11/2021) levels.    

Sale & Purchase (Wet:

Softer Dry: Softer)

The dry bulk and tanker secondhand market activity has slightly slowed down last week. On the other hand, appetite for Container units was strong with a good volume of deals materializing. In the tanker sector, we had the sale of the “ASTRO PERSEUS” (159,116dwt-blt ’04, S. Korea), which was sold to Middle Eastern buyers, for a price in the region of $18.5m. On the dry bulker side sector, we had the sale of the “CHINA STEEL REALIST” (203,512dwt-blt ’07, Taiwan), which was sold to Chinese buyers, for a price in the region of $21.5m.

Newbuilding (Wet:

Softer / Dry: Softer)

It’s been a while since we saw such a short list of new constructions like the one compiled for last week’s orders. Indeed, only one order was inked; Croatian owner Atlantska exercised an option for the construction of two more 82,000dwt vessels at New Hantong yard for a price of $34.25 million each. With almost one month remaining for the end of 2021, this years’ newbuilding contracting activity clearly belongs to LNG and Container segments. Dry bulk newbuilding deals have also found support amidst the exceptional earnings that the market has been enjoying during this year so far, while crude tanker appetite for newbuilding units have been bearish during the second half of the year, a more or less expected approach if we take into account the rates that are prevailing in the tanker freight market during this year.

Demolition (Wet: Stable-

/ Dry: Stable-)

The demolition market seemed to be stabilizing during the past week in terms of the offered scrap levels from the Bangladeshi and Pakistani breakers while a noteworthy decrease materialized in Indian bids amidst a continuous decline in steel plate prices. Indeed, we saw average scrap levels losing $20/ldt w-o-w with Alang buyers being reluctant to compete with their neighbors under these circumstances. A more modest approach was also adopted from the Bangladeshi and Pakistani breakers; Indian decline has shaken market development in the demolition market with prospects unclear for the foreseeable future. As a result, buyers across the Indian-subcontinent regions are more cautious in their bids, in the view of a bearish market ahead. On the other hand, in the Turkish market, the appetite for fresh demo candidates has pushed offered prices upward despite the ongoing historical depreciation of the Turkish Lira. Average scrap prices in the different markets this week for tankers ranged between 330-620/ldt and those for dry bulk units between $320-615/ldt.