– Freight Market Report – Juli 2015
ICMA – Freight Market Report
(3 July 2015)
Fleet Supply Slowdown
Freight Market Overview
Capesize and Panamax markets have both reached year-to-date highs in
recent weeks. As a result in late June the Baltic Exchange Dry Index (BDI)
climbed above 800 points for the first time in 2015. By the standards of recent
years, this remains a low average; last year’s annual average was 1,105
points.
The upturn has been most pronounced in the Capesize sector, where the
average earnings for 172,000 dwt vessels were languishing around
$4,250/day at the beginning of June, but subsequently advanced to
$9,467/day by 25 June. The average was pulled higher by eye-catching
upward movement in the Atlantic, where round voyage rates jumped to
$10,250/day on 25 June from $3,275/day on the opening day of the month.
Rapid gains in the Atlantic basin were accompanied by improvements in the
Pacific. The Pacific round voyage rate for example almost reached
$9,000/day towards the end of the month, having stood near $5,000/day as
June began. The resulting positive effect on Pacific coal freight rates has seen
the Richards Bay-Qingdao rate appreciate to $10.80/t, marking a leap of
$3.80/t in the past two weeks alone. Consequently, the period market has
also received a boost, with the one-year rate for Capesizes rising to
$11,500/day.
At over $7,000/day, the current Panamax 4 TC average (basis 74,000 dwt) is
not only the highest of the year, but is also almost $3,000/day above the level
seen at the start of June. Rate gains in this sector have been Atlantic-led, but
the ballast option presented to operators in the Pacific has pushed the round
voyage rate up from $4,212/day to more than $6,100/day over the same
period. The Newcastle-Qingdao spot freight rate is now $8.80/t, but did rise
above $9/t in the second half of June for the first time this year.
Rates in the geared sectors have seen a more gradual improvement over the
past month. Having been the strongest performing bulker sector for much of
this year, the timecharter average for Baltic Exchange-type Supramaxes (of
52,545 dwt) has now been overtaken by Capesizes. Nonetheless, the TC
average climbed above $7,500/day in late June compared with $6,814/day at
the beginning of the month. The S8 rate from Indonesia to East Coast India
has mirrored this development, increasing by roughly $850/day to above
$7,000/day in late June. Handysize average earnings (28,000 dwt) meanwhile
experienced a more gradual gain of around $500/day to $5,313/day by time of
writing.
Dry Bulk Trade Developments
-1-
Chinese dry bulk imports are estimated to have recorded a fourth successive
quarter of annual decline in the 2q15, primarily due to further steep drops in
coal imports coupled with iron ore import growth turning negative in May.
Although May’s global crude steel production total of 138.9 Mt was the highest
in 12 months, it still marked a 2.1% year-on-year fall. This was the fourth
consecutive month of annual output decline in both China and in the rest of
the world.
East Coast South America was the focal point of increased Panamax
chartering activity in June, with Brazil’s soyabean exports establishing an alltime high of 9.8 Mt last month. The International Grains Council expects that
Chinese soyabean imports will rise by 4.5 Mt to 78.0 Mt in 2015/16 (Oct-Sep),
while US soya exports are predicted to reach a near-record 59.0 Mt (-1.8 Mt
from the estimate for 2014/15. Despite this relatively positive outlook for
grains, the weakness in coal trade volumes is playing a key role in limiting
world seaborne dry bulk trade growth this year.
Fleet Supply Developments
A Capesize newbuilding delivery total of 44 since the beginning of the year
coupled with 65 vessels removed from the fleet by scrapping means that in
dwt capacity terms the Cape fleet has shrunk by 0.7% in the year to date.
Since the turn of the year 73 Panamax newbuilding deliveries have
outnumbered the 50 vessels scrapped over the same period. For comparison,
the highest year for Panamax demolition, 2012, saw 69 vessels removed from
the fleet through scrapping.
Of the 129 newbuildings entering the 40,000-64,999 dwt “Handymax” fleet this
year, 96 have been Ultramax designs of 60,000-64,999 dwt. This has
propelled Handymax net fleet expansion to 3.3% in the year to date, and, in
turn, has pressured Panamax vessel earnings, where net growth is a less
rapid 1.2%.
In the Handysize segment, newbuilding deliveries (89) have been
outnumbered by vessels removed from service for scrap (103). Due to the
larger size of newbuildings, this has led to a slight gain in dwt capacity (of
0.1%).
Market Outlook – Freight Futures
The upward movement in the physical markets described above has
translated into some gains in freight futures (FFA) prices. For example, the
Capesize 4 TCs are trading around $14,000/day for the 4q15 at close of
business on 2 July, as opposed to just over $9,000/day two months ago.
Some retreat is anticipated for the 2016 calendar year FFA contract, which is
priced at $11,650/day. Turning to the Panamax market, there is comparatively
little premium to the current physical market along the FFA forward curve, with
-2-
the 4q15 close to $8,000/day and the 2016 calendar year FFA contract
trading a fraction under $7,000/day.
SSY Consultancy & Research
3 July 2015
Whilst care has been taken to ensure that the information contained in this report is
accurate, it is supplied without guarantee. SSY Consultancy & Research Ltd can
accept no responsibility for any errors or omissions or any consequences arising
therefrom. The views expressed are those of SSY Consultancy & Research Ltd and
do not necessarily reflect the views of any other associated company.
Panamax Coal Spot Freight Rates
$30
Indonesia-Qingdao
E.Kalimantan-Krishnapatnam
$25
Newcastle-Qingdao
$15
$10
$5
Source: SSY
-3-
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
$0
May-10
USD/t
$20
Capesize Coal Spot Freight Rates
$30
Newcastle-Qingdao
Richards Bay-Qingdao
$25
Gladstone-Japan
Newcastle-Zhoushan
$15
$10
$5
Source: SSY
-4-
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
$0
May-10
USD/t
$20
(3 July 2015)
Fleet Supply Slowdown
Freight Market Overview
Capesize and Panamax markets have both reached year-to-date highs in
recent weeks. As a result in late June the Baltic Exchange Dry Index (BDI)
climbed above 800 points for the first time in 2015. By the standards of recent
years, this remains a low average; last year’s annual average was 1,105
points.
The upturn has been most pronounced in the Capesize sector, where the
average earnings for 172,000 dwt vessels were languishing around
$4,250/day at the beginning of June, but subsequently advanced to
$9,467/day by 25 June. The average was pulled higher by eye-catching
upward movement in the Atlantic, where round voyage rates jumped to
$10,250/day on 25 June from $3,275/day on the opening day of the month.
Rapid gains in the Atlantic basin were accompanied by improvements in the
Pacific. The Pacific round voyage rate for example almost reached
$9,000/day towards the end of the month, having stood near $5,000/day as
June began. The resulting positive effect on Pacific coal freight rates has seen
the Richards Bay-Qingdao rate appreciate to $10.80/t, marking a leap of
$3.80/t in the past two weeks alone. Consequently, the period market has
also received a boost, with the one-year rate for Capesizes rising to
$11,500/day.
At over $7,000/day, the current Panamax 4 TC average (basis 74,000 dwt) is
not only the highest of the year, but is also almost $3,000/day above the level
seen at the start of June. Rate gains in this sector have been Atlantic-led, but
the ballast option presented to operators in the Pacific has pushed the round
voyage rate up from $4,212/day to more than $6,100/day over the same
period. The Newcastle-Qingdao spot freight rate is now $8.80/t, but did rise
above $9/t in the second half of June for the first time this year.
Rates in the geared sectors have seen a more gradual improvement over the
past month. Having been the strongest performing bulker sector for much of
this year, the timecharter average for Baltic Exchange-type Supramaxes (of
52,545 dwt) has now been overtaken by Capesizes. Nonetheless, the TC
average climbed above $7,500/day in late June compared with $6,814/day at
the beginning of the month. The S8 rate from Indonesia to East Coast India
has mirrored this development, increasing by roughly $850/day to above
$7,000/day in late June. Handysize average earnings (28,000 dwt) meanwhile
experienced a more gradual gain of around $500/day to $5,313/day by time of
writing.
Dry Bulk Trade Developments
-1-
Chinese dry bulk imports are estimated to have recorded a fourth successive
quarter of annual decline in the 2q15, primarily due to further steep drops in
coal imports coupled with iron ore import growth turning negative in May.
Although May’s global crude steel production total of 138.9 Mt was the highest
in 12 months, it still marked a 2.1% year-on-year fall. This was the fourth
consecutive month of annual output decline in both China and in the rest of
the world.
East Coast South America was the focal point of increased Panamax
chartering activity in June, with Brazil’s soyabean exports establishing an alltime high of 9.8 Mt last month. The International Grains Council expects that
Chinese soyabean imports will rise by 4.5 Mt to 78.0 Mt in 2015/16 (Oct-Sep),
while US soya exports are predicted to reach a near-record 59.0 Mt (-1.8 Mt
from the estimate for 2014/15. Despite this relatively positive outlook for
grains, the weakness in coal trade volumes is playing a key role in limiting
world seaborne dry bulk trade growth this year.
Fleet Supply Developments
A Capesize newbuilding delivery total of 44 since the beginning of the year
coupled with 65 vessels removed from the fleet by scrapping means that in
dwt capacity terms the Cape fleet has shrunk by 0.7% in the year to date.
Since the turn of the year 73 Panamax newbuilding deliveries have
outnumbered the 50 vessels scrapped over the same period. For comparison,
the highest year for Panamax demolition, 2012, saw 69 vessels removed from
the fleet through scrapping.
Of the 129 newbuildings entering the 40,000-64,999 dwt “Handymax” fleet this
year, 96 have been Ultramax designs of 60,000-64,999 dwt. This has
propelled Handymax net fleet expansion to 3.3% in the year to date, and, in
turn, has pressured Panamax vessel earnings, where net growth is a less
rapid 1.2%.
In the Handysize segment, newbuilding deliveries (89) have been
outnumbered by vessels removed from service for scrap (103). Due to the
larger size of newbuildings, this has led to a slight gain in dwt capacity (of
0.1%).
Market Outlook – Freight Futures
The upward movement in the physical markets described above has
translated into some gains in freight futures (FFA) prices. For example, the
Capesize 4 TCs are trading around $14,000/day for the 4q15 at close of
business on 2 July, as opposed to just over $9,000/day two months ago.
Some retreat is anticipated for the 2016 calendar year FFA contract, which is
priced at $11,650/day. Turning to the Panamax market, there is comparatively
little premium to the current physical market along the FFA forward curve, with
-2-
the 4q15 close to $8,000/day and the 2016 calendar year FFA contract
trading a fraction under $7,000/day.
SSY Consultancy & Research
3 July 2015
Whilst care has been taken to ensure that the information contained in this report is
accurate, it is supplied without guarantee. SSY Consultancy & Research Ltd can
accept no responsibility for any errors or omissions or any consequences arising
therefrom. The views expressed are those of SSY Consultancy & Research Ltd and
do not necessarily reflect the views of any other associated company.
Panamax Coal Spot Freight Rates
$30
Indonesia-Qingdao
E.Kalimantan-Krishnapatnam
$25
Newcastle-Qingdao
$15
$10
$5
Source: SSY
-3-
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
$0
May-10
USD/t
$20
Capesize Coal Spot Freight Rates
$30
Newcastle-Qingdao
Richards Bay-Qingdao
$25
Gladstone-Japan
Newcastle-Zhoushan
$15
$10
$5
Source: SSY
-4-
May-15
Feb-15
Nov-14
Aug-14
May-14
Feb-14
Nov-13
Aug-13
May-13
Feb-13
Nov-12
Aug-12
May-12
Feb-12
Nov-11
Aug-11
May-11
Feb-11
Nov-10
Aug-10
$0
May-10
USD/t
$20