Capesize
The Vale dam tragedy sparked a sharp fall in rates across all regions even where tonnage remained tight. The potential loss of production prompted a panic among some owners and operators who chased rates down. Vale did fix a ship on the key run from Tubarao to Qingdao at $13.75 mid-week and as the week closed out the rate was hovering around the mid $13.00s. The North Atlantic still saw limited tonnage availability but fronthaul rates dipped closer to $20,000 and a well described 180,000dwt vessel fixed a transatlantic round at $14,000 daily. In the East, as the Chinese New Year approached, the rate from West Australia to Qingdao dropped to $4.80 with, as yet, little sign of the market finding a floor. Timecharter trading was limited, but certainly rates were significantly lower. However, some owners resisted taking equivalents of voyage rates agreed. There was some back-haul business coming to light with a 135,000dwt 10% coal cargo fixed, from Richards Bay to Hamburg via the Panama Canal, at a rate in the low $9.00s – suggesting a substantial negative return. Period rates were also lower, with a 179,000dwt fixed for 11 to 14 months trading, with China delivery at $15,000.
Panamax
Despite talk of more enquiry in the East last week (seasonal holidays), most fixtures, concluded from Australia and Indonesia, have been on an arrival pilot station (APS) basis, whilst from the North Pacific Kamsarmaxes fixed as low as $4,000 daily for a round trip. The Atlantic followed a similar pattern, with vessels fixing on an APS basis, or on voyage, with many having to agree some waiting time for later cargoes to find cover. Non-South American front-haul saw a Panamax fixed at $10,000, basis Gibraltar delivery, whilst South America appeared to stabilise and even show a slight improvement for end February-early March stems. Meanwhile, Kamsarmaxes concluded at $13,300, plus $330,000 ballast bonus, as opposed to $12,750, plus $275,000 ballast bonus, or lower for earlier dates. Period interest remains from charterers, but not at levels owners would entertain.
Supramax
Since the start of the year the Baltic Supramax Index (BSI) has lost around 50% of its value, and with widespread holidays in Asia in the week ahead the market remained cautious. Period activity was evident, but charterers looked to cover with discounted rates early in the week, and split rate thereafter. Levels from key areas, such as East Coast South America, remained poor, with a 58,000dwt vessel booked at $9,500, plus $95,000 ballast bonus. From the US Gulf, Supramaxes were seeing numbers at around $5,000-6,000 for transatlantic runs. Very little activity was registered elsewhere with tonnage lists growing. Routes in Asia also suffered heavy losses with owners having to give APS rates. An Ultramax was fixed delivery Kalimantan, for trip to West Coast India at $7,000, with limited action further north. Again, the Indian Ocean was slow, with a 63,000 tonner covering delivery South Africa, redelivery Arabian Gulf, to West Coast India range at $11,000 plus $100,000.
Handysize
With the long first month of the year now over, next comes the Chinese New Year celebrations. The Baltic Handysize Index (BHSI) recorded a large fall, from 588 on the first index day of 2019 to 328 on 31 January. Spot ships were building up in both basins with little cargo lending support, brokers said. A few more fixtures were reported from East Coast South America, with a 33,000dwt ship fixing at $5,250 from Recalada, to redeliver in ARA-Ghent range. A 30,000dwt vessel was booked for moving sugar from Santos to the West Mediterranean at $5,000. The same level was concluded on larger Handysize vessels in northern Brazil, for redelivery in the Baltic area, with some waiting days. In the East, two 28,000dwt vessels were fixed via Australia, to redeliver in Singapore/Japan range, in the low-mid $4,000s, basis Singapore delivery from the Persian Gulf. A 28,000dwt was covered at $7,000 for a run to Bangladesh with fertiliser.
Tanker market report
VLCC
In the Middle East Gulf the market for 270,000mt to China fell six points, with Unipec securing WS 48. Going west, Exxon took two ships, at WS 20 Suez/Suez, for 280,000mt to US Gulf. In West Africa, in line with the Middle East market, rates fell almost four points to WS 50. Petroineos fixed Rotterdam to Singapore at $4.75 million, while Hound Point to South Korea went at $5.75 million. CPC fixed US Gulf to Taiwan at $6.3 million.
Suezmax
West Africa initially firmed to WS 80 for 130,000mt to UK-Continent, before easing to low WS 70s. Black Sea/Mediterranean rates for 135,000mt were steady at WS 97.5, with Turkish straits delays of 36 days in total, north and south, supporting the market here.
Aframax
An uneventful week saw rates static at WS 105 for 80,000mt from Ceyhan with Black Sea paying low WS 120s. In the Baltic rates for 100,000mt dropped to WS 87.5. The 80,000mt cross-North Sea market followed suit, losing 7.5 points to WS 105.
Clean
Rates for 75,000mt Middle East Gulf/Japan eased 2.5 points to WS 127.5. The market for 55,000mt fell a further 7.5 points to WS 122.5. Limited enquiry and plenty of tonnage saw rates ease 10 points to WS 125 for a 37,000mt, Continent/USAC, with the market remaining under downward pressure. The 38,000mt backhaul trade from US Gulf initially gained five points, WS 100 before easing to WS 95, with potential to soften further.
Freightos Baltic container report
Summary
Business in China has already started winding down in advance of the next week’s week-long public holiday. The rush to get shipments out beforehand has held China-West Coast prices above the $2,000 mark and China-East Coast prices above the $3,000 mark for the past four weeks. At $2,102, West Coast prices were down just $8 on last week. East Coast prices went up $20 to $3,312.
China’s week-long Spring Festival holiday has nudged transpacific ocean prices over the West Coast’s $2,000 mark and East Coast’s $3,000 mark for the past four weeks now. However, prices typically drop away once China gets back into full production. West Coast prices dropped 25% and East Coast prices dropped 22% in the three weeks following the holiday. In 2017, they dropped 17% and 12%, respectively. This year should be no different – we’ve already seen some carriers cancel their 1 February general rate increases (GRIs).
What may buck this trend, by artificially boosting demand, is another trade tariff increase, but that seems unlikely in the next two weeks. China’s Vice Premier Liu is flying over later this week to meet up with Trade Representative, Robert Lighthizer, and even with an unsatisfactory outcome there’ll likely be a few more days of behind the scenes activity before any further escalation is announced.
