Market Analysis
15th - 19th February 2016, Week 7
Crude oil prices started the week with a bang, rallying on the news of a possible gradual decrease in output. The International Energy Agency (IEA) issued its monthly medium-term oil market outlook today, pointing at a further squeeze in production by both non-OPEC and OPEC countries. This goes along the recent talks between Saudi Arabia and Russia which reached an agreement to cap production at January’s levels, while at the same time U.S. light, tight oil (LTO) output has been dropping at a faster pace for now. Nevertheless, the outlook sees a rebalancing take place in 2017 rather than this year, meaning that the excess supply noted is considerable and there is still ample supply that needs to be taken offline before a balance is met. On the back of this, expectations are that we will now go through a period of “insufficient” investments in terms of new oil production, something which might possibly lead onto a gradual price rise once the market begins to rebalance and leaving the door open for small price spikes during any periods of increased demand. It goes on to see that the United States and Iran will be leading production gains by 2021 among non-OPEC and OPEC countries respectively.
These recent shocks in the market caused by the excessive supply of crude oil noted, have been evident in the freight market since the beginning of 2016. The crude oil market has been only now starting to show signs that much of its recent gains in the freight market are supported on shaky and unstable premise that the rate of stocking noted in 2015 will continue. However with such excess storage having been made in the industry over the past 12 months, Consumers are starting to move into a complacent mood, having become used to the new market prices and that this will be the new medium-term “norm”. Coupling this with the lack in global economic growth potential and most notably the lagging growth being noted in China, has meant that new sources of demand are limited and it looks as though the fundamentals do not support a fast paced demand growth in shipments of crude oil.
For the moment earnings are still holding at what one might call “spectacular” levels when compared to the freight rate trends noted during the period 2008-2014. At the same time, we have averted setting the foundation of a complete collapse, as newbuilding orders were held to a minimum last year keeping the orderbook in check as most owners feared what direction the market could take moving forward. Nevertheless, this does not mean that we don’t have a strong orderbook to overcome over the next 12-24 months, with 169 crude oil carries scheduled for delivery within the rest of 2016 and another 171 within 2017. Given that the current fleet of tankers (from Aframax to VLCC) stands at around 2,072 vessels, this means that this figure could increase by as much as 8% this year and another 7.6% in 2017. Although the final figures will surely end up being lower than these, the growth might well prove to be excessive given that demand might well stagnate during the same period. Yet, to dissipate any fears and given the level freight levels have reached during the past 12 months, it is important to note that we would still be talking about relatively good freight rate levels compared to the overall performance that was noted since 2008. The figures are more so a realisation of what was mostly expected by most, i.e. that the peak in the recent market boom may well be behind us now.
George Lazaridis
Head of Market Research & Asset Valuations
Freight Market
Dry Bulkers – Spot Market
15th - 19th February 2016
Capesize - No real splurge in activity noted this week despite the return of the Far East. There was however a notable resistence being noted across the board from owners and this coupled with the fact that a number of Australian miners brought a good number of fresh inquiries to market helped close things off in the green. Despite this it looks as though there is little momentum to keep things positive moving forward and we might see things soften slightly over the coming days.
Panamax - Thanks to a good volume of stems for grain out of ECSA things were looking to be on a positive trajectory, though the overall week-on-week gain was relatively marginal. Charterers are now looking to put a halt on this positive path, stepping back their interest, while keeping interesting figures only for promptly available tonnage.
Supramax - Things were looking fairly positive in the Supramax market, with positive gains being noted in the index every day this past week. Inquiries in the Pacific basin noted a strong comeback pushing the round voyage route there to almost double in performance. This lead to slightly better sentiment in the market overall, with owners now ramping up their resistance levels and putting real pressure for better freight rate levels.
Handysize - A mediocre performance being noted on much of the North Atlantic and backhaul voyages was enough to soften the overall gains noted this week. Support form the firming ECSA and Far East trades did keep things interesting, allowing for a fairly healthy week-on-week increase in the overall index.
Freight Market
Tankers - Spot Market
15th - 19th February 2016
Crude Oil Carriers - despite the stronger demand being noted in both the MEG and WAF markets, overall rates seemed to have continued on a further softening trend this week. The main pressure seemed to have been brought about from an increase in open tonnage in the market, while expectations for a stronger return in market inquiries after the Far East Holidays and IP week seemed to have disappointed overall. Moving in to the first half of the March program, there is some indication of slightly better demand levels which could reverse this latest downward trend, however it seems to be too early to call for now.
Oil Products - Activity in the MR segment was keeping up at a good pace showing good interest levels in both the CPP and DPP routes. However it seemed that the DPP market was the one holding real upward drive, while overall it was the smaller size groups taking up the main interest from charterers this week.
Sale & Purchase
Newbuilding Orders
15th - 19th February 2016
A trickle here a trickle there and still short of anything noteworthy to keep this market alive. The relatively few number of orders continues to pound on the shipbuilding industry, while the few buyers in the market are taking their time, knowing that they hold the upper hand. There are talks circulating of an imminent order to be placed by French liner operator CMA CGM at South Korea’s big three shipbuilders for another set of ULCV container ships, though being at a preliminary stage, it is unknown for how many and at what price these will be booked when the time comes. The containership market is one of the few that can provide some sort of life line during the current market, as despite the lacking performance noted in the freight market, the paradoxical demand for new bigger ships created by the intense competition by liner operators keeps interest in the newbuilding market firm. These orders may well be few in number but usually provide a very good cash flow and good margins for the shipbuilder, often making the difference between survival and default.
Sale & Purchase
Secondhand Sales
15th - 19th February 2016
On the dry bulk side, activity started to pick up once more thought with prices showing ever more signs of softening. It looks as though the pressure remains on the pricing front and based on current market rumors circulating of ongoing deals we expect further price drops to be seen over the coming weeks. Older tonnage have seen an increase in price drops, as the lower scrap values have “swept the rug” underneath their feet.
On the tanker side, there was still limited activity to be seen though interest still holds fairly well. There were a couple of product tankers reported this week, while at the same time their were rumors circulating of a couple of more in the works, though not concluded as of yet. Prices wise, here too we have seen a softening trend, influenced by the poor sentiment over spilling from the dry bulker market, in conjunction with the slight turbulence noted recently in freight rates.
Sale & Purchase
Demolition Sales
15th - 19th February 2016
With another steep dive of the Indian Rupee against the US dollar and with prices for scrap steel taking a further hit, sentiment was seriously shaken, with end buyers pulling back their price ideas in fear of the market losing further ground over the coming days. All this has not been helped by the overwhelming number of dry bulk demo candidates being offered, outnumbering the current capabilities of the still limited number of end buyers which are active in the current market. As such, end buyers are still taking their time while competition between them is limited to non existent. It is often the case that some end buyers don’t even bother making offers for some units, comfortable in the fact that there is ample good quality tonnage out there (as well as expected to emerge over the coming weeks/months) and no reason to speculate and drive prices any higher then what they are.
Trade Indicators
Markets, Currencies, Commodities
15th - 19th February 2016
Hyundai Group has revealed its shipping unit Hyundai Merchant Marine (HMM) is starting talks with overseas owners on Monday as it seeks to reduce its charter burden.
The meetings, held together with its legal advisor Millstein & Co, are part of an “intensifying” restructuring of the debt-laden operator, it added. HMM aims to have fee reductions in place by mid-March, with a creditors meeting scheduled after that. This will focus on a renegotiation of $100m of bonds due in April. The company has also announced it has signed a formal contract with Hahn & Co's H-Line to sell its bulker fleet for about KRW 120bn ($100m), plus the assumption of KRW 420bn in debt, for a total of $450m.
Hyundai Group chairwoman Hyun Jeong-eun is pumping in $25m of her own money through a share issue and the sale of three financial affiliates of Hyundai Group, including Hyundai Securities, is nearing completion. “It is rare to find such large financial companies in the M&A [merger and acquisition] market, and the management rights can be obtained by acquiring merely 22.56% of the stakes, both merits which are regarded highly in the industry,” the group said. Source:Tradewinds
Το κόστος κατασκευής κρουαζιερόπλοιων έχει αυξηθεί κατά τη διάρκεια των ετών, καθώς η βιομηχανία βλέπει πιο εξελιγμένα και μεγάλα πλοία. Εδώ σας παρουσιάζουμε τα 10 πιο ακριβά κρουαζιερόπλοια στον κόσμο. Το κόστος κάθε κρουαζιερόπλοιου υπολογίζεται σε δολάρια και καθώς νέα κρουαζιερόπλοια κατασκευάζονται η λίστα μπορεί να αλλάζει συνεχώς. Τα παρακάτω ποσά αποτελούν εκτιμήσεις και δημοσιοποιούνται με στρογγυλοποίηση.
