Shipbroker Optimistic About the State of the Shipping Markets

In its latest weekly report, shipbroker Intermodal noted that “during the summer’s peak, and with the markets remaining relatively quiet, we can argue that most markets have built solid foundations to enjoy a strong Q4 and healthier rates compared to last year”.

According to Intermodal, “in order to put things into perspective, it would be enlightening to perform a mini review of some indices, values and commodities compared to August last year. Average earnings for Capes were at around $5,500/day a year ago, whereas currently are above $11,500/day. Concerning the average dry bulk asset prices for 5-yr old vessels, all values across all segments are up when compared to August 2016, while the BDI today is above 1,000 points compared to the low 600s it was faring a year ago”.

The shipbroker’s Research Analyst, Mr. George Panagopoulos said that “moving on to the Tanker market, T/C rates have decreased compared to a year ago, especially for the crude carriers, while average asset prices for 5-year-old vessels have overall followed a similar direction. On the new-building market we have gone from the non-existent dry bulk activity of last year to a relatively decent number of orders here and there throughout 2017, while even during the traditionally more quiet summer months there is still a bit of contracting volume reported as well. On the tanker side, the trend is even stronger, with sectors like VLCC and MR seeing a lot of activity since almost the beginning of the year”.

Meanwhile, “in the demolition market, forecasts had predicted that demo activity would be higher, as in September last year Finland was the last member state that rectified the Water Ballast Convention that was scheduled to enter into force this fall. Recently however, the IMO and IOPP agreed to extend for two years the time for compliance, which means that the new date is now September 2019” Panagopoulos said.

He added that “regarding some of the main cargoes for both dry bulkers and tankers, it would be interesting to take a look at the commodity market’s performance year on year. Iron ore has moved from around $50/t in August 2016 to over $70/t today and despite some recent downward correction the upward movement has once again resumed, with iron ore futures also suggesting an optimistic market ahead”.

“Coal has at the same time gained around 40% over the past twelve months, although in this case forecasts are mixed on the commodity’s future as India is closing down a number of mines. Focusing on other commodities; industrial metals such as aluminum have also been moving north. Agricultural products have shown a mixed picture, with some like soybean for example remaining into similar levels and other like corn having moved upwards. In the oil market, prices have been moving in a rather tight range for the bigger part of the past twelve months despite the extension of the OPEC production cut. To conclude, it is a fact that everyone will enjoy their summer holidays with less concerns from last year. In general, all markets show some signs of stability, with some pressure being applied on the tanker market, but even there we sense some optimism for the remainder of the year”, Intermodal’s analyst concluded.