04 JULY 2021
Welcome to BLK Shipping Weekly, our update from the shipping market. In this issue, we’ll be covering:
- Wet Cargo
- Dry Cargo
- Containers
- Gas
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Wet Cargo
The increasing price of crude oil has been driving the tankers’ charter rates up, with significant boom this week, especially for the Black Sea – Med routes. The barrel price above $75, caused 500%+ surges specifically on the medium-sized parcels.
VLCC – Very Large Crude Carriers rallied 100% WoW, growing with the positive sentiment around oil price. The Spot rates pretty much doubled, from $600/day to $1200/day. Although we’re still unbelievably far from 2019 levels, we can now see positive signs of pick-up. Outlook: Stable
Suezmax – rates boomed, growing on average 30% WoW, with some routes seeing a 5 times increase. As the oil price keeps surging, we expect a positive impact on the vessel charter rates coing forward. Outlook: Positive
Aframax – afra rates more than doubled on the back of the positive oil prices news last week. Current rates fixed above $10600/day. Outlook: Positive
Dirty Products – July began with a relatively stable outlook, particularly busy in the Mediterranean, particularly weak in the US Gulf. Outlook: Stable.
Clean Products – Charter rates weakened between 3 to 60% owing to the fact that most world refineries are still operating under capacity due to the low demand for refined fuels. With airlines still down and road traffic at a fraction of the pre-pandemic levels the market remains far from its best shape. Plenty of carrying capacity available on the main routes contributes to weakening the outlook. Outlook: Stable
MR – uptake in demand did not have the expected positive effects on MR rate, owing to the oversupply of carrying capacity in the market. Overall down on average 25%, settling at $3800/day.. Outlook: Stable
LR1 – demand for log-range tankers remains low. Slow pick-up is possible depending on the easing of lockdowns and demand for refined products on each side of the Atlantic. Outlook: Stable
LR2 – In general, the market remains down between 3% and 5%. Slightly better than the previous week, although far from 2020 peak performance. Outlook: Stable
Handy – As anticipated last week, with LR and MR tanker rates below those of Handy tankers, charterers have been shifting to larger vessel sizes, wherever possible. This led to a hit in the region of 10% to Handy rates, with an additional slight drop still possible until break even or below is reached. Currently at $3800/day. Outlook: Stable
Dirty Panamax – Rates continued softening slightly on all routes, with a general 15% drop since last week, among fears of a new COVID wave due to the delta variant. Outlook: Stable
Dry Cargo
General pick-up on all routes and across all segments, underpinning a strong market sentiment, driven by the increasing demand for raw materials.
Capesize – Capes remained relatively stable, having broken through the $30k/day for the first time in years and now finding resistance to a further growth. Outlook: Stable
Panamax – slight increase in demand impacted positively the charter rates, with another 7% weekly growth. Hold availability shortage played a major role, with charter rates now surpassing $3500/day on certain routes. Outlook: Stable
Supramax – rates climbing steadily over the course of 2021 and stabilised in May to pick-up again more aggressively in June, with a 20% average growth WoW. The first days of July saw a stabilisation of this trend, with a flatter growth curve, rising by an average of 7% WoW to settle on an average of $27k/day Outlook: Positive
Handysize – rates continued their upward trend breaking past the $27k/day mark. Outlook: Positive
Container
Container rates did not slow down starting July with a further 5-6% increase. Now nearing the $100k/day mark for Neo-panamax vessels too. As container liners keep stashing cash on the back of the strongest year on record, we are seeing the newbuilding order book starting to fill-up for the year ahead.
We are now seeing more ship owners ordering new tonnage, predominantly ultra-large carriers, LNG fuelled like CMA CGM or methanol-propelled, like Maersk.
More, new carrying capacity is set to enter the market, which should contribute to the softening of the rates. The entrance in service of these vessels is, however, still many months away and demand for containers still looks strong.
On the raw materials side, however, and especially in chemical commodities, the high freight rates (now looking upwards of $15,500 per TEU on the route China – Europe) now impact prices of goods to the extent that it is equivalent or cheaper to source from European suppliers.
We expect to see a continual decrease in smaller-batches shipments westbound from Asia to Europe, hopefully accompanied by a subsequent easing of the TEU rates towards the end of the year.
Air cargo is now cheaper than ocean freight for smaller parcels, are we on the tipping point for this huge container rally?
Outlook: Positive
Gas
Rates for Gas Carriers remained relatively stable, with a small growth for large carriers. Pressurized and semi-pressurized vessel rates remained constant.
As plenty of tonnage is currently tied-up in dock for ballast water treatment systems installation, we are to expect a softening of the rates next month, as the ships come back into the market.
Outlook: Stable
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