Welcome to BLK Shipping Weekly, our Friday’s update from the shipping market. In this issue, we’ll be covering:
- Wet Cargo
- Dry Cargo
- Containers
- Gas
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Wet Cargo
Charter rates stabilising, on all trades in view of the demand uplift in June, driven by easing of lockdowns in UK and Europe and roll-out of vaccination programmes in the western countries. These factors are expected to drive energy demand up and cargo with it, increasing the overall demand for tonnage and hold space. With the winter months ahead of us, rates can be expected to start picking up for the rest of the year.
VLCC – the beginning of June is looking still quiet, with some softening of rates across the Atlantic, counterbalanced stronger performance in the Pacific. Outlook: Stable
Suezmax – rates still suffering from the oversupply of tonnage in the market. Relatively stable trend on all routes, with supply and demand nearly balanced. Outlook: Stable
Aframax – relatively stable rates, with demand for hold space still counterbalanced by relatively large supply of tonnage. Most cargoes are fixed far in advance and therefore no significant movements are expected. Outlook: Stable
Dirty Products – rates continue picking up, primarily driven by the low availability of tonnage in the Mediterranean and Baltic. Outlook: Positive
Clean Products – weaker rates compared to may, 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 weak. Outlook: Negative
MR – overall performance weakened, with charterers going for long range tankers for the same routes as a reasonable alternative to MR.. Outlook: Negative
LR1 – demand for log-range tankers picking up, as their rates closed in with those of the MRs and are now being seen as a suitable alternative Outlook: Stable
LR2 – Tonnage availability came back into the market, weakening the rates. Outlook: Negative
Handy – Slow pick-up is possible depending on the easing of lockdowns and demand for refined products on each side of the Atlantic. Outlook: Stable
Dirty Panamax – Rates on the rise, looking positive to the summer, when investors anticipate a further increase of energy requirements from western nations. Further rise driven by reduction in tonnage offering especially in the Mediterranean. Outlook: Positive
Dry Cargo
Capesize – Relatively slow declining trend, with spot demand weakened slightly in western regions due to summer holidays approaching. Outlook: Negative
Panamax – stable demand does not lead to expected growth in rates going forward. Tendency to slightly weaken counterbalanced by the hold availability shortage. Outlook: Stable
Supramax – rates climbing steadily over the course of 2021 and stabilised in may with no real surge expected. Outlook: Stable
Handysize – rates rising WoW, primarily driven by grain, coal and cement trade in the APAC region. Port congestions in Indonesia strengthened the growth, which looks positive overall for owners. Outlook: Positive
Container
Container rates continue with their strong rally on all fronts, although the curve seems to be flattening a little bit. Demand looks strong and will continue to be as western economies get out of lockdowns and people shop around for finished goods, using up the savings gathered during the pandemic. At the same time, a large share of ships is out of service for dry dockings and BWTSs installations for the compliance with the Ballast Water Management Convention. It seems that the IMO’s exercise of forcing the BMW Convention on to owners to reduce the overall supply of carrying capacity and support rates shooting up has worked its charm, with many vessels being scrapped simply because the cost of the system installation was uneconomical.
We’re expecting to see a stabilisation to this trend as more vessels come out od dry docks and resume normal operations, coupled with the effect of inflation – which is going to off-set the buying craze and put a lid on overall demand.
Outlook: Positive
Gas
Rates for Large Gas Carriers continued to decline between 4% to 6%, with cargo cancellations being the primary causes, resulting in oversupply of carrying capacity in all main routes. Pressurized and semi-pressurized vessel rates remained unchanged.
As plenty of tonnage is currently tied-up in dock for ballast water treatment systems installation, we are to expect a further softening of the rates next month, as the ships come back into the market.
Outlook: Negative
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