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
Subscribe to our newsletter to stay up-to-date with our Shipping Weekly and follow us on Facebook and LinkedIn to never miss an update.
Wet Cargo
Charter rates appear to be stabilising, especially 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 – rates fell from the all-time high in April 2020 and continued sliding. Outlook: Stable
Suezmax – rates still suffering from the oversupply of tonnage in the market. Downward trend on all routes, meaning good news for shippers. Outlook: Negative
Aframax – relatively stable rates, with demand for hold space still counterbalanced by relatively large supply of tonnage. Outlook: Stable
Dirty Products – stronger rates, primarily driven by a mini-surge in demand for MR tanker tonnage, especially on atlantic routes.
Clean Products – weak rates, 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.
MR – uptake in demand drove rates up, with a positive outlook for the weeks ahead. Outlook: Positive
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 – 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: Negative
Handy – Slow pick-up is possible depending on the easing of lockdowns and demand for refined products on each side of the Atlantic. Gloomier in SEA. 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. Outlook: Positive
Dry Cargo
Capesize – rates climbing steadily over the course of 2021, although the spot demand weakened in western regions due to summer holidays approaching. Outlook: Stable
Panamax – stable demand does not lead to expect a growth in rates going forward. Outlook: Stable
Supramax – rates climbing steadily over the course of 2021, although the spot demand weakened in western regions due to summer holidays approaching. Outlook: Stable
Handysize – rates climbing steadily WoW, primarily driven by demand for raw materials in China. Outlook: Positive
Container
Container rates surge continues unhindered on all fronts, with rates up from 100% to 163% compared to pre-pandemic levels. 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.
We’re expecting to see a brake to this trend, however, with the effect of inflation, which is going to off-set the buying craze and put a lid on overall demand.
Inflation in the UK has doubled MoM, hitting 1.5% in April, and it will continue rising. Same goes for the US, where prices surged 4.2%, up from 2.6% in March and the EU, with inflation currently at 1.6%. As some central banks work to put a brake on inflation by upping base rates, increase in consumer prices may hamper demand after the summer.
We are therefore likely to see a stabilisation or decline of container rates as we progress into Q3 2021.
Outlook: Positive
Gas
Rates for Large Gas Carriers picked up globally, supported primarily by the low availability for suitable tonnage in the Asia-Pacific regions.
As plenty of tonnage is currently tied-up in dock for ballast water treatment systems installation, we are to expect a general softening of the rates next month, as the ships come back into the market.
Outlook: Stable
To learn more about how we can support your business shipping as cheaply and environmentally-friendly as possible, visit us at BLK.
Subscribe to our newsletter to stay up-to-date with our Shipping Weekly and follow us on Facebook and LinkedIn to never miss an update.