25 June 2021
Welcome to BLK Shipping Weekly, our regular shipping rates updates. In this issue, we’ll be covering:
- Wet Cargo
- Dry Cargo
- Containers
- Gas
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Wet Cargo
Charter rates down, on all fronts, although we seem to be scraping the bottom of the barrel, with owners’ resistance to further drops, leading to a no deal on a growing number of fixtures.
VLCC – It was another bad week for VLCCs, with most routes commanding negative charter rates. Very good news for shippers, especially those looking at cross-Atlantic routes. List of uncharted vessels remain high, with supply overpowering demand. Owners are now starting to turn down cargoes, in a bid to drive charter rates back up. Avg. VLCCs rate at $601, underpinning the large tonnage oversupply. If you can, ship now. Outlook: Negative
Suezmax – rates still suffering from the oversupply of tonnage in the market but made a slight recovery WoW. Rates now surpassing those of VLCCs, just below the $2500 per day mark. Outlook: Stable
Aframax – afra rates saw drops between 4 and 11%, with the exception of Mediterranean Routes, which saw a whopping +144% growth WoW. Avg. charter rates stable at $4900/day. Outlook: Stable
Dirty Products – the slow decline in rates continued, primarily driven by the low availability of tonnage in the Mediterraneand and Baltic. Charter rates fall slowed down compared to the previous week, shrinking only between 3% and 28% Outlook: Stable.
Clean Products – Charter rates weakened between 2 to 40% 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 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 – In general, the market remains down between 12% and 22%. Outlook: Negative
Handy – Slow pick-up is possible subject to the easing of lockdowns and demand for refined products on each side of the Atlantic. LR and MR tanker rates, however, are now below those of Handy tankers, meaning that charterers will likely shift to larger vessel sizes, wherever possible. Therefore, we should expect a further drop in Handy rates. Outlook: Negative
Dirty Panamax – Rates softened everywhere, 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 – Uptake in charter rates picked up, with nearly $5000 growth WoW, which pushed the Cape rates beyond $30k/day for the first time in years. Outlook: Positive
Panamax – stable demand which impacted positively the charter rates, with a 7% weekly growth. Hold availability shortage played a major role, with charter rates now nearing $30500/day 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. Outlook: Positive
Handysize – rates remained stable without much movement from the previous weeks. Fixed around the $24k/day mark. Outlook: Stable
Container
Container rates continue with their strong rally, with ultra-large container carriers breaking through $100k/day for the first time in history.
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. This week Hapag Lloyd announced the order for 12 Ultra-large 23,500 TEU vessels. We expect other liners to soon follow-suit, booking yards for LNG-fuelled vessels.
Positive news for shippers, with new carrying capacity entering 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 container still looks strong.
Rising inflation in post-lockdown economy may contribute to ease the demand for finished goods but it remains to be seen whether this will be permanent or, as the Bank of England predicts, only temporary. In the latter case, we’re in for a long winter of very expensive shipping from Asia with final consumers paying the ultimate price.
On the raw materials side, however, and especially in chemical commodities, the high freight rates (now looking upwards of $12,500 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
Shipping rates updates for Gas Carriers are not significant. Stable WoW, with a slight 9% recover for large carriers rates. 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: Stable
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