Fearnleys Shows Slight Market Recovery

Over the last week, 62 firm newbuilding orders have been reported, according to Fearnleys. Optional vessels are being declared in all segments as newbuilding prices are still firming.

Vogemann has declared their option for another 4 Newcastlemax vessels from JES. Price reported to 53 mill USD, which is about 4 mill USD below current price level at Chinese yards.

Both CMTC and Costamare have declared optional Container vessels at respectively DSME and Hanjin Subic Bay, while Navigator has exercised option to build another 3 LPG carriers at Jiangnan shipyard.

ACTIVITY LEVEL Tankers Dry Bulkers Others Slow Active Active

Average Far Eastern Prices

PRICES (mill usd) This week Last week Low 2014 High 2014 VLCC 300’dwt USD 102.0 m USD 102.0 m 96.0 102.0 Suezmax 150’dwt USD 68.0 m USD 68.0 m 64.0 68.0 Aframax 110’dwt USD 54.0 m USD 54.0 m 52.0 54.0 Product 50’dwt USD 37.5 m USD 37.5 m 36.0 37.5 Capesize 180’dwt USD 56.0 m USD 56.0 m 55.0 56.0 Panamax 82’dwt USD 31.5 m USD 31.5 m 30.0 31.5 Handymax 64’dwt USD 28.0 m USD 28.0 m 28.0 28.0 Prices are based on payment terms 40/60

NEWBUILDING CONTRACTS

Type No Size Yard Owner Del Mill$ Comm BC 4 64000 dwt CSI Jiangsu Dong Fang Lease 2015/16 BC 1 85000 dwt Sasebo First Steamship 2016 35 BC 10+8 180000 dwt JES Empire Bulkers 2015/16 BC 4 208000 dwt JES Vogemann 2016 53 Options declared CO 4 1020 TEU Tsuneishi SIPG 2016/17 CO 2 2200 TEU Yangfan Essberger 2015/16 CO 4 9443 TEU HHI CMTC 2016 CO 1 9160 TEU DSME CMTC 2016 Option declared CO 4 11000 TEU Hanjin Sub. Bay Costamare 2016 Options declared CO 8 14000 TEU JMU Japanese 2016-18 LPG 3 35000 dwt Jiangnan Navigator 2016 78.4 Ethylene/Ethane MPP 10 12500 dwt Taizhou Sanfu Zeaborn 2015/16 Incl. Options MPP 2 12500 dwt Jiangzhou Auberbach 2015/16 MT 1+1 106000 dwt Sumitomo HI Lundquist 2016 MT 4 160000 dwt HHI Arcadia 2016

DRY BULK

CHARTERING – Handy

There is still no place to hide in the Atlantic for the smaller but flexible sizes. Slow and weak seems to be the headlines, although the Pacific is slowly showing some signs of recovery. USG to Brazil is done at arrnd mid 5K, trip across to Med at high 8’s. Fronthaul in the mid 15.000 rge. A flow of fresh requirements lifting the Pacific slowly to 10-11 K bss Spore for coal rounds.

Owners see mid 9’s China-Indo-India runs, and abt same for NOPAC or 10-11 + 300 BB APS. South Africa have not changed much, where India positions get abt 12 K + 250 GBB for trips via S Africa to the East. Period not very active, although larger Ultramax apparently done 13.500 for Sh period bss del CJK.

CHARTERING – Panamax

The Easter break did not cause any radical changes to even the most strong believers. The overwhelming oversupply of tonnage versus too few requirements and low activity still prevails in both hemispheres. Owners in the Atlantic are simply holding back from fixing the poor returns offered.

However, with a slow flow of fresh requirements sentiment is pushing the Atlantic slightly up to 3-5.000 on T/C, but far less on voyage terms. The long lack of push from ECSA grains could be in a turning point, although it remains to be seen a clear postive trend. Typical levels mid week at abt 14.500 + 450 K GBB APS. In the Far East, where most people live, it is quiet and levels are still poor. Levels hovering in the 7.000 range for various rounds up to abt 9.000 for NOPAC on T/C. There is a scent of optimism from ECSA grains expectations and tick higher levels are seen on Indo/india runs. Lifting of the 19 month old iron ore ban in GOA could have a positive effect for the Panamax owners after the monsoon season later this year.

Meanwhile, the period market is in a waiting mode, under the motto: “let’s see tomorrow” lacking suport from a flat forward curve.

CHARTERING – Capesize

After Easter, the sentiment has turned more positive and owners will rather let their ships wait or ballast than fix pre Easter levels. West Australia / Qd is presently at USD 7,60, and more owners are aiming in the 8s. Its more coal being shipped and rates are slowly improving for trades like Indonesia /India and east coast Australia/ Far East. For the Atlantic and front haul however, it remains weak with lack of requirements. Its however expected this will change within soon, which will together with increased period interest be the main contributors for improved rates.

ACTIVITY LEVEL Capesize Panamax Handysize Moderate Low Mixed

RATES

CAPESIZE (usd/day, usd/tonne) This week Last week Low 2014 High 2014 TCT Cont/Far East (172′ dwt) 24,400 23,000 23,000 53,500 Tubarao / R.dam (Iron ore) 8.20 8.00 7.80 17.00 Richards Bay/R.dam 8.40 8.40 7.40 11.30 PANAMAX (usd/day, usd/tonne) Transatlantic RV 4,000 2,550 2,550 18,000 TCT Cont / F. East 14,000 13,000 12,900 24,500 TCT F. East / Cont 1,600 1,450 1,000 2,750 TCT F. East RV 7,900 7,750 7,750 12,000 Murmansk b.13-ARA 15/25,000 sc 5.50 5.65 5.50 10.00 Murmansk b.13-L.pool 15/25,000 sc 6.05 6.20 6.05 10.85 HANDYSIZE (usd/day) Atlantic RV 7,250 7,500 7,250 20,290 Pacific RV 9,400 8,800 5,500 13,400 TCT Cont / F. East 15,500 15,000 15,000 22,680 1 YEAR T/C (usd/day) Capesize 150,000 dwt 19,000 17,000 13,500 22,500 Capesize 170,000 dwt 24,000 22,000 18,000 28,000 Panamax 75,000 dwt 12,750 12,900 12,500 14,000 Handysize 53,000 dwt 12,250 12,000 11,750 13,000

Baltic Dry Index (BDI): This Week: 956 Last Week: 970

SALE AND PURCHASE

Vessel Size Built Buyer Price Comm. Jing Yang 47 685 2012 Chinese 17,00 CB Adventure 46 232 2002 Greek 16,50 Ace Century 32 787 2000 Undisclosed 12,00 Flex Shine 32 700 2003 Greek 15,20 Semi open/box Wooyang Sterling 20 756 1999 Greek 6,00 Semi open/box

TANKERS

CHARTERING – Crude

The VLCC activity picked up somewhat as most players in the West returned from their Easter holidays. Some fresh requirements appeared the last couple of days, and charterers continued to secure coverage off the market. Rates remain stable/soft pending on voyage, age and charterer etc.

Its expected take a few days before the market is up and going again after the long break, but for the time being charterers seem to be in the driving seat. The Atlantic remains quiet with limited action to report and rates are stable at similar levels seen prior to Easter. Due to a Short Easter week, the fixing volumes in West Africa got somewhat compressed and in combination with some prompt replacements, rates went up and peaked at ws 75 for a voyage to Europe.

Everybody is now back from the Easter Holiday and the market has already dropped significantly as the tonnage overhang for first decade is ample and Charterers are already starting to cover for second decade. The Easter boost is also over for Suezmax tonnage in the MED and Black sea and rates have eased off accordingly. The Nsea and Baltic aframax markets remain pretty much unchanged from last week. But at time of writing, just after the holidays the market is showing some small signs of a change in momentum and weakening rates.

After the Easter break the position list in the Med/Bsea opened up a little and charterers who were still looking to cover cargoes with April dates managed to push rates down a couple points. Going forward Fearnleys expects the market to soften a bit more as more available tonnage emerging for May loading dates. A couple of vessels being cancelled ex Ceyhan due to non production on the Botas pipeline will also reinforce the downward pressure on rates. The Caribs market has continued its downward trend in the beginning of this week, mainly due to more available tonnage and no delays, and it is now stabilizing around ws95.

CHARTERING – Product

As the Easter holiday has come to an end, the LR2 market in the East has continued its soft trend from last week. Plenty of available tonnage are moving into the AG, and too few longhaul cargoes around have steered the market to ws 87,5 for MEG/Japan down another 2,5 points from last week.

The LR1’s are basically in the same situation as a week ago around ws 90 for MEG/Japan. Westbound voyages from the AG on both LR1 and LR2 have also softened a touch over the holidays, and currently Fearnleys assess a MEG/UKC voyage at USD 2200k and USD 1675k respectively for LR1 and LR2.

The MR market have followed suit with a steady to soft trend the last week and currently Fearnleys sees ws 115 for SPORE/Japan. Just like the East, the West has also been pulled down by the Easter holiday and the market is currently suffering. MR’s going TA are currently being fixed at ws100 and sadly there is not enough activity at the moment to get the hopes up for the immediate future at least. Ships going CONT/WAF are also being punished, and currently Fearnleys is assessing the market to be at ws115.

LR1’s have not seen such a dramatic drop but are today at ws 90/95 level. Backhaul cargoes ex USG was fixing at ws 80 basis 38kt before the holidays, but have plummeted 12,5 points down to ws 67,5 today. LR1’s doing backhaul cargoes are more or less unchanged from pre-holidays levels at around ws 65. Handies trading cross UKC are only marginally down to ws 185.

ACTIVITY LEVEL VLCC Suezmax Aframax P. E. of Suez P. W. of Suez Stable Soft Mixed Soft Soft

RATES

DIRTY (Spot WS) This week Last week Low 2014 High 2014 MEG / West VLCC 28.0 28.0 27.0 42.0 MEG / Japan VLCC 40.5 41.5 37.0 72.0 MEG / Singapore VLCC 41.0 41.5 37.5 70.0 WAF / USG 260,000 47.5 45.0 45.0 75.0 WAF / USAC 130,000 57.5 67.5 52.5 130.0 Sidi Kerir / W Me 135,000 57.5 67.5 57.5 170.0 N. Afr / Euromed 80,000 95.0 110.0 77.5 230.0 UK / Cont 80,000 97.5 100.0 82.5 220.0 Caribs / USG 70,000 95.0 95.0 95.0 300.0 CLEAN (Spot WS) MEG / Japan 75,000 87.5 90.0 70.0 97.5 MEG / Japan 55,000 90.0 87.5 85.0 112.5 MEG / Japan 30,000 115.0 105.0 100.0 117.5 Singapore / Japan 30,000 115.0 105.0 100.0 117.5 Baltic T/A 60,000 90.0 95.0 87.5 130.0 UKC-Med / States 37,000 100.0 115.0 100.0 160.0 USG / UKC-Med 38,000 67.5 67.5 67.5 120.0 1 YEAR T/C (usd/day) (theoretical) VLCC (modern) 24,000 24,500 24,000 25,500 Suezmax (modern) 18,500 19,000 17,000 20,000 Aframax (modern) 15,000 15,000 13,500 15,000 LR2 105,000 16,250 16,500 16,000 16,500 LR1 80,000 15,250 15,250 15,000 15,500 MR 47,000 14,750 14,750 14,500 15,500

VLCCs fixed all areas last week: 33 previous week: 34 VLCCs avail. in MEG next 30 days: 120 last week: 117 (incl. vessels on subjects excl Tankers UK and Frontline)

SALE AND PURCHASE

Vessel Size Built Buyer Price Comm. Aegean Flower 6 523 2002 Undisclosed 2,25

GAS

CHARTERING

The VLGC market is still extremely firm and the Baltic VLGC index has continued its trend of record postings every day. That being said, with the Easter break in-between, not many postings have been done. The activity level is also reflected by the Easter break obviously, and the market still awaits a return to normality.

However the situation on when ships are available is still unchanged with owners still uncertain on when/where their ships may come open, thus “normality” may be somewhat further down the line. One fixture has been concluded in the West, at a level just above the Baltic VLGC index equivalent. Thus the West Premium may be gone for now, but with a very limited availability of ship in the West, the premium might very well return on the next fixture. In the East Fearnleys has noted some inquiries from India, where one ship has been secured on subjects at record levels, but at a premium to the Baltic index reflecting previous fixtures.

[mappress]
fearnresearch, April 25, 2014