News in English

S&P Report: Energy commodities prices surged to high levels, reinforcing inflationary waves

During the last days, major energy commodities prices such as oil, gasoline & coal surged to high levels, reinforcing inflationary waves, and adding additional concerns for the global economy. Mainly Brent crude oil futures climbed to around USD 90/barrel for the first time in seven years, while the WTI remained at levels not seen since late 2014 to around USD 88/barrel extending gains for a 3rd straight session. Furthermore, coal futures have shot back towards record highs and trading at around USD 230 a ton, the highest since late October 2021. Since early January 2022, coal futures have increased by around 44%. It is worth mentioning that as a precaution against fuel shortages, European utilities have stepped up coal imports, squeezing a market that has yet to recover from Indonesia's shock ban that curbed coal flows during the peak winter season. Meanwhile, U.S gasoline futures climbed to above USD 2.5/gallon, the highest since September 2014.

While major commodities prices have rallied up, global markets’ analysts believe that the peak is not reached yet, as the tension between Russia and Ukraine keeps on rising, causing concerns. Meanwhile the United States and Europe have warned President Vladimir Putin that Russia will face swift and tough economic sanctions if they attack Ukraine. Europe is a major importer from Russia, as Russian coal, and Russian natural gas accounts for 40% of European imports while Russian crude oil accounts for 30%. In the scenario of economic sanctions towards Russian energy sector, Europe will have to find other sources to cover its needs, looking mainly to the Middle East, Australia, and United States while Russia will try to replace the exports towards Europe with increased exports to Asia and China. Market analysts believe that if the US and the Europe sanctions are realised, tankers, and gas carriers will see an increased demand as tonne-miles will also be increased. This positive impact in the demand may boost the rates, at least for a short term.

In the bulker market we are watching a major downside during the past month. The weighted 5T/C route average for the BCI has decreased by 56%, at USD 8,918/day. On 28/01 the 5T/C route average for the BPI was USD 16,557/day, 22,8% less than one month ago, at 24/12/2021. For the same period, the 10T/C route average for the BSI and the 7T/C route average for the BHSI are down by 32% at USD 17,569/day and USD 18,304/day respectively. Looking at the bigger picture we can see that Handysizes market has responded better than the other markets during the year as its T/C average has gained about 46% on a yearly basis, while Capes have lost 45% and Panamaxes and Supramaxes T/C average has gained 13% and 37% each Y-on-Y. It is also noticeable that since October 2021 highs, the BHSI has experienced a fall of 998 points (it is about 50% down) while BCI has decreased by 90% (a fall of 9,410 points), furthermore the BPI has decreased by 2,044 points (53% down) and the BSI has noted a fall of 53% (1,807 points down).

Despite the markets’ correction from October highs, the ships’ prices have corrected disproportionately. For instance, late in October 2021 a 10-year-old Panamax was valued around USD 22 mills, whilst now it has retreated to about USD 20 mills. During the same time, a 10-year-old Supramax was sold for USD 21 mills, while today a comparable age/size group vessel would cost around USD 19 mills. Last but not least, in October 2021, the value of a 10-year-old handysize was in the region of USD 18 mills, whilst now the value of a similar size and age vessel is in the region of mid/low USD 16mills. Taking into account the movement of charter rates and indices since January 2021 and that secondhand prices are at slightly lower levels than those of October 2021, Handysizes have shown a better resilience to rates variation and a consistency between their earnings and investment cost.

Sale and Purchase:

On the dry bulk S&P, clients of Safe Bulkers acquired the Capesize “South Trader”( MC main engine) - 181K/2014 Koyo for USD 33.8 mills. The BWTS fitted geared Panamax “Silver Star” - 79K/2011 Cosco Dalian, was sold for USD 18 mills to Middle Eastern buyers. On the Supramax sector, the “Safesea Neha II”- 53K/2008 Dayang changed hands for USD 13.8 mills. Finally, the BWTS fitted Handysize “Cielo Di Virgin Gorda” - 39K/2015 Yangfan, was sold for high USD 22 mills to German buyers.

On the tanker side, on the Suezmax sector, the “Kaveri Spirit” - 159K/2004 HHI sold for USD 15.8mills. The Aframax “Crudesun” - 116K/2018 Daehan changed hands for 47.6 mills. Greek buyers acquired the LR1 “Polar Cod”- 74K/2007 Onomichi for USD 11.7 mills. Finally, the BWTS & Scrubber fitted MR2 “Sti Fontvieille” - 50K/2013 HMD sold for USD 23.5 mills.

On the NB front, clients of KC Maritime have ordered 2x 64K DWT imo phase 3 compliant at Cosco Zhousan for region usd 31 mills each. The first newbuilding will be delivered within second half 2023 and the second vessel during the first half of 2024.

* Xclusiv Shipbrokers Inc.