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BDI index increased by 3.5% on a weekly basis

The Russian invasion of Ukraine continues for a second week. Russia subjected the Ukrainian port of Mariupol and the cities of Chernihiv & Kharkiv to relentless missile bombardments on Thursday while, on Friday, Russian forces seized the Ukrainian nuclear power plant where a fire was extinguished, raising international alarm over Moscow’s warfare after another night of devastating shelling.

The war in Ukraine and the sanctions over Russia have triggered “exceptional moves” in raw materials from oil to wheat, making the global commodity prices on track for the biggest weekly rally in more than 50 years. WTI crude oil prices hit the highest level since 2008, at USD 125 per barrel and Brent crude jumped at USD 139 per barrel, before closing to a slightly lower level on Monday 7th of March. Natural gas and coal have also soared this week, in a move that will have profound effects on global businesses and consumers. In Europe, wholesale natural gas prices reached almost €242 per mWhr while thermal coal, used in power plants, surged beyond $400/tonne. Wheat futures also shot above USD 12/bushel, a 60% increase since the start of February. Russia and Ukraine account for just under 30 per cent of global wheat exports, sending the grain to countries in the Middle East, North Africa, and Asia. The huge gains on commodities prices and energy costs are making production more expensive and will further push up inflation that central banks are struggling to control, raising the cost of living across the globe.

While crude oil futures were making new highs, the VLSFO Bunker prices in Fujairah and Singapore have risen to above the USD 900 per tonne mark for the first time ever. In Fujairah, the world’s third largest bunkering port, prices hit USD 924 on Friday, while in Singapore the largest bunkering hub in the world, they stood at USD 892. On Monday 7th of March bunker prices followed crude oil price rally & raised at USD 1,001 and USD 981 respectively, crossing the USD 1,000 per tonne mark for the first time in history. Since bottoming in the summer of 2020, bunker fuel prices have been on the rise while a rapid acceleration towards new record highs, which started as global oil prices are now over USD 120 per barrel. As sanctions against Russia & general geopolitical uncertainty have sent Crude oil prices to the highest level since 2008, the very low sulphur fuel oil (VLSFO) price increased by up to 35% since the beginning of the year, and the fuel spread between VLSFO and HSFO is now over USD 280 per tonne. The rise of the fuel spread back above USD 200 per tonne for the first time since 24th January 2020, is giving a huge advantage to owners with scrubber-fitted tonnage.

The energy scarcity and commodity price surge pushed the tanker market to levels not seen since spring of 2020. The BDTI closed the week at 1,474 points, up by 29% w-o-w, highest level since end-April 2020. Following that, the clean market increased by around 42% since the past week, closing at 989 points, a level not seen since mid-May 2020. Routes on Black Sea enjoy premium rates as incurred a war risk premium. For instance, the TD6–Novorossiysk/Augusta & the TD17-Primorsk/Wilhelmshaven routes pay close to USD 200K/day. It is worth mentioning that since past month those routes have increased by more than 2,700%.

As Russia's spread of aggression on Ukraine complicates the movement of cargo between Europe and Asia, most importers across Europe, may soon face higher shipping costs, longer delays and an obstacle course of sanctions to deal with. During the past week, the world’s biggest container carriers, the Mediterranean Shipping Co. & the A.P. Moller-Maersk A/S halted bookings for Russian freight, with former seeing “ripple effects” and “significant delays” across the region. That may add new obstacles to the European economies, which already struggle with energy spikes, product shortages and clogged ports.

On the dry side the market seems to withstand any uncertainties the invasion of Ukraine creates. BDI index increased by 3.5% on a weekly basis, at 2,148 points. Capesize index dropped by 3.3% at 1,635 points despite raising at almost 200 points higher within the week. The indices for smaller vessels, Panamax, Supramax & Handysize closed the week upwards at 2,785 points, 2,586 points & 1,443 points respectively. Worth noting that Capesize is the most affected market as it has decreased by 25% since the day of the invasion while the other markets follow an upward trend by 3.2% for Panamaxes, 8.3% for Supramaxes & 6.6% for Handysizes.

Sale and Purchase:

On the dry S&P activity, the Chinese BWTS fitted & TIER III Panamax Newbuilding “Eastern Heather”-82K/2022 Chengxi was sold for USD 36 mills, while the 10-year-old “Darya Kirthi”-81K/2012 STX sold for USD 25 mills to Greek buyers. Furthermore, clients of Lomar Shipping acquired 3x BWTS fitted Kamsarmaxes, the “Golden Empress”-79K/2010 Jinhai, the “Golden Endeavour”-79K/2010 Jinhai & the “Golden Enterprise”-79K/2011 Jinhai for USD 52 mills enbloc. The BWTS fitted Ultramax “Drogba”-63K/2015 Chengxi committed region USD 28.7 mills. On the tanker side, on the VLCC sector, we witnessed 4 transactions during the past week. The 5-year old “Landbridge Majesty”-308K/2017 Dalian sold for USD 71 mills, while the 10-year older “My Way”-314K/2007 NACKS changed hands for USD 35 mills. Furthermore, 2x more VLCC’s, the “Navarin”-307K/2007 Dalian & the “Nautilus”-307K/2006 Dalian sold enbloc for USD 63.5 mills to clients of Sinokor. The Suezmax “Densa Orca”-158K/2012 HHI sold for USD 32.5 mills to Greek buyers. Clients of Centrofin acquired the LR1 & BWTS fitted “Tectus”-75K/2009 STX for USD 15.5 mills. Finally, the MR1 “Torm Tevere”-37K/2005 HMD sold for USD 8.3 mills to Nigerian buyers.

Xclusiv Shipbrokers Inc.