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On the dry market, Capes had an impressive come back

As the Russian invasion of Ukraine is still dominating the news, Emmanuel Macron was re-elected as the president of France. Macron’s win is not only an opportunity for France but for the EU as well. This may be the time that France will seek a more prominent leadership role because of its strategic weight as the EU’s only nuclear power, with an economy that is outperforming Germany’s & one that is less dependent on Russian economy & energy in a time of war and surging energy prices. France’s geopolitical importance is vital to bolstering a pro-Ukraine stance when it comes to supporting Kyiv financially & militarily, as well as cutting European reliance on Russian oil & gas. Paris’ ability to prod Berlin on these issues will be vital, given that German Chancellor Olaf Scholz has pressure from his coalition to take a clearer line on dependence from Russia.

China is still struggling with COVID-19 outbreaks while the government is “stuck” with the zero-Covid strategy. China lockdowns and a surging US dollar sent crude oil prices to lower levels last week with both WTI and Brent futures to USD 95 & USD 99, respectively, but today have managed to recoup some of their losses. Chinese authorities on April 24 tightened restrictions in parts of Shanghai, including erecting fences around apartment buildings with COVID-19 infected individuals. Furthermore, authorities in Beijing have ordered 3.5 million residents and workers in the biggest district of Chaoyang to report for three coronavirus tests this week to stem a surge in cases. Coming back to Europe, the pressures for a ban on Russian oil & gas are increasing. Activists from Greenpeace attempted to block the delivery of Russian jet fuel to ExxonMobil's Slagen import terminal in Norway's Oslo Fjord, sending a message to Norway’s Government to stop importing Russian oil. As mentioned in the first paragraph, the EU is trying to find a way to reduce its dependence on Russian oil and gas but has so far come up empty handed, with voices inside the EU asking for immediate action increasing day by day. In this extremely volatile environment, the BDTI closed the week with a decrease of 14.5% at 1465 points, having a series of 4 negative closings, while BCTI closed the week at same levels as last week, at 1076 points mark. The good news is that flows of jet fuel exports from East Asia to the US have been on the rise over the last few months as airlines step up flights to meet growing travel demand amid easing of border restrictions. So far in April, 200,000 mt of jet fuel loadings with options to deliver into Europe or US have been fixed and according to analysts there is no surge in shipments to the US and South America from Northeast Asia, but demand believed to pick up in the coming weeks, while freight for moving diesel and gasoline to the US has been elevated and has risen by more than 47% so far in April for MR tankers. Moreover, Indonesia strikes again. After the ban on coal exports, Indonesia plans to ban exports of palm oil and its raw materials due to domestic shortages. Indonesia’s agriculture ministry said that crude palm oil shipments would be excluded from a planned palm oil export ban, as the ban is on cooking oil and its raw materials. Indonesia’s palm oil exports largely focus on process palm oil which made up for about 75% of its 2021 exports.

On the dry market, Capes had an impressive come back, as the BCI climbed back to levels above 2,000 points after one month with a 24,6% weekly increase. BSI and BHSI followed with 7.2% and 3.8% increase respectively at 2,678 and 1,504 points, while BPI lost 1.2% on a weekly basis and closed the week at 3,004 points. The return of the optimism in the Capesize market has driven the spot rates higher. The rainfalls have finally started to ease up in Brazil so it is expected that ports will become a little busier as iron ore exports will increase. Meanwhile in China, despite the local lockdown implications, blast furnace capacity utilisation inched up for the second week to more than 86%, as steel mills resumed operations and the demand of iron ore and coking coal has increased again. Finally, the market ability to adapt to current market conditions does not stop to surprise analysts. In previous reports we have noted that charterers are fixing larger ships to move smaller parcels as the cost is significantly lower. The high freight rates for handysize bulkers continue to translate to interesting and unconventional new opportunities for larger vessels. Now, a shipment of three handysize stems of pine logs, 105,000 tonnes of cargo will be loaded onboard a newcastlemax bulk carrier for the first time ever. M/V Golden Champion (208K dwt, blt 2019, China) loaded log cargo at Montevideo, Uruguay and is heading to China, opening a window of new opportunities for capes as more and more capesize owners are taking an interest in the log trade, seeing it as leverage against iron ore clients.

Sale and Purchase:

In the Capesize sector, Greek buyers acquired the “Aquamaka”- 179K/2009 HHI for USD 26 mills, while the mini-Cape “Spring Pride” - 107K/2007 Oshima was sold for USD 17.5 mills to Chinese buyers. In the Panamax sector, the BWTS fitted “Coral Topaz” - 77K/2007 Sasebo reported sold for low USD 18 mills to S. Korean buyers. 2x TIER II S. Korean Supramaxes, the “Desert Hope” - 57K/2011 HMD & the “Desert Peace” - 57K/2011 HMD, changed hands for USD 45 mills enbloc. Finally, the BWTS fitted handysize “Dolce Vita”- 39K/2015 Chengxi sold for region USD 25 mills to German buyers.

In the VLCC sector, the “Nissho Maru”- 301K/2004 IHI was sold for USD 31 mills to Greek buyers. Greek buyers acquired also the Aframax “Wafrah” - 114K/2007 Daewoo for excess USD 17.5 mills. We witnessed a significant number of modern MR2 sales. The BWTS fitted “Matuku”- 50K/2016 SPP was sold for USD 31 mills to European buyers, while the “Elandra Pine” - 50K/2018 HMD sold for USD 34 mills to clients of Premuda. Furthermore, Far Eastern buyers acquired the “Ardmore Seahawk” - 50K/2015 for USD 24.5mills. Last but not least, in the chemical sector, the “LS Christine”- 8K/2007 Turkter Tersane changed hands for USD 4.25 mills.

In the LPG sector, the “Hellas Serenity” - 81K/2008 HHI, was sold for USD 47.5 mills to Indonesian buyers.

Xclusiv Shipbrokers Inc.