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The beginning of 2023 has seen the wet market wobble

The beginning of 2023 has seen the wet market wobble as the BCTI has lost around 66% within the 20 first days of January and BDTI has also fallen about 25% in the same period. Lots of voices of concern are rising about the wet market, and the tanker S&P market, but panic is not the best consultant in economy and in life in general.

Studying the market of large tankers, it is observed that the indices fall and the turmoil of the market in general has not affected all the types of tankers. The 5Y old second hand prices for large crude oil tankers like VLCC, Suezmax and Aframax, are still high without showing any significant signs of correction. And not only that but their prices are at the highest levels of the last decade and their price trend is mainly upward since January 2013. Within the last decade indices have seen much higher levels than today but the S&P prices didn’t achieved today’s levels. Looking also at the newbuilding prices for VLCC, Suezmax and Aframax, it is also notable that their numbers are also at highest levels since January 2013, with a price rally started 2 years ago. The gradually increasing construction cost, the closing of many yards and the pandemic have created an upward trend in the newbuilding prices in general. Speaking of the market and freight rates, it is also interesting to take a look at the 1Y TC for big tanker vessels. As it can been seen in the graph, Suezmax and Aframax 1Y TC rates are also on ten year high while VLCC 1Y TC rates are staying in quite high levels. The Russian sanctions have played a major part in creating a somewhat two tier market, as many western countries search for alternative crude oil trade routes adding tonne miles to the trade and many older ships stay into carrying Russian oil mainly to Asia, driving the demand for newer vessels higher while the supply is steady at the best.

Talking about new and old vessels, India came to shake things up with a decision about shipping. The Indian government is set to pose age restrictions for ships entering its ports. Under the new rules no bulk carrier, tanker or general cargo ship aged 25 or older will be allowed to call at Indian ports. For gas carriers, offshore vessels and container ships the age limit will be set at 30 years. Is this decision capable of changing the seaborne trade map? Looking the trade data, India is a “small” giant which is responsible for the 17% of the world seaborne iron ore trade, 19% of the world’s seaborne coal trade and 2% of the world’s seaborne grain trade. On the wet market, India is responsible for the 12% of the world’s seaborne crude oil trade and 7% of the world’s seaborne oil product trade. Taking into consideration that about 7% of the bulker fleet and almost 4% of the tanker fleet is older than 21 years old, how this decision of the Indian government will shift the seaborne trade “map” and how it will affect the rates and the supply / demand of vessels is yet to be seen. In the Container sector, the vessels that are near or older than 30 years old are a small majority (only 3% of the container fleet are vessels older than 29 years old) and taking into account the big newbuilding orderbook that has already begun deliveries, the container market probably will stay unaffected. As for the Gas carrier sector, India’s LNG imports are the 5% of the world seaborne LNG trade while India’s LPG imports are 15% of the world seaborne LPG trade. Despite the fact that almost 11% of gas carrier fleet is older than 29 years old, the really high order book (about 20% of the fleet) suggests that this market will not be significantly affected by India’s new policy.

Sale and Purchase:

On the Post-Panamax sector, European buyers acquired the “Am Liberia” - 99K/2013 Tsuneishi Zhoushan for excess USD 20 mills, while Far Eastern buyers acquire the “Dyna Globe” - 99K/2006 Imabari for USD 15.1 mills. The “Navios Prosperity I” - 76K/2007 build STX was sold for USD 13.75 mills. On the Ultramax sector, the “IVS Hirono” - 60K/2015 Onomichi was sold for USD 24.5 mills to clients of Pacific Basin. Last but not least, Greek buyers acquire the Handysize “Ben Wyvis” - 35K/2015 Jiangdong for USD 17.4 mills.

On the wet market, we witnessed a strong interest on the VLCC sector. The Scrubber fitted “Yasa Southern Cross” - 318K/2012 SWS and the “Poros” - 318K/2008 SWS were sold for undisclosed terms. Moreover, the Scrubber fitted “Maran Aquarius” - 321K/2005 Daewoo found new owners for mid/ high USD 52 mills, while the “Arcadia V” - 299K/2000 Kawasaki changed hands for USD 40 mills. The LR2 “Kriti Bastion” - 106K/2003 HHI was sold for region USD 30.5-31mills, while the Aframax “Kriti Galaxy” - 111K/2006 Mitsui was sold for USD 38 mills. The MR2, “Atlantica Breeze” - 47K/2007 Sungdong was sold for USD 19 mills to Far Eastern buyers. Last but not least, Greek buyers acquired the StSt Chemical “Mild Bloom” - 21K/2006 Shin Kurushima for excess USD 16 mills.

Xclusiv Shipbrokers Inc.