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Three American banking institutions asked for state aid

Three American banking institutions asked for state aid in previous week, causing a knock on effect to the Swiss banking system, maybe the most reliable and famous banking system in the world. The Swiss National Bank was also forced to give an emergency lifeline of USD 54 billion to Credit Suisse, one of the biggest banks in Switzerland and the 17th largest European bank. But this was not enough to ease the pressures and calm its clients. UBS agreed to buy Credit Suisse for USD 3.25 billion, with the latter wiping out USD 17 billion AT1 bonds and a share price dilution of 99% from its 2007 peak. Despite the turbulence in the banking system and the market concerns about high interest rates, the European Central Bank decided another interest rate increase by half a percentage point (from 2.5% to 3%) sticking to its target of fighting inflation. It remains to be seen whether the "banks' domino" will be continued, spreading concerns of a banking crisis.

Let's move back to the shipping industry, where the dry market continues its "counterattack" from mid-February lows. BCI closed at 1,931 points mark, having an increase of 606% since 17 February and 19 daily positive closings out of the last 21. The reopening of China, the increased needs of India and the rerouting of Russian Coal exports because of the War Sanctions have given a great boost to Capesize demand & freight rates. Supramax & Panamax vessels have also capitalised this upward trend, with BPI and BSI up by 112% and 90% respectively within the last 30 days, while BHSI is having a 22 continuous positive daily closings, reaching 694 points but only 58% higher than 15 February low. On the wet market the good news keep the BDTI and BCTI in 2023's highs. China's diesel exports surged more than 10-fold to 4.54 million tons during January and February from the prior year as domestic demand eased. That's equivalent to about 574,000 barrels a day, while gasoline exports were 20% higher. Due to the China's COVID-19 limitations being loosened, OPEC increased its prediction for Chinese oil demand growth in 2023 on Tuesday. However, it maintained its forecast for the worldwide total, citing potential downside risks to global economy. The Organization of the Petroleum Exporting Countries said in its monthly report that the World oil demand in 2023 will rise by 2.32 million barrels per day (bpd), or 2.3%. The banking system turmoil has also affected oil market as oil has fallen to levels not seen since 20th December 2021 due to investors mulling over the banking sector risks, with WTI and Brent crude futures dropping to USD 68/ barrel and USD 74/barrel respectively.

As the Q1 is moving to its close, we take a look of Bulk Carrier, Tanker (>=10,000 DWT), Container and Gas segments fleet's and orderbook's front and make a comparison with the similar period of 2022. As of 17th March, dry bulk's total active fleet was 13,202 vessels, with a total of 891 vessels to be on order (6.7% orderbook to fleet ratio). Compared to March 2022, the dry bulk's orderbook has increased by 19%, whilst the total active fleet is up by 3%. Noteworthy to mention that the fleet over 21 year-old has increased by 10% y-o-y to 1,568 vessels. In the tanker market, the active fleet (>= 10,000 DWT) has rose by 3% to 7,462 vessels, while the total orderbook has decreased by 38% to 334 vessels on order, compared to the same period of 2022, while the orderbook to fleet ratio has plunged from 7.5% to 4.5%. We also witnessed an increase of 21% in the number of vessels aged 21+ year-old, almost 2 and half times more than the current tanker orderbook, highlighting that the tanker fleet is jeopardized to shrink in the following years. In the Container market, the active fleet accounts for 5,850 vessels and is up by around 4% compared to March 2022, when the fleet was 5,606 vessels. A similar increase has also been noticed in the Container orderbook, as currently accounts for 917 vessels on order, whilst a year ago stood at 791 orders (an increase of 16%). Likewise, to ageing (21+ year-old) Dry bulk's and Tanker's fleet, the Containers being over 21 years old constitute a significant percentage of total Container fleet (21%). In the LPG and LNG sector, the active fleet accounts for 2,327 vessels, while back in March 2022 was 2,243 vessels (up by 3.7%). The orderbook has soared by 31% to 475 orders (as back in March 2022 the vessels in order were 362), reflecting an increase in orderbook to fleet ratio from 16.1% in March 2022 to 20.4% currently. It is interesting to note that a significant consistency towards the zero-emission goal is shown in the LPG/LNG orderbook with 90% of these being capable or ready to use alternative fuels. Where can conclude, there is host of 21+ years old vessels, thus we may see a significant increase in the number of vessels go for scrap in the future, with some cases, such as the dry bulk market and the tanker market, the vessels on order do not offset the vessels may be demolished.

Sale and Purchase:

We witnessed an increase in the buying appetite of the dry bulk market, with the Capesize and Supramax constituting a significant part of the sales. Clients of Norden acquired 2x Capesizes, the "Aquahaha" - 179K/2012 HHIC and the "Aquatonka" - 179K/2012 HHIC for USD 28 mills each. On the same sector, Chinese buyers acquired the "Xin Jin Hai" - 180K/2009 Dalian for USD 23, whilst the Scrubber fitted "Golden Shui" - 169K/2009 Daehan and the Scrubber fitted "Golden Feng"- 169K/2009 Daehan were sold for low/mid 23 mills each to Greek buyers. Moving down the sizes, Safe Bulkers announced the sale of Panamax "Efrossini"- 75K/2012 Sasebo for USD 22.5 mills basis 10-14 month TC back to sellers at USD 16K/day. On the Supramax Sector, Chinese buyers acquired the "Eastern Azalea" - 57K/2012 Jiangsu Hantong and the "Eastern Laelia" - 57K/2011 Jiangsu Hantong for USD 15 mills and 14.5 mills respectively. Furthermore, the Supramax "Eastern Begonia" - 58K/2010 Yangzhou Dayang was sold for USD 14.75 mills to Greek buyers. Finally, the Handysize "Merchant Three"- 28K/2012 Imabari changed hands for low USD 13 mills.

On the wet S&P activity, the Suezmax "Eurovoyager" - 159K/2005 Daewoo was sold for USD 38 mills to UAE buyers. Clients of Torm acquired 3x Electronic M/E MR2, the "Gladys W" - 50K/2013 STX, the "Julia L" - 50K/2013 STX and the "Marjorie K" - 50K/2013 STX for a total cash consideration of USD 48.5 mills and the issuance of 1.42 million shares. Clients of Ace Tankers acquired 4x StSt modern chemical tankers, the "Stream Pacific"- 20K/2019 Fukuoka, the "Stream Baltic" - 20K/2019 Fukuoka, the "Stream Atlantic" - 20K/2019 Fukuoka and the "Stream Arctic" - 20K/2018 Fukuoka for USD 134 mills enbloc.

Xclusiv Shipbrokers Inc.