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The dry bulk market has started the new year on the back foot

The dry bulk market has started the new year on the back foot. The market's correction following the nearly 40-day rally (November-December 2023) is a reality, and it appears to be intensifying as we approach the Chinese New Year. Within the first two weeks of 2024, the Baltic Dry Index (BDI) has lost almost 31%, compared to the 18% loss it experienced in the last two weeks of 2023. Capesize vessels have seen their average five-route time charter (T/C) rate fall to $18,015 per day, about 38% lower than at the end of 2023. Meanwhile, Panamax five-route T/C rates and Handysize seven-route T/C rates have declined by around 24% in the first two weeks of 2024, reaching $12,693 and $11,089 per day, respectively. Supramax vessels have experienced the smallest drop in rates at the beginning of the year, with a 17% decline, bringing their average 10 T/C rate to $11,967 per day. This correction in freight rates is certainly not a cause for alarm or a sign of a "bad market," as intense volatility has become the norm over the past four years. Of course, seasonality and commodities stockpiling ahead of the Lunar New Year holiday (10 February 2024 to 17 February 2024) have also played a significant role.

China, having emerged from the COVID-19 pandemic, is actively pursuing a return to pre-pandemic levels of economic activity. According to official customs data, China's coal imports soared by a remarkable 61.8%, reaching an unprecedented high in 2023. Last year's imports totalled 474.42 million metric tons, eclipsing the previous record and exceeding initial projections of 470 million tons for the entire year by approximately 5 million metric tons. Additionally, last month's coal imports set an all-time monthly record of 47.3 million tons, marking an 8.7% increase from November. This surge in imports can be attributed to a record-breaking cold wave that gripped various regions of the country, driving up coal demand. China's crude imports rebounded 10.3% month on month to 11.44 million b/d in December 2023 from a four-month low in November, while oil products exports fell to a six-month low of 4.64 million mt amid tight export allowances. The month-on-month gain in crude imports was within expectations as independent refineries were set to bring more barrels once new import quotas were available. Exports of oil products dropped 39.7% year on year in December but pushed total outflow in 2023 to gain 16.7% from a year ago to 62.69 million mt. The year-on-year gain of 80.3% in oil products imports, which was stronger than exports, led China's net oil product exports to drop 45% to 14.99 million mt in 2023. In December, China imported 4.76 million mt of oil products, surging 45.2% year on year and growing 14.5% from November, customs data showed.

The Red Sea situation is deteriorating rapidly, raising concerns about a prolonged closure of the vital trade route and its potential economic and inflationary consequences for the global economy, businesses, and consumers. Following the recent US-UK airstrike on Houthi targets, the Houthi rebels have threatened to escalate their attacks on shipping vessels. In response, Danish tanker company Torm A/S has suspended all transits through the southern Red Sea, and Japanese shipping giant Mitsui O.S.K. Lines has imposed an immediate ban on all vessels transiting near Yemen, including the Red Sea and the Gulf of Aden. The recent decisions by Torm and Mitsui O.S.K. Lines suggest that tanker shipping may also be forced to take this longer, more expensive route, potentially exacerbating supply chain disruptions and driving up global energy prices.

S&P Activity:

Dry

On the Newcastlemax secor, the "Mineral Qingdao" - 206K/2020 Qingdao Yangfan was sold for USD 54.25 mills to clients of Winning Shipping. Greek buyers acquired the Capesize "Coronet"- 183K/2011 Kawasaki for USD 27 mills. Greek buyers also acquired the Kamsarmax "Kavala" - 83K/2009 Sanoyas for USD 16.3 mills. On the Supramax sector, the Scrubber fitted "Crested Eagle" - 56K/2009 IHI and the "Stellar Eagle" - 56K/2009 IHI were sold enbloc for USD 14.5 mills each. 2x Handymax vessels, the "Notos Venture"- 43K/2017 Qingshan and the "Eurus Venture" - 43K/2017 Qingshan found new owners for USD 23 mills each. Last but not least, on the Handysize sector, Turkish buyers acquired the "Helga Bulker" - 34K/2017 Hakodate for excess USD 22 mills, while the 2-year older Non-Eco "Lowlands Hopper"- 36K/2015 Shikoku was sold for excess USD 17 mills to Far Eastern buyers.

Tanker

Frontline sold a series of its oldest VLCCs. The Scrubber fitted "Front Signe" - 297K/2010 SWS, the "Front Cecilie"- 297K/2010 SWS, the "Front Endurance" - 321K/2009 Daewoo, the "Front Kathrine" - 298K/2009 SWS and the "Front Queen" - 298K/2009 SWS were sold enbloc for USD 290 mills to clients of Sinokor. Moving down the sizes, the LR2 "Fair Seas"- 115K/2008 STX changed hands for USD 43.5 mills. Emarat Maritime acquired 2x LR1s Ice Class 1A, the "Brook Trout" - 74K/2007 STX and the "Lake Trout" - 74K/2007 STX for USD 26 mills each. Finally, on the MR1 sector, the Ice Class 1A "Dinah"- 37K/2008 HMD and the "Pluto" - 37K/2008 HMD were sold enbloc for USD 41.75 mills.

Xclusiv Shipbrokers Inc.