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Last updateΤρι, 07 Δεκ 2021 4pm

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Weekly S&P Report Xclusiv Shipbrokers Inc.

Bulk carrier 1

During the last month, dry bulk market has corrected to levels not seen since June 2021, mainly in the Capesize & Supramax size segments. The BDI has decreased by 52% within the last month (7th October), whilst the BCI has plunged by 7,205 points (around $60K/day down). The BSI closed the week at 2,416, 29% down comparing to 7th October, while the BPI & BHSI declined 813 & 283 points respectively. However, there are some facts and fundamentals which may allow the dry bulk market to maintain healthy levels over the next few years since the present supply of vessels may not be able to cover future demand.

On the demand side, we still have not engaged in the implementation of significant infrastructure projects, all over the world. Projects, which were postponed during Covid-19, will be re-instated in the following years, and are adding to the ones already scheduled via their regular planning. All these projects will increase demand for raw materials like steel, iron, cement & machineries which may keep seaborne trade demand at healthy levels. The House passed one of the largest infrastructure packages in U.S. history Friday night, shoring up $1.2 trillion in funds, including $550 billion in new investments, for road and bridges, public transit, Amtrak, broadband internet, electric grid, airports, road safety, zero emissions transport vehicles and the Great Lakes Restoration Initiative. The Association of South-East Asian Nations (ASEAN) Catalytic Green Finance Facility, managed by the Asian Development Bank unveiled during COP26 with purpose to support development of sustainable infrastructure projects such as renewable energy, clean transportation or urban infrastructure in developing countries across the region. ASEAN governments and partners have committed to deploy over £5 billion.

On the supply side, the total bulk carrier Orderbook to fleet ratio is today at historically low-level accounting for 6.8% (in DWT), while in 2020 & 2019 it was 7.2% & 10.6% respectively. Fewer orders are a result of regulatory uncertainty, decision on immature technologies & bunkering infrastructure and limited financing. Also, shipbuilding capacity has shrunk as many shipyards have closed over the past years and shipyard’s strategy is to undertake more profitable and “expensive” orders. Adding to this, the fact that many yard’s slots have been already covered by excessive container Orderbook leaving limited availability for Bulk Carrier slots with deliveries even in 2024.

On the tanker market, the total Orderbook presently is at low levels amounting to 55mills DWT under contract, which equals to 7.7% of the active fleet, the lowest of the past 25 years. The average tanker yearly Orderbook of 1996-2021 is 76mills DWT & the Orderbook to fleet ratio 25y average is 20.4%. In the meantime, President Biden and other global leaders urged OPEC+ to increase oil production, with OPEC+ remaining firm to its previous decision of maintaining the monthly increase of 400K bpd production. In 2019, pre Covid-19 pandemic, the world consumed 99.7 million bpd of oil. As the world is getting over the economies’ lockdowns & transport restrictions, it will move eventually to a post pandemic period and demand for refined products such as jet fuel, gasoline & diesel will recover. The consumption trends of petrol and diesel indicate growth as IEA (International Energy Agency) expects it to hit 96.1million bpd in 2021 & 99.4million bpd in 2022. However, OPEC has forecasted that the oil demand will reach 100.8 million bpd in 2022, exceeding pre-pandemic levels. This in combination with reduced deliveries of newbuildings scheduled over the next 3 years (based on the low mentioned present Orderbook) should lead to a gradual improvement of the tanker market

Sale and Purchase:

During the last two weeks, we observe a decrease in the volume of dry bulk secondhand sales due to the BDI easing off. However, asset prices seem to be resisting downward pressure. On the Capesize sector, the “Bao May”- 178K/2010 SWS was reported sold for region USD 31.5 mills. The Chinese built “Majulah Harbourfront”-82K/2014 Tsuneishi Zhousan changed hands for high USD 29mills. On the Ultramax sector, the “Nautical Alice”-64K/2016 Hantong sold for USD 28.5mills.

On the tanker S&P activity, we highlight the sale of “Atalandi”-105K/2004 Daewoo which was sold for USD 13.6mills. The LR1 “Iris Victoria”- 74K/2010 Minaminippon found new owners for xs USD 17.5mills. The MRII “Nord Skate”- 51K/2009 STX fetched region USD 17mills, being now the second one from Norden fleet being reported, further to our previous advice on the “Nord Stingray”-51K/2009 STX, as part of their modernization plan. On the chemical segment, the “Lt Diamond”-13K/2020 Dayang & “Lt Crystal”- 13K/2020 Dayang sold enbloc for high USD 16mills each to clients of Nanjing Yangyang Chemical Transport. Finally, clients of E&S Tankers acquired the “Bow Dalian”-9K/2012 Chongqing Chuandong, the “Bow Nangang”-9K/2013 Chongqing Chuandong & the “Bow Fuling”-9K/2012 Chongqing Chuandong for region USD 8 mills each..

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