Σαβ01282023

Last updateΠαρ, 27 Ιαν 2023 10pm

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The dry bulk indices on a free fall

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The beginning of the year saw the dry bulk indices on a free fall. BDI had a harsh fall of 17.49% the first day of 2023, the highest daily fall witnessed since its inception in 1985, and it dropped 25% w-on-w during the first week of 2023. The week closed with BCI down almost 33% to the 1,512-points mark, Panamax index down to 1,299 points with a fall of 15.3% and BSI and BHSI indices with a fall of 21% and 17% respectively. The downfall in the dry bulk sector the first week of the year has driven the less volatile BSI and BHSI indices to levels not seen since 2020 and to be more accurate, Supramax index was at similar levels back in July 2020 (July 11) and Handysize index had seen the 552 points mark again back in August 2020 (August 22).

China’s reopening to the world, cancelling the strict zero Covid policies has created an enthusiasm to the market but the massive Covid outbreak in China that followed created further concerns. But as the majority of analysts insist, China’s reopening will be a good omen for the shipping market in the long run. Especially for the dry bulk market, China’s come back may drive the traditional supply/demand levels to post-pandemic ones. Analysts noted that demand will play a major role in spot freight rates and China coming back as a protagonist and the dominant force of bulk imports may be the catalyst for a significant demand increase.

Despite market numbness during the Christmas and New Year’s holidays and the downward start of 2023, the first news of the year can only have a positive imprint on the dry market. Indian authorities announced that power plants that rely on imported coal should be fully compensated when ordered to supply electricity meaning that Indian demand for imported coal will heat up again. Since May 2022, Indian power stations, with a combined capacity of about 17 gigawatts, had ceased operating due to high prices of imported coal. The compensation of imported coal price will lead to the gradual reopening of these power stations and to an increase of demand for coal. But there is more about coal. There are many rumours that Chinese authorities are considering to lift over the two-year-old unofficial ban on Australian coal imports. The exact timeline of the ban’s removal is still unclear, but traders and analysts have announced that three Chinese state-owned power plants and a steel producer have received intimations from the Chinese authorities to import Australian coal. Allowing inflows from Australia, which make up about 30% of global coal exports, the biggest followed by top supplier Indonesia, will ensure China has enough options after Russia's invasion of Ukraine in February 2022 propelled global thermal coal prices to record highs and China could reclaim its position as the top consumer of Australian coal in the long term.

The wet market also started the year with the wrong foot. BDTI index welcomed 2023 with a near 26% fall in the first week at 1,391 points, while BCTI index had a massive 50% w-on-w decrease (44% at the first trading day of the year) at 1,068 points mark. Most analysts believe that China’s Covid outbreak has played a huge role in this downfall as the vessel demand is moving to lower levels and the rates are pushed down. Crude oil tanker earnings are softening mainly due to weak Chinese oil demand as Chinese refiners buying buy oil from overseas and try to rely mainly on their stockpiles. Meanwhile Russian crude oil exports are shrinking not only to west Europe and Mediterranean but also to Asia. But Russia is not hunkering down, but instead trying to push more crude oil produced in the Arctic to India providing big discounts. In a try to find alternative routes for Arctic oil after the European Union, G7 Nations and Australia introduced the price cap on Russian oil in December, on top of an EU embargo on Russian crude by sea, Russia is selling it to India with major discounts. Arctic crude exports to India have steadily increased since May, with a record of 6.67 million barrels loaded in November and 4.1 million barrels in December as recent data showed. It is also noteworthy that tankers controlled by companies in the UAE, China, India and Russia carried more than 60% of Russian oil since December 5, more than double its previous share before the EU embargo, according to oil companies’ sources.

Sale and Purchase:

The year starts with dynamic activity in the Capesize sector, followed by the Supramax sector. On the Capesize sector, Greek buyers acquired the BWTS fitted “Aquasalwador” - 180K/2012 Daehan and the “Aquanavigator”- 180K/2011 Daehan for USD 27 mills and 25 mills respectively. The BWTS fitted Supramax “Sunrise Rainbow”- 56K/2012 Jiangsu Hantong rumored sold for USD 15.5 mills, while the 2-year older BWTS fitted “CN Journey” - 57K/2010 Cosco Zhousan was sold for high USD 12 mills to Indonesian buyers. Finally, the BWTS fitted and Ice Class II Handysize “Atlantic Dream” - 33K/2011 Zhejiang changed hands for USD 10.75 mills.

Α active beginning for bigger sizes was also observed in the wet market, as half of the sales belong to the VLCC sector. The BWTS & Scrubber fitted VLCC “FPMC C Honor” - 298K/2008 Universal - dd: 11/2023 reported sold for region USD 54-55 mills. Furthermore, in the same sector, the BWTS fitted “Asia Dawn” - 281K/2005 IHI was sold for shade below USD 50 mills to Middle Eastern buyers, while the 3-year older BWTS fitted “Cosgreat Lake” - 299K/2002 Nacks was sold for high USD 30s mills to GMS. UAE buyers acquired the BWTS fitted Aframax “Syra”- 105K/2010 Sumitomo for USD 40 mills. Last but not least, the MR1 “Delphi” - 39K/2006 GSI found new owners for USD 14 mills.

Xclusiv Shipbrokers Inc.

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