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CAPESIZE MARKET KEEP STRUGGLING

The beleaguered dry bulk market has now entered its third year of crisis, in what could be a “make-or-break” 12 months for many owners, already financially exhausted by the continuous low freight rate environment.

So far, the familiar January slow start to the year is already apparent, as this is – traditionally – the slowest time of the year.

As a result, over the course of the first couple of weeks, the Baltic Dry Index (BDI) has lost a total of 51 points, retreating back to 910 points.

In its latest report, shipbroker commented on the Capesize market, by noting that “the rollercoaster ride in the Capesize segment continued through the opening weeks of 2017, as momentum from the strong end-Dec figures kept rates largely in the green during early January.”

NEWBUILDING ACTIVITY PICKS UP

Some cash-rich ship owners are starting to become enticed by aggressive pricing for newbuilding contracting. As such, on the back of softer prices being quoted for tanker vessels, we were seeing an improved inflow of fresh activity this week. The product tankers have started to gain some traction with a number of buyers picking up slots for both MR and smaller product/Chemical units.

We were also seeing a continuation in activity for more specialized units, with major S. Korean yards reportedly managing to secure contracts for high spec FSRU units from Norway’s HOEGH LNG, something that will surely help significantly the cash flow and operations situation for both these shipbuilders.

Beyond these deals however it still continues to be a fairly inactive month, while it still looks like an unlikely scenario that we will see a return back to high volume activity in the first quarter of this year, said Allied Shipbroking in its latest weekly report.

AADA INCREASES CHINA-AUSTRALIA CARGO RATE

Member lines of the Asia Australia Discussion Agreement (AADA) will raise rates US$300 per TEU and US$600 per FEU for both dry and refrigerated cargo from China to Australia from March 1, 2017.

The AADA said in a notice to trade that the action was taken to maintain a high standard of service to customers. The increase will apply in full on top of existing ongoing market rates and will be subject to accessorial surcharges applicable at the time of shipment.

AADA members include ANL Singapore (ANL), APL, Cosco Shipping Lines, Evergreen Line, Hamburg Sud, Hyundai Merchant Marine, Maersk Line, Mediterranean Shipping Co. (MSC), Orient Overseas Container Line (OOCL), Pacific International Line (PIL), TS Lines and Yang Ming Line.

 

WHAT NEXT FOR THE SMALLER TEU FLEET?

The world is becoming an ever smaller place and the ability to conduct business with the most competitive companies globally is paramount for survival.

The emphasis on customer needs now provides competitive advantage, and in the case of the container market, this may present opportunities for smaller TEU vessels. These containerships, which generally fall into the 1,000-4,999 TEU size range, were once pioneers laying a foundation for the modern behemoth of the container market.

JAPAN’S THERMAL COAL IMPORTS DECLINE, LNG PURCHASES DOWN

Japan’s coal imports for power generation fell in 2016 from four years of successive record highs and liquefied natural gas (LNG) purchases dropped for a second year as an energy crisis brought on by the 2011 Fukushima disaster eased.

Rising supplies of homegrown renewable energy and the return of some nuclear power, amid falling demand as Japan’s population declines, mean the world’s third-largest economy has more diversity in its sources of energy.

Thermal coal imports declined to just below 110 million tons in 2016, down from a record-high 113.84 million tons in 2015. Import costs fell 20 percent from a year earlier. Shipments of liquefied natural gas (LNG) dropped for a second year last year, down 2 percent to 83.34 million tons, while their value fell 40 percent.

SOUTH KOREA SEES MORE SHIPPING RESTRUCTURES IN 2017

South Korea said this Wednesday it will continue with corporate restructuring efforts in 2017, with plans focusing on shipping and shipbuilding companies struggling with shrinking global demand. If last year we put together the rules and framework for corporate restructuring despite hardships, this year we will engage in restructuring in earnest and make sure the efforts are carried out smoothly, Finance Minister Yoo Il-ho said in opening remarks at a joint meeting with other government ministers.

They ministers were discussing this year’s plans for restructuring industries that also include steel and petrochemicals.

BIGGEST BOX MAKER ISSUES PROFIT WARNING, BLAMES WORLD TRADE FALL

Shenzhen’s China International Marine Containers (CIMC), the world’s biggest container manufacturer, has issued a profit warning to investors.

In a filing to the Hong Kong stock exchange, CIMC told the market that its net profit for 2016 will range from zero to half of what it was in 2015 – that was CNY1.97 billion (US$288 million). Shareholders and potential investors are advised to exercise caution when dealing in the shares of the company.

The company blamed its plight to shrinking international trade and a planned acquisition that was called off, in which CIMC Enrich Holdings, an equipment manufacturer, had pulled out. It is expected that a relatively large amount of provision for impairment will be made to the consolidated financial statements of the company for 2016, which will affect the net profit attributable to shareholders and other equity holders of the company for 2016, CIMC said.

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