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BALTIC DOWN ON WEAKER PANAMAX, SMALLER VESSEL RATES

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, fell on Wednesday on weaker rates for panamaxes and smaller vessels, even as rates for capesizes rose.

The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, fell for the seventh straight session and was down 7 points, or 0.61 percent, to end at 1,147 points, its lowest since mid-March.

The capesize index snapped a six-session losing-streak and gained 23 points, or 1.3 percent, to 1,790 points. Average daily earnings for capesizes, which typically transport 150,000-tone cargoes such as iron ore and coal, were up $256 to $13,135.

NEWBUILDING ORDERING ACTIVITY GAINS

With prices for second hand ships on the rise of late, a few ship owners have turned to the newbuilding ordering market, where more investment opportunities are to be found. It is said that the newbuilding market came to life this past week, with the numerous rumored deals that where in the works now coming to light.

Interest has intensified considerably these past months, with in part the increase in secondhand prices having pushed a number of potential buyers to this direction, while at the same time the slowly firming prices being quoted by shipbuilders pushing others to place orders on speculation fearing that they will lose the window to secure these low prices before it closes shut.

 

CHINA’S SHIFTING TRADE PATTERNS COULD IMPACT PRODUCT TANKER MARKET

The looming increase of import taxes on oil by-products in China, combined with the gradual demise of the so-called ‘teapot’ refineries, both as a result of new Chinese policies, could have a significant impact on the product tanker market in Asia moving forward, both in a negative and a positive way.

It is said that China’s crude oil imports and refinery processing in Q1 2017 have reached new highs and painted a particularly healthy picture. Overall, despite slowing economic growth, China’s continued growth in crude oil imports since 2016 has been attributable to strong demand from independent refiners, commercial and strategic stockpiling and declining domestic production from maturing fields.

SHIP SCRAPPING: RATES ON DOWNWARD PATH

As ship owners are actively pursuing more trading opportunities, the demolition market appears to be slowing down again. It is said that as the tables turned on the rapid momentum that the Indian sub-continent recycling markets witnessed over the recent past, further declines and disappointments came forth as prices continued their downward spiral for yet another week.

Given the current trend, a week (perhaps two) of a stable market will be needed before end buyer confidence returns to the point they are willing to offer with any aggression, as local steel plate prices have been fluctuating wildly and by as much as USD 10/LDT nearly everyday.

SHIPOWNERS HAVE THEIR WORK CUT OUT HANDLING THE SUPPLY SIDE IN 2017

Oil tankers experienced a tough start to 2017 as freight rates for all crude oil and oil product tankers continued their decline following the brief lift at year-end.

For one, VLCCs may not yet have bottomed out. By 7 April 2017, average earnings stood at USD 18,853 per day, down from USD 63,284 per day on 16 December 2016.

The demand situation for both crude oil tankers and oil product tankers in 2017 and 2018 is closely connected to the destiny of worldwide oil stocks.

PORT BLAIR MAY OFFICIALLY LOSE ‘MAJOR PORT’ TAG

Port Blair may soon officially lose the tag of a major port, granted to it seven years ago, as the central government is of the view that executing a big-size port at that location is not feasible due to lack of container traffic.

The Ministry of Shipping had engaged a consultant to ascertain whether the declaration of Port Blair as a major port would be a feasible option.

According to a source, the consultant has advised the government against it as even a transshipment hub at the location would be unable to attract traffic. Keeping these studies in mind, the government has decided to not have a major port at Port Blair, the source said.

GOOD DAYS AHEAD FOR THE WORLDWIDE DRY BULK MARKET

There could be no looking back for the Baltic Dry Index (BDI) hereon. Hovering around 1300 levels at present, this freight index, which measures the price of shipping majors’ raw materials, is expected to move only northwards in the coming months.

With global dry bulk traffic set to increase on select routes and discarding of old vessels only on the rise, BDI could have a smooth and steady uphill journey.

Experts are of the view that US president Donald Trump’s policies on pollution norms and thrust on coal production in the world’s largest economy would have a significant impact on dry bulk trade on the trans-Atlantic route.

The earlier Obama administration, for environmental safety, had enforced a moratorium on coal leases and also asked coal mining companies to avoid mining practices that harm the environment. Last month, President Trump signed an order rolling back a temporary ban on mining coal and a stream protection rule imposed by the Obama administration.

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