Clean tankers: platts east of Suez LR2 market steadies
The East of Suez LR2 tanker market was steady Wednesday following fresh demand that supported the rates.
The recent decline in rates had drawn several charterers leading to a slight uptick. Among the fixtures heard, the FS Endeavour was placed on subjects by Mitsubishi Chemicals at w86 for March 3 naphtha loading on the Persian Gulf-Japan route, sources said. Earlier this week, LR2 fixtures on this route were done around w81-82.5 but after the gains in LR1 rates, owners are seeking w95-100. In these circumstances, MCC may have found it prudent to take FS Endeavour around the mid-80s Worldscale points level. In the LR1 market, the Torm Ismini was placed on subjects by Clearlake, the shipping arm of Gunvor, at w110 for March 3 naphtha loading on the Sikka-Japan route.
Container shipping: a year where fleet growth and demand growth are the same
Having experienced falling freight rates from August to year-end in 2017, most liner companies were successful in pushing rates higher in early January 2018.
Remarkably, most of them managed to hold onto most of the gains they achieved, considering October and November were challenging in terms of very low demand growth. The weak demand came from the Far East to Europe trade, and on the Intra-Asian transport. Liners were the most successful at maintaining higher freight rates on the US-bound trade lanes, both east and west coast. On the other high-volume trades into the Mediterranean and North Europe, the announced General Rate Increases (GRI) lifted freight rates too, but to a smaller extent. Most containers are moved on shorter hauls intra-Asia. For the full year of 2017, data provider CTS counted 40.9m TEU being transported between different Asian ports (+4.3% Y/Y).
Dry bulk shipping q1 requires careful handling as seasonal cargo demand drops
The first quarter of any year always represents a challenge for the shipping industry, with fewer cargoes being tendered and Chinese New Year in February creating recurring business issues.
In terms of freight rates, the positive development that characterised most of the second half of 2017 came to a sudden end on 12 December 2017, once capesize earnings peaked at USD 30,475 per day. On 29 January 2018, average capesize earnings were quoted at just USD 14,065 per day. By the end of January, the freight rates for all sizes of dry bulk carriers were at break-even levels – covering both OPEX and CAPEX – but not turning profitable. Chinese New Year celebrated on 16 February 2018, marks the beginning of the year of the dog. For dry bulk shipping it marks volatility, and a fall in demand round the festive days.
Hong Kong port box volume rises 9pc in January
The Port of Hong Kong container volumes increased nine per cent year on year to 1.81 million TEU in January, a rise mostly attributed to a later than usual Chinese New Year in 2018.
Volumes at the main Kwai Tsing terminals rose 5.9 per cent to 1.41 million TEU while throughput in the non-Kwai Tsing trades soared 22.9 per cent to 400,000 TEU from 325,000 TEU previously. Throughput in January also rose from the prior three months, which averaged about 1.7 million TEU per month from October to December after the peak of the high season. All aboard for hedge funds as trade tide lifts shipping. Forced to abandon ship after mistiming their investments five years ago, hedge funds are venturing back in a bid to profit from growing global trade flows. Around 90 percent of traded goods by volume are transported by sea and global shipping sectors, including dry bulk, are on course for a recovery this year after a near-decade long crisis, ratings agency S&P said in a report last week.
Tanker shipping markets under massive pressure
The future of oil demand and subsequently of tanker demand is very much policy driven. It has been so in the past to some extent, but in coming years this will be more apparent.
BIMCO was surprised by the barely seen seasonality in tanker shipping where freight rates peak during the colder months in the Northern Hemisphere – from November to January. Loss-making freight rates across the board highlight the issues that the tanker industry is currently battling.
Overcapacity, weak “trading demand” and weak OPEC output have depressed the conditions that usually boost long hauls. As illustrated by the very weak rates for oil product transports during most parts of 2017, the hardship extended losses into 2018.
Macroeconomics growth around the world is supporting shipping
The International Monetary Fund (IMF) has published its World Economic Outlook for January 2018 and has subsequently revised its original forecast for global growth in 2018 and 2019 – up by 0.2 to 3.9 percent for both years. The index is now on wave 4 of a wave C corrective move and starting to show signs of basing. The March futures have completed their wave 4 correction and have now started a wave 5 bull move.
The stochastic is low compared to price, if a new high is not replicated by the stochastic it would create a bearish divergence. A warning of slowing momentum, not a sell signal. Elliott wave analysis would suggest that the Q2 futures are now on wave 5 of wave 3. Above the 50 period MA market pullbacks should be regarded as corrective rather than bearish.