SSG No 20 - Shipgaz

Wet – scrapping old aframax tonnage
November stems saw aframax freight
firm quite a bit into the second half
of October as a temporary shortage of
spot tonnage developed for relatively early
delivery. Good demand forced rates trough
WS 100 to reach WS 120 in both the North
Sea and the Baltic. Even so, freight is lower
than in the second half of September when
it reached this autumn’s peak of WS 150
for the North Sea and WS 130 for 100,000
tonnes out of Primorsk. Fundamentals have
not changed much in the past month characterised
by both too much tonnage and
too meagre demand. Therefore the aframax
has for all intent and purpose remained in
the doldrums since mid-year, despite the
one peak period. Analysts like to call it
freight volatility.
The one positive aspect of this development
is that owners might send single-skin
vessels to the breakers. Scrap prices ought
to tempting at around USD 500 per lightweight
ton. At least it should be more
tempting than continued trading at dismal
freight levels. In our June report we noted,
When front haul rates for capesize tonnage
move close to USD 230,000 per
day, as it did from Continent to the Far
East towards the middle of October, we
can safely say we have a good dry bulk
market. Mind you, the capesize market
has since consolidated and fallen back a
little. One wonders if a peak was reached
by mid-October and that this is a far as the
market will go. Confidence, for what it is
worth at this stage, remains solid. Another
measure of the confidence in the cape market
was that Chinese charterers paid USD
155,000 per day for a 174,000 tonner for 12
months. Even though the Far Eastern market
remained firm, while the Atlantic fell a
little, the transatlantic round voyage still
stood at USD 177,000 per day.
While the capesize tonnage in the Atlantic
consolidated, the Atlantic panamax continued
ever upwards to new heights. Such is
the market that an increase of USD 4,500
per day to close to USD 85,000 per day on
the transatlantic round voyage made a leading
broker say that the pace of the increase
“aframax freight nearly halved”. Freight has
not really recovered since then. Demand
for suezmax tonnage also picked up during
the period covered, but made little or no
impact on the freight level.
MR (Medium Range) freight for transatlantic
business westbound has firmed lately
in panamax freight had slowed down. The
equivalent Far East round voyage was close
to USD 92,000 per day and as much as
USD 95,000 per day was also paid for an
Australian round voyage.
In the handy/handymax market the rate
from the US Gulf to the Continent, which
MARKET REPORTS
and was just going through WS 200 for the
first time since the middle of August. MR
freight has, in fact firmed steadily since the
beginning of October. The last time the rate
went to WS 200 it fell back quit sharply to
WS 155 and remained between WS 155
and WS 170 for a good many weeks.
Wet bulk freight development
Worldscale ■ Suezmax North Sea–TA ■ Aframax NS– UKCont
■ Aframax Primorsk–UKCont ■ Clean MR UKCont–TA ■ Clean Baltic–UKCont
Dry – dry bulk at dizzy heights
400
300
200
100
0
180,000
150,000
120,000
90,000
60,000
30,000
0
Jan ’06
Apr ’06
has been firm for some considerable time,
was coming ever closer to USD 100,000 per
day. Short period fixtures were concluded
at USD 77,000 per day for handymax tonnage,
while the transatlantic round voyage
was closing on USD 72,000 per day.
petter arentz
SCANDINAVIAN SHIPPING GAZETTE • OCTOBER 26, 2007 83
Jul ’06
Oct ’06
Jan ’07
Apr ’07
Jul ’07
Oct ’07
Source: SSG, October 18, 2007
Dry bulk freight development
Atlantic round voyage,USD/day ■ Capesize ■ Panamax ■ Handymax
Jan ’06
Apr ’06
Jul ’06
Oct ’06
Jan ’07
Apr '07
Jul ’07
Oct ’07
Source: Fearnleys/SSG, October 18, 2007