Click here to load reader

Monthly S&P Report - Lorentzen & Stemoco AS · PDF fileFebruary 2015 Dry Gas Monthly S&P Report-Shipbrokers and consultants since 1919- ... 19.50 Nord Obtainer 47,500 2008 Onomichi

  • View
    214

  • Download
    2

Embed Size (px)

Text of Monthly S&P Report - Lorentzen & Stemoco AS · PDF fileFebruary 2015 Dry Gas Monthly...

  • 1

    VLCC chartering activity is good,

    though charter rates are a little

    down. Market fundamentals

    seem to support optimism for

    rate upturn within the next

    month. The Suezmax charter-

    market is going strong, and

    Aframaxes are gaining on

    weather related delays. This

    continues to feed the positive

    S&P sentiment, and there is

    little trouble finding buyers for

    crude tankers nowadays, willing

    (and realistic) sellers however

    are rather thin on the

    ground. China has witnessed

    much of the S&P action with GC

    Tankers (HNA) offloading four

    VLCCs this month and

    Rongsheng associate Roxen

    Shipping selling two Suezmaxes

    in an uncharacteristic second

    hand swoop by Fredriksen.

    Since it began 30 years ago, the

    BDI has never been this

    low. Whilst the composition of

    the index may well have

    changed somewhat since the

    last record low in 1986, this is

    cold comfort to owners having

    to face the daily reality of this

    market with no obvious end in

    sight. So are there any reasons

    to be cheerful amidst all this

    charter market gloom? Well,

    more Capes have been

    scrapped in the last month than

    in the whole of last year, and

    we may finally be starting to

    see a healthier rate of scrap-

    ping despite lower demolition

    prices. In S&P asset prices are

    falling gradually, more pro-

    nouncedly on distressed

    units. Accordingly, there has

    been a noticeable increase in

    the number of failing deals.

    We have completed quite a few

    2nd hand transactions of both

    13dwt IMO2 coated tankers,

    19stst IMO2 tankers, and

    smaller stst specialized tankers

    since the new year. While we

    cannot comment on specific

    details of in house transactions,

    we can confirm that the last

    deals in all these segments of

    the chemical tanker fleet reflect

    a market where asset values

    remain under pressure, and

    positive notes (from a sellers

    perspective) are limited to con-

    tinued low bunker prices which

    move some buyers focus off

    new buildings and on to second

    hand ships, along with the

    weak JPY against USD where

    applicable. However, from a

    buyers perspective; at time of

    writing the market does sup-

    port schemes where obtainable

    2-3 year TC rates justify pur-

    chases at market levels, and as

    such investors entering now

    should be in good shape to ride

    out the storm on the back of

    longer time charter commit-

    ments, before assets again start

    to pick up value.

    More S&P activity has been

    seen for LPG ships. Contracting

    activity was limited to one fully

    ref. MGC of 38,000cbm ordered

    by KSS Line at Hyundai Mipo at

    US$ 52 million. Two VLGCs

    were reported sold, the Hellas

    Argosy (80530cbm, 2013 built)

    realized US$ 66 million and the

    Gas Sapphire (75358cbm, 1993

    built) US$40 million. Levels

    were below expectations for

    the modern ship and above

    expectations for the oldest

    ship. The smaller gas vessel, the

    Gas Pacu, was sold from Prime

    to Asian buyers for US$ 5.8

    million. Demolition of smaller

    gas carriers has been more ac-

    tive lately with three sales con-

    cluded over the past month,

    the ethylene carriers Gas Coral,

    East Med Gas and Capricorn

    Gas. No new activity was rec-

    orded in LNG.

    HIGHLIGHTS

    Crude: High

    activity in VLCC

    second hand

    market

    Dry: BDI at all-time

    low cutting

    expectations for

    recovery

    Product/Chemical:

    2-3 year TC rates

    justifying current

    asset values

    February 2015

    Dry

    Crude

    Product/Chemical

    Gas

    Monthly S&P Report

    -Shipbrokers and consultants since 1919-

    Hot Hulls

  • 2

    -Shipbrokers and consultants since 1919-

    With TC earnings in the spot market above US$ 90 000/day and 1yr TC levels around US$ 1.9 mill/month the VLGC market is the

    best performer by far in the current shipping market. During the past month, rates have increased further on the back of new

    export capacity coming online in the US.

    VLGC

    Dry Bulk

    Crude oil and storage development

    The beginning of 2015 has seen increasingly disapointing macroeconomic numbers from China, having a further detrimental effect

    on dry bulk demand which is already weighing heavy. High levels of scrapping seem to be a small highlight in this market. Asset

    values are expected to fall further going ahead.

    VLGC Fleet -Ordering and Scrapping

    Capesize Asset Values Dry Bulk Fleet - Ordering

    Values VLGC 82/84 kcbm

    Price development Brent spot/futures As the market saw a recent uptick in crude oil prices,

    the spread between Brent spot prices and 1 year

    futures contracts somewhat narrowed, reducing the

    contango effect which up to now has provided an

    incentive for a number of traders to charter crude oil

    tankers for use as floating storage. Storage chartering

    has seen a slight reduction recently, and numbers

    have so far failed to pick up again after the increase

    in prices dampened demand.

  • 3

    Special Report - In a sea of QE -Shipbrokers and consultants since 1919-

    A massive economic experiment is underway as cen-

    tral banks are getting into the groove of quantitative

    easing (QE), in a bid to stimulate the economy and

    boost competitiveness. This is the last in a line of poli-

    cy strategies attempting to increase spending and in-

    flationary pressure, as currencies keep depreciating

    and growth slows in Asia and Europe.

    Leading the charge is the Japanese Yen, which has

    been in a race to the bottom for the past few months,

    deprecating almost 10% relative to the US dollar

    since November last year (and by around 40% over

    the past two years with Abenomics) when the Japa-

    nese Government announced the addition of further

    measures to its QE program in an attempt to increase

    spending and support economic growth.

    With the view to offset deflationary trends in the

    global economy, more and more central banks are

    employing similar stimulus strategies, lastly the Euro-

    pean Central Bank, announcing a massive 1 trillion

    Euro asset buying program last month. The result is

    what seems to be an ever more aggressive currency

    war concealed behind altruistic growth policies. For

    any company with receivables in US$ and payables in

    Euro, the current situation is a welcome one.

    With the Euro expected to depreciate further relative

    to other currencies as the ECBs program comes under

    way, the Eurobond market is increasingly becoming

    an interesting bet, also for the shipping industry. The

    China State Shipbuilding Corporation (CSSC) recently

    joined other Chinese shipping interests who have

    been raising euro-denominated funds, and thereby

    taking advantage of a very low coupon rate of 1.7%.

    The recent flight to bonds as a safe haven compared

    to other securities has been pushing rates lower. Eu-

    ros should be looking attractive for Chinese players at

    the moment, as the comparable rate from Bank of

    China is standing at 3.125% for January 2019 maturi-

    ty. Of course there is a currency risk involved here,

    but the bet nonetheless seems an attractive one for

    some.

    The shipping market is seeing various dynamics com-

    ing forward as a result of currency depreciation, and

    especially so in ship building. Some talk has been

    heard of Japanese yards making their way back into

    segments long dominated by Korean yards, and due

    to the lack of other alternatives this trend does not

    seem to be abating.

    As stimulus programs continue on their way, central

    banks are keeping interest rates low (only the US FED

    has signaled a possible hike in rates within the end of

    the year) meaning capital comes cheap for those with

    access to it. The question remains whether we need

    more new buildings in all segments, or whether some

    markets are increasingly saturated as ordering has

    been high on the back of expected growth that has

    failed to materialize, such as in dry bulk.

    In the second hand market however, the next few

    months look set to offer some very interesting oppor-

    tunities as the bid-ask spread in various segments

    narrows, especially for those thinking about fleet re-

    newals and who are able to take advantage of incen-

    tives presented by the effects of QE.

  • 4

    -Shipbrokers and consultants since 1919-

    Scrapping

    Newbuilding Prices (China)

    Bunker Prices

    Panamax and Capesize Scrapping Scrap Price Developments

    Dry Bulk NB Prices (China) Tanker NB Prices (China)

    Source: AXS/L&S Research

    (US$/mt) February to date January Trend

    Rotterdam IFO 380 291.2 254.1 Firming

    Rotterdam MGO 528.9 483.4 Firming

    Singapore IFO 380 335.2 284.8 Firming

    Singapore MGO 541.1 504.5 Firming

    Dry Bulk Jan-15 Dec-14 Nov-14 Trend

    Newcastlemax 55.7 56.4 56.5 Softening

    Capesize 52.5 53.1 53.4 Softening

    Kamsarmax 29.1 29.4 29.5 S

Search related