[xclusiv] S&P Report 27th November 2023


Market Commentary:

Although the week started with a downward trend for the BDI, during the last 2 days of the week the dry bulk market made a significant rebound, with the BDI breaking the 2,000 points for one more time and closing the week at 2,102 points – showing an increase of 247 points in a day, indicating the largest daily rise in points since 18th June 2020. On the 24th November, the BCI skyrocketed to 3,385 points, almost 26% up on a daily basis, while the 5/TC routes for the BCI climbed to USD 28,071/day. It is noteworthy that the BCI has increased around 78% within November. The Panamax sector continued its sharp increase and closed the week at 2,064 points (the highest level since late October 2022), counting 14 positive closings in a row and having increased around 43% since 6th November 2023. Amongst the smaller sectors, the BSI, counting 13 uninterrupted positive days, closed the week at 1,279 points, reaching its highest level of the past 2-month period, while the BHSI rose by 12% on a weekly basis and closed the week at 670 points. But what is the reason of dry bulk market’s “sudden spike”?

First of all, as we have previously reported, China’s government continues the efforts to boost its economy with liquidity injections, by accelerating the issuance of bonds, which is definitely a significant explanation for this rally. Beijing is increasing its pressure on banks to provide financial assistance to struggling real estate developers, while it is also targeting the world’s largest banks, urging them to extend more credit and guarantee that private developers are able to secure loans at the same rate as the industry average. During the past week we saw a rebound in property developer’s stocks. Despite not unveiling its restructuring plan, Country Garden shares have risen over 60% this month, while the stock of Evergrande also climbed over 10% within the same period. Furthermore, the expectations of increased investment in China’s urban development, as the latest government push comes in a bid to revive urban villages (projects built on rural lands) together with the fact that inventories of iron ore have sunk to their lowest level in seven years – have powered the iron price forecasts. Citi has set Iron price target at USD 140/tonne. This may also justify the launch of the Capesize market, as “thirst” for iron ore to fill the low inventories, increases China’s imports. Apart from China, another reason that may have driven that tremendous increase in the Capesize sector is the unprecedented traffic in South African ports. Nearly 100 vessels are waiting to berth in South African ports – as Transnet, the state-owned logistics company, struggles with breakdowns and bad weather. Due to unprecedented traffic, Transnet suspended on 20th November processing trucks carrying coal to Richards Bay, also affecting seaborne trade. South Africa is a leading iron ore and coal exporter, with its iron ore and coal shipments valued at USD 6.7 billion and USD 13 billion respectively for 2022. Finally, Panama Canal’s major restrictions have positively affected the dry bulk market, as limited daily transits are limited to 18 vessels and almost all of them are container or gas carriers. Most other vessels are trying routes bypassing Panama canal and adding tonne-miles to the market. An MR tanker chartered by Glencore which was carrying fuel cargo, in order to avoid the delays at the Panama Canal, preferred to pass through the Strait of Maggelan, making a longer journey around the southern point of South America adding thousands of miles to its route. Some charterers instead of bypassing Panama canal, prefer to pay a premium for a priority spot, while the price of auctioned slots are nearly USD 4 mill.

Moving to the oil market, oil prices steadied above $76 per barrel on Friday after facing heightened volatility in recent sessions but remained under pressure as a dispute among OPEC+ postponed its meeting to 30th November, raising questions about the future course of crude production cuts. WTI and Brent crude futures trading at USD 74/ barrel and USD 79/barrel respectively. 

Sale and Purchase:

In the dry S&P activity, on the Capesize sector, the “Genco Commodus” – 169K/2009 Sungdong was sold for USD 19.5 mills to Asian buyers. Chinese buyers acquired the Kamsarmax “Aquavita Sol” – 82K/2020 Jiangsu Hantong and the “Aquavita Sea”- 81K/2020 Jiangsu Hantong for USD 30.5 mills each. On the Ultramax sector, the “Santa Vitoria” – 61K/2012 Iwagi found new owners for USD 19.8 mills basis delivery within January 2024, while the Electronic M/E Supramax “Earth Ocean”- 50K/2013 Oshima was sold for USD 19.4 mills to clients of TMC basis 2-year BBHP. Finally, the Handysize “Navios Lyra” – 35K/2012 SPP was sold for USD 13.75 mills to Middle Eastern buyers.

In the tanker S&P activity, the Aframax “Aegean Myth”- 116K/2006 Samsung was sold for USD 37.5 mills to Chinese buyers. On the MR2 sector, clients of GNMTC acquired the “Dee4 Ilex” – 50K/2022 HMD and the “Dee4 Mahogany”- 50K/2022 HMD for USD 54 mills each tender 3-months subs. The Chemical tanker “Tarrant” – 13K/2008 Jinse changed hands for USD 9.5 mills basis ss/dd passed.

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