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Shipping Monthly Report – December 2010
• The Baltic Dry Index (BDI) declined by 22% to 2099 in November
2010, mainly led by a steep correction in the Capesize index by
32% to 2910. Steel production in China increased 5% (MoM) to
50.3 million tonnes (MT) in October. However, imports of iron ore
by China declined 13% (MoM) to 45.7 MT along with 3% (MoM)
increase in inventory levels to 74 MT
• The Dirty Tanker Index rose by 16% to 882 level while the Clean
Tanker Index increased by 18% to 740 level in November 2010.
Clean and Dirty Tanker Index both registered significant gains
with the seasonal rise in heating oil demand from US and Europe
• LPG freight rates across all categories continued to rise for the
third consecutive month
• Utilisation levels for drill ships, semi-subs and jack-up rigs was at
71%, 85% and 75% in November 2010 from 72%, 84% and 74% in
October 2010
• New build as well as second hand asset prices have remained
constant throughout November except for panamax vessels,
which reported a decline of ~2%
• New build orders for dry bulk vessels increased from 92 to 104
vessels while that for tankers declined from 56 to 26 vessels in
November 2010
Demolition of vessels increased from 74 vessels to 101 vessels in
November 2010. In tonnage terms, 2.2 million DWT of fleet was
scrapped as against 1.7 million DWT in the previous month.
Average scrap prices declined to $341 per LDT in November 2010
Outlook
Dry bulkers
Dry bulk freight rates are expected to remain range bound in December
2010. We remain cautious as despite a rise in Chinese steel production its
iron ore imports have declined along with rise in iron ore inventory levels.
Tankers
Crude and product tanker freight rates are expected to rise in December
2010. The rise in freight rates is likely to extend over the next couple of
months on account of seasonal heating oil demand from US and Europe.
LPG carriers
LPG freight rates are likely to continue their recovery in December 2010.
Offshore vessels
Utilisation levels and vessel charter rates are expected to remain firm in
December on account of pick-up in exploration/drilling spend backed by
firm crude oil prices.
Tanker freight rates reported a good recovery in November after
bottoming out in October. VLCC freight rates recovered to $14150 per day
along with Suezmax and Aframax freight rates, which increased to $13153
and $7225 per day, respectively. Vessel freight rates recovered as
demand increased for crude and product carriers on account of seasonal
heating oil demand from the US and Europe.
Dry bulk freight rates declined in November after rising for two
consecutive months. The rates for Capesize vessels declined by 13%
while Panamax, Supramax and Handysize vessel rates declined by 10%,
13% and 8%, respectively. The main reason for the decline was the
subdued iron ore demand from China.
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