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Shipping Monthly Report – April 2011
• The Baltic Dry Index (BDI) rose by 22% to 1530 in March 2011 led
by a 35% rise in the Capesize index to 1768. The major reason for
the rise in dry bulk freight rates was resumption of iron ore
imports by China
• The Dirty Tanker Index rose by 1% to 932 while the Clean Tanker
Index rose by 16% to 841 in March 2011. The decline in crude oil
imports by Japan following the closure of refineries post the
earthquake led to a drop in crude oil shipments on the key tanker
route TD3 i.e. Saudi Arabia (Ras Tanura) to Japan (Chiba).
However, the rise in import of refined crude products by Japan led
to a rise in demand for product carriers and resultant strength in
product carrier freight rates
• LPG freight rates across all categories reported a rise in March
2011
• Utilisation levels for drill ships, semi-subs and jack-up rigs was
reported at 73%, 81% and 72% in March 2011 as against 71%,
79% and 73% in February 2011, respectively. Utilisation levels
showed signs of improvement but did not translate into a rise in
charter rates
Outlook
Dry bulkers
Dry bulk freight rates are expected to remain subdued in April on the back
of lower iron ore and coal imports by Japan, which is the second largest
importer of dry bulk commodities after China. Further, we also expect iron
ore inventory levels to moderate in China. This would lead to pressure on
dry bulk freight rates in April 2011.
Tankers
Crude oil tanker freight rates are expected to decline as crude oil prices
are showing signs of retreating. This could lead to backwardation i.e. a
market condition wherein the price of a forward or future contract is
trading below the present spot price. This would lead to unwinding of the
contango trade. This, in turn, would lead to a rise in supply of crude
tankers. Hence, we believe tanker freight rates would come under
pressure in April 2011.
LPG carriers
LPG freight rates are expected to continue their upward trend in April
2011 due to the rise in LPG/LNG imports by Japan.
Offshore vessels
Utilisation levels for offshore vessels are expected to rise while charter
rates are expected to remain stable in April 2011. High capex spend by
major global oil exploration/drilling companies is likely to lead to higher
utilisation levels for offshore vessels.
Tanker freight rates reported an increase in March across asset
categories. VLCC freight rates rose to $14477 per day while Suezmax and
Aframax freight rates increased to $20912 and $11151 per day,
respectively. Tanker freight rates, after bottoming out in January 2011,
have risen steadily through February and March. The earthquake in Japan
and the subsequent crisis at the nuclear complex at Fukushima led to a
decline in nuclear power production and also a drop in crude refining
capacity, resulting in a rise in imports of refined products lending support
to product carrier rates. Further, the crisis in MENA countries, is also
believed to have resulted in crude oil tankers being used as storage for
crude oil.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Shipping Monthly Report – April 2011
• The Baltic Dry Index (BDI) rose by 22% to 1530 in March 2011 led
by a 35% rise in the Capesize index to 1768. The major reason for
the rise in dry bulk freight rates was resumption of iron ore
imports by China
• The Dirty Tanker Index rose by 1% to 932 while the Clean Tanker
Index rose by 16% to 841 in March 2011. The decline in crude oil
imports by Japan following the closure of refineries post the
earthquake led to a drop in crude oil shipments on the key tanker
route TD3 i.e. Saudi Arabia (Ras Tanura) to Japan (Chiba).
However, the rise in import of refined crude products by Japan led
to a rise in demand for product carriers and resultant strength in
product carrier freight rates
• LPG freight rates across all categories reported a rise in March
2011
• Utilisation levels for drill ships, semi-subs and jack-up rigs was
reported at 73%, 81% and 72% in March 2011 as against 71%,
79% and 73% in February 2011, respectively. Utilisation levels
showed signs of improvement but did not translate into a rise in
charter rates
Outlook
Dry bulkers
Dry bulk freight rates are expected to remain subdued in April on the back
of lower iron ore and coal imports by Japan, which is the second largest
importer of dry bulk commodities after China. Further, we also expect iron
ore inventory levels to moderate in China. This would lead to pressure on
dry bulk freight rates in April 2011.
Tankers
Crude oil tanker freight rates are expected to decline as crude oil prices
are showing signs of retreating. This could lead to backwardation i.e. a
market condition wherein the price of a forward or future contract is
trading below the present spot price. This would lead to unwinding of the
contango trade. This, in turn, would lead to a rise in supply of crude
tankers. Hence, we believe tanker freight rates would come under
pressure in April 2011.
LPG carriers
LPG freight rates are expected to continue their upward trend in April
2011 due to the rise in LPG/LNG imports by Japan.
Offshore vessels
Utilisation levels for offshore vessels are expected to rise while charter
rates are expected to remain stable in April 2011. High capex spend by
major global oil exploration/drilling companies is likely to lead to higher
utilisation levels for offshore vessels.
Tanker freight rates reported an increase in March across asset
categories. VLCC freight rates rose to $14477 per day while Suezmax and
Aframax freight rates increased to $20912 and $11151 per day,
respectively. Tanker freight rates, after bottoming out in January 2011,
have risen steadily through February and March. The earthquake in Japan
and the subsequent crisis at the nuclear complex at Fukushima led to a
decline in nuclear power production and also a drop in crude refining
capacity, resulting in a rise in imports of refined products lending support
to product carrier rates. Further, the crisis in MENA countries, is also
believed to have resulted in crude oil tankers being used as storage for
crude oil.
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