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Shipping Monthly Report – July 2011
• The Baltic Dry Index (BDI) declined by 5% to 1413 in June 2011
due to a 12% and 10% fall in the Panamax and Supramax index,
respectively. Freight rates declined in June for smaller vessels like
Panamax and Supramax owing to lower Indian exports of iron ore
to China due to the monsoon season in India
• The Dirty Tanker Index declined by 2% to 747 while the Clean
Tanker Index declined by 3% to 694 level in June 2011. Though
VLCC showed some positive momentum, the crash in Suezmax
freight rates impacted the demand for VLCCs
• LPG freight rates displayed a mixed trend in June 2011 with LGCs
declining by 4% MoM while MGC rates increased by 1% to 2.5%
• Utilisation levels for drill ships, semi-subs and jack-ups remained
stable. Utilisation levels for drill ships, semi-subs and jack-up rigs
was reported at 79%, 86% and 79% in June 2011 as against 78%,
86% and 80% in May 2011, respectively. Day rates for rigs
displayed a mixed trend with deep water depth rigs day rates
moving up marginally while mid water depth rigs moved up
strongly and jack-ups still continued to face pricing pressure
Outlook
Dry bulkers
Dry bulk freight rates are expected to remain subdued in July on the back
of the Indian monsoon season, which will most likely reduce iron ore
exports from India. Also, China could be importing lower volumes of iron
ore due to current high level of inventories. China’s iron ore inventory
level is at an all-time high of 92.3 million tonnes (MT) and steel production
in China is expected to remain slow on account of restriction of electricity
allocation to steel plants. On the positive side, from a medium-term
perspective, China’s thermal coal fixtures are likely to remain firm while
lifting of the Russian wheat export ban and the recovery of Australian coal
mines could lend support to dry bulk freight rates.
Tankers
Crude oil tanker freight rates are expected to remain subdued owing to
the oversupply of tonnage, which would handicap the market. Even if
some demand emerges in the near term, the tonnage available is likely to
weigh on the charter rates and keep them subdued. Some positive
momentum is likely for VLCCs while Suezmax day rates are expected to
rise from its current appallingly low levels.
LPG carriers
LPG freight rates are expected to remain weak in July 2011 due to
availability of excess tonnage.
Offshore vessels
Utilisation levels for offshore vessels are expected to rise while charter
rates are expected to remain stable in July 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 in June 2011, displayed a mixed trend. VLCCs showed
an improvement but are still at a very low level while Suezmax rates
crashed and Aframax rates also declined. VLCC rates showed some
positive momentum but abysmally low rates of Suezmax limited the gains
for VLCCs. Suezmax rates declined by 89% while Aframax rates declined
by 29%. Substantial oversupply across various categories is keeping in
check an up move in freight rates.
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