Shipping Monthly Report – September 2012
• The Baltic Dry Index (BDI) contracted 22% in August 2012
hovering around a six-month low of 703. Concerns over the
Chinese economy slowing down and US drought continue to
plague the industry along with the burden of excess
additional tonnage. The Baltic Capesize and Panamax index
rates tapered off by 2% and 25%, respectively, on a MoM
basis. Baltic Supramax and Handymax index continued to
slump by 17% and 19%, respectively, MoM due to US
drought woes
• The Dirty Tanker Index (BDTI) was down marginally by 2%.
However, the Clean Tanker Index remained flattish posting
no gains on an MoM basis. VLCC time charter yields (TCY)
rates continued to face the brunt slumping below operating
level. Suezmax rate were down 67% on an MoM basis.
Aframax rates showed some signs of relief posting a modest
gain of 4% on an MoM basis.
• LPG freight rates remained flattish across all segments.
However, the medium carrier segment (MGC – up to 35000
cbm) was down nearly 1% MoM
• Utilisation levels for drill ships, semi-subs and jack-ups
continue to remain at elevated levels at 90%, 91% and 82%,
respectively, providing stability to rates in August 2012
Outlook
Dry bulkers
Dry bulk rates have crashed in August 2012 with the BDI hovering around
703 levels; its lowest since February 2012. Chinese iron ore inventory
levels continued to rise gaining 1.3% MoM coupled with muted steel
output and a prolonged drought in the US. The worst sufferers were
Panamax and Supramax indices, which declined 25% and 17%,
respectively. To aggravate the poor condition, exports from Indonesia
suffered due to imposition of regulatory constraints and Indian monsoon
picking up leading to curtailed traffic. With approximately 25 million dwt
added to the world dry bulk fleet in the past couple of months and another
56 million tonnage set to join by end of 2012, supply continues to outpace
demand putting further pressure on rates.
Tankers
On the tanker rates front, Suezmax rates plunged 67% MoM while VLCC
TCY rates declined below operating levels. The rates were subdued
largely on account of poor global demand conditions and lower imports
by the US due to increased domestic crude production. The Iranian
embargo along with excess tonnage in world tanker fleet continues to
hamper charter rates.
LPG carriers
LPG carrier’s rates remained largely flat with the mid-segment gas carriers
showing some signs of pressure. Going forward, demand for gas carriers
can rise from Japan on account of alternate energy source requirement.
Offshore vessels
The offshore vessels segment continues to remain at high utilisation
levels providing comfort to day charter rates. Major global oil and
exploration companies have increased their spending on account of
attractive crude price levels.
The VLCC TCY went into the red after slumping below the operating level.
Suezmax average TCY rates declined by 67% whereas Aframax rates
inched up by 4% on an MoM basis. The segment is under persistent
pressure due to Iranian sanctions and waning global demand. Lack of reinsurance on part of the European Union continues to dent shipments
from Iran though other oil producing nations have stepped in to fill the
gap. Both China and the US have curtailed their crude demand on account
of increased strategic stocking levels and steady growth in domestic
crude production by the US. On the vessel supply front, approximately 1
million dwt was added to world tanker fleet in August 2012, with the
break-up being two VLCC, one Suezmax, one Aframax and four smaller
vessels. The tanker fleet is expected to expand by another 19 million dwt
in 2012, which continues to add to the woes of an already bleeding
market.
http://content.icicidirect.com/mailimages/ICICIdirect_FreightForward_September2012.pdf
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