Baltic Exchange to Develop LNG Freight Index
The Baltic Exchange is looking into launching a freight index for liquefied natural gas (LNG) and is working with leading ship brokers to explore potential shipping routes that might be used as the LNG market grows, the company said on Thursday. Founded in 1744 as a forum for chartering vessels, the Baltic Exchange now produces benchmark indexes for global shipping rates, including ones used by the multi-billion dollar freight derivatives market. Singapore Exchange acquired the exchange in 2016 and since then the Baltic has been looking for new markets to develop.
Global Container Fleet Market to Grow 3% in 2017-21
A report forecasts the global container fleet market to grow at a CAGR of 3.19% during the period 2017-2021. The report says key vendors in the market are Maersk, CMA CGM & MSC. To calculate the market size, the report by Research and Markets considers volume based on container fleet capacity for the respective region or the container type. It considers freight volume based on the freight volume shipped by the vendors operating in the market making use of the containers. The latest trend gaining momentum in the market is increasing use of fleet management system.
Further Upside Seen for Asian Aframax Rates
The Asian Aframax market has been strengthening steadily, with rates for the Indo/Japan route up by w25 points w-o-w at w135. The Baltic Exchange’s benchmark TD14 route reached w127.50 Tuesday, jumping by w29 points w-o-w. This is partly due to underlying seasonality as refiners in the region typically raise utilization rates during Q4 in order to meet winter demand. An early and colder-than-usual winter in North Asia has led to increased heating fuel demand, lending further support to refinery runs.
North Asian MR Rates Rise on Strong Winter Demand
The medium range (MR) tanker market in the North Asia has firmed this week, with rates recovering from last month’s lowest levels in 2016 as charterers rushed to fix an influx of fresh cargoes before the holiday season. Rates for the key South Korea-Japan route grew by $20,000 w-o-w to $290,000 while rates for the key South Korea-Singapore route jumped by $75,000 w-o-w to $380,000. Rates for the key Singapore-Japan route basis 30kt were up by w17.5 points w-o-w to w125 points. Robust winter heating demand, increasing Chinese product exports as well as weather delays lent support to MR rates.
More Room for Asian VLCC Rates to Fall
VLCC rates on the AG/Japan route tumbled by nearly w10 points within a day to w60 on Tuesday, after news of S-Oil placing Australis on subs for an AG/Onsan run at w54.75, loading March 13-15 basis 274kt, broke. Charterers went for the jugular, with at least four older vessels fixed within the range of w55-w58 for an AG/East voyage. We believe that VLCC rates will remain depressed in the short term due to the upcoming refinery turnaround season in Asia, diminishing floating storage inventories that will free up more tonnage as well as OPEC production cuts.
Aframaxes Taken for Short-term Time Charters in Asia
The Asian Aframax market is currently stable but seems to be facing a more positive outlook on the back of short-term time charters as well as an increase in third decade cargoes. Rates for an Indonesia/Japan run basis 80 kt are hovering around w100 to w102.5, while rates for the AG/East route basis 80 kt stand at w115. Reflecting firmer owner sentiment, TD14 inched up steadily w-o-w to w100.78 which translates into daily earnings of around $8,700/day. At least three Aframaxes…
LR Tankers Taken for Gasoline Storage in Asia
Singapore gasoline cracks have averaged $10.72/bbl in February so far, down by 12 percent y-o-y but still relatively firm. Robust demand from the Middle East and intra-Asia as well as a flurry of both planned and unplanned refinery outages have been supporting gasoline cracks. ADNOC recently bought nine 27 kt cargoes over March-April delivery as its 127 kb/d RFCC remains shut from a fire. The shutdown of Pertamina’s 125 kb/d Balongan refinery and TPPI’s reformer in Tuban also led to firm buying from Indonesia, Asia’s largest gasoline importer.
A Tale of Two Tanker Classes
In a stark reminder of how volatile shipping markets can be, sentiment in the previously weak Asian Aframax market has flipped while the LR2 market continues its downward slide. The Aframax market in the East of Suez firmed rapidly with rates for the Indo/Japan route up by w22.5 points w-o-w to w132.5 due to a flurry of pre- Lunar New Year activity. Among fixtures heard, BP placed a vessel on subjects for an Indo-Aus voyage at w132.5 basis 80,000 mt. Rates for the AG/East route gained by w5 points from the previous week to w115.
Asia Gasoline Demand Draws European Cargoes
Robust Asian gasoline demand has drawn more cargoes from Europe over the past week. At least five LR2 vessels have been fixed within the week to load 80kt cargoes of gasoline and gasoline blendstocks from NWE (mostly Mongstad) to Singapore. Gasoline from Europe typically moves to Asia on an opportunistic basis. The sharp increase in fixtures can be attributed to the recent surge in Singapore gasoline cracks. Singapore gasoline cracks jumped to an almost t10-month high last Wednesday…
Long-haul Arbitrage Trades to Benefit VLCCs
The OPEC production cuts since the start of 2017 has tightened supplies of medium and heavy sour crudes, leading to a narrowing Brent-Dubai EFS. This has made long-haul crude trades from the Atlantic Basin to the Far East economically viable, resulting in a surge in flows from the North Sea as well as Americas which has in turn boosted ton-mile demand in the VLCC sector. Growing ton-mile demand has helped to halt declining rates in a sector flooded with newbuild deliveries in Q1. VLCC rates for the benchmark AG/Japan route rebounded from w46 end-March to current levels of w65.
Weak US Imports Push European Gasoline East
Unusually bloated gasoline inventories in the U.S. during peak summer driving season has kept the transatlantic arb barely workable. EIA data indicates that gasoline imports into the U.S. East Coast (PADD 1) for June averaged 549 kb/d so far, down by 15.4 percent m-o-m. As such, an atypical influx of LR tankers carrying gasoline from Europe have been fixed to the East in recent weeks. At least 6 LR2 and LR1 tankers loaded with gasoline are heading from the ARA region to AG/Singapore in June.
Asia Tankers-VLCC Rates Uncertain on Tonnage Woes
MidEast tanker rates fall to $22,000 a day, below breakeven; 52 VLCCs to be delivered this year, highest since 2011. Freight rates for very large crude carriers (VLCCs), which fell to four-month lows this week, face an uncertain direction next week as refinery maintenance and excess tonnage pressure rates even as owners resist moves by charterers to push rates lower, brokers said. Meanwhile, rates on routes from the Middle East and West Africa to China rose slightly this week after falling since Feb. 10.
Has the Asian LR Tanker Market Hit Bottom?
The Long Range (LR) 2 tanker market in the East of Suez has been languishing in the doldrums for almost two weeks. LR2 rates on the AG/Japan route, basis 75 kt, nosedived from w120 at the beginning of January to current levels of w80. Earnings for a round voyage on the benchmark route are hovering around barely breakeven levels at $2,000/day. A slew of refinery outages which have lowered CPP exports as well as a pile up of prompt tonnage in the region have culminated in the perfect storm.
Capesize Rates Post Biggest Weekly Drop in 2 Years
The Baltic Exchange's main sea freight index fell on Friday and continued to linger around five month lows as the capesize segment recorded its biggest weekly percentage decline in two years. The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels that ferry dry bulk commodities, shed 14 points, or 1.23 percent, to 1,125 points, the lowest since Aug. 10, 2017. For the week, the index ended 12 percent lower. The capesize index fell 118 points, or 7.32 percent, to 1,493 points, its lowest since Aug.
Baltic Index Drops to 5-month Low on Sinking Capesize Rates
The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, fell nearly 5 percent on Wednesday to its lowest in over five months due to tumbling capesize rates. The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, slid 57 points, or 4.7 percent, to close at 1,164 points, the lowest since Aug. 14. The capesize index fell 267 points, or 13.28 percent to 1,743 points, its lowest level since Aug. 9 last year.
Baltic Exchange Chief Outlines Growth Plan
Newly appointed Baltic Exchange Chief Executive Mark Jackson has set out the Exchange’s vision of the near-future in a wide-ranging speech in Singapore during the concurrent MPA Singapore Maritime and Singapore Iron Ore Weeks. “The recent acquisition of the Baltic Exchange by the Singapore Exchange (SGX) has reinvigorated this key international maritime institution, allowing us to grow our leadership profile and play a bigger role than ever before in setting standards, building consensus and leading change in the shipping markets. These are bold plans and will ensure that the Baltic Exchange remains at the heart of the bulk shipping industry for the long-term.
Capesize Rates Pull Baltic Index to 4-month Low
The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, hit a more than four-month low on Tuesday, as capesize rates dropped to their lowest since August last year. The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, lost 43 points, or 3.4 percent, to 1,221 points, the lowest since Sept. The capesize index fell 221 points, or 9.91 percent, to 2,010 points, its lowest level since Aug. 10 last year.
Baltic Exchange to Shutter Baltex
The Baltic Exchange will close its freight derivatives platform Baltex at the end of the year after a strategic review, the London-run business said on Monday. Baltex was launched by the centuries-old Baltic Exchange in June 2011 as the first central electronic marketplace for freight forward agreements, which allow investors to take positions on freight rates at a point in the future. Singapore Exchange completed its 87 million pound ($114.19 million) acquisition of the Baltic in November last year. Reporting by Jonathan Saul
A Glimmer of Hope for Asia Dirty Tankers
As we enter Q2 2017, Asia’s crude tanker market finds itself flooded with a flurry of newbuilds that hit the water over the last quarter. According to Lloyd’s List Intelligence, new tonnage delivered hit 15m dwt in Q1 and is expected to stand at 8.7m dwt in Q2. The gradual but steady unwinding of floating storage in global hotspots due to a flattening Brent futures curve is likely to release a constant stream of tonnage into the market, exacerbating the situation of oversupply.
China’s Fuel Exports and Crude Imports End 2016 with a Bang
China’s product exports in December eclipsed yet another record set in November, up by 23.8 percent y-o-y and 10.3 percent m-o-m to hit 1.27 mmb/d. The surge in exports can be attributed to Chinese refiners’ attempts to fully utilize their leftover export quotas for the year, as well as destocking ahead of the nation-wide switch to China V emission standards. The boost in Chinese crude throughput was also a contributing factor, as refinery production hit a new high of 11.3 mmb/d (up by 3.7 percent y-o-y).
Signs of Recovery Seen in Asian MR Market
A new lease of life has been breathed into the ailing Medium Range (MR) tanker market in Asia. The MR market has been mired in a slump in recent months, with TC11 rates sinking to a multi-year low of $240,000 in April on the back of lower product exports from China and South Korea. The lumpsum rate for TC11 has since rebounded by $50,000 to $290,000 due an influx of activity in North Asia. Overall Chinese product exports touched a three-month low at 3.5 mmt in April, down by 22.6 percent m-o-m and 4.9 percent y-o-y which contributed significantly to the previous decline in MR rates.
Internet Ship Broker Goes Live
Internet ship-brokerage Levelseas went live this week, saying it would add functionality to allow cargo-owners and shipowners to trade with each other directly before October. "This initial release of LSX is LevelSeas' first step towards building a global, web enabled freight exchange and voyage management system," said CEO Richard Hext. Hext said that cargo owners and ship owners already did "a hell of a lot" of business directly without the use of a broker, and it was too early to know whether this would increase. "They will make the decision as to whether they'll do more direct, or do more through brokers, or whether they'll work with the smarter brokers who are on the system," he said.
London's Baltic, China's Ningbo Exchanges in Container Link
London's Baltic Exchange and Chinese state-owned Ningbo Shipping Exchange said on Friday they would collaborate on container indices, the first foray by the Baltic into this segment of the freight market. Sources told Reuters in early October that the London Metal Exchange, which is owned by Hong Kong Exchanges and Clearing , had made an informal approach to the Baltic to acquire it. In a first step, Ningbo's weekly containerised freight index - which tracks rates on various routes - would be published on the Baltic's website, the exchanges said. A Baltic spokesman said it would work with Ningbo to do "more in the container space". Baltic chief executive Jeremy Penn said separately the move underlined its "ever-closer ties with the Chinese market".