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Braemar Seascope Thursday, 20 June 2013

Market Indicator Wet* 19-Jun-13 May Avg Avg YTD 2012 Avg

TCE ( US $ / Da y ) TCE ( US $ / Da y ) TCE ( US $ / Da y ) TCE ( US $ / Da y )

260,000 NHC AG/EAST TD3 7,000 3,000 -2,500 11,000

130,000 NHC WAFR/USAC TD5 1,000 4,000 5,000 12,000

80,000 NHC NSEA/CONT TD7 3,500 2,500 6,500 7,500

55,000 CLN AG/JAPAN TC5 5,000 6,500 9,000 8,500

37,000 CLN CONT/USAC TC2 7,500 14,000 14,500 10,000

38,000 CLN CARIB/USAC TC3 12,000 11,500 10,000 9,500

* All rates based on benchmark Baltic Exchange speed and consumption f igures

Dry 19-Jun-13 May Avg Avg YTD 2012 Avg

BDI 995 859 827 920

BCI 1,757 1,454 1,353 1,573

BPI 909 814 928 963

BSI 909 891 826 904

Container 17-Jun-13 May Avg Avg YTD 2012 Avg

B O X i 58.20 56.44 55.39 55.76

Financial 19-Jun-13 May Avg Avg YTD 2012 Avg

BRENT CRUDE US$/bbl 105.40 103.05 108.28 111.81

IFO 380 ROTT US$/tonne 597.50 586.17 603.18 640.97

YEN/US$ 95.24 101.00 95.18 79.70

WON/US$ 1,130 1,112 1,101 1,123

US$/EURO 1.34 1.30 1.31 1.34

Braemar Seascope Weekly Chartering Report 2

20/06/2013

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VLCC It has been a more stable week for freight rates in the AG this week, which has led to stability in all other sectors of the VLCC market. Those charterers more desperate to fix below last week’s levels of 270kt x ws42.5 were able to secure only slightly under these levels by fixing marginally older and less well-approved tonnage. Naturally, some charterers do not have the luxury of such a choice and they have managed to only slightly better that rate, but are still unable to quite get to ws40.0. If you were to study the tonnage list, you might say that we are facing a similar over-tonnage situation. However, owners are unwilling to give up such hard-fought Worldscale points without resistance. In a turn-around from last week, the AG/West market seems to be slightly softer than AG/East round trips as owners try to take advantage of the increased westerly freight to boost up their triangulation calculation. In West Africa, again rates have remained stable and we are assessing W Africa/China at 260kt x ws40.0-ws41.0 level, depending on the date range. However, most cargoes are now covered for the first two decades, which leaves only the final decade. It has been a quiet week from the Indian charterers, with no fresh cargoes being worked ex-West Africa from their side. IOC have already fixed four cargoes for the first decade of the month and are expected to have at least a couple more for the third decade. BPCL and Reliance have ticked off their one cargo a month quota from the region. Rates in West Africa continue to slip slightly on the back of a softening tendency being felt in the AG due to a lack of volume this week, and IOC will be keen to take any advantage of the same once they enter the market with their third decade July stems. We are assessing W Africa/WC India at US$3.4m and W Africa/EC India at US$3.7m. There has been intermittent activity for fuel oil loading in Rotterdam, but it seems to be marginal as to whether the arbitrage is open or not sufficient to support freight rate levels of US$3.5m. The 30 day availability index shows 55 VLCCs arriving at Fujairah, of which eight are over 15 years old, compared to 59 last week. For the June laycans, we recorded a total of 112 fixtures, which is in line with the usual monthly average. A total of 27 fixtures have now been reported for the first decade of July but with an overhang of only six ships which can make June loading dates, charterers will be in a more difficult situation if late notice replacements are required. The bunker price today is US$612/tonne, up US$10/tonne from last week. The freight rate for 280,000mt AG/USG is ws23.0, down ws0.5pts from last week. Owners' earnings are: Assuming one way (excludes any ballast) at 13knots laden, this equates to US$23,500/day (US$25,000/day last week) Round Trip Cape Laden (13knots)/Suez ballast (11knots) US$-3,000/day (US$-1,750/day last week) The freight rate for 270,000mt is ws41.0, down ws1.5points from last week, so owners' earnings are: Round Trip Ras Tanura/Ulsan at 11knots ballast and 13knots laden: US$20,000/day (US$22,000/day last week)

Route Size Load Discharge Today’s Assessment Last Week’s Average

TD1 280,000 Ras Tanura LOOP ws23.0 ws23.5

TD2 265,000 Ras Tanura Singapore Ws42.0 Ws43.0

TD3 265,000 Ras Tanura Chiba Ws41.0 Ws42.0

TD4 260,000 Bonny LOOP Ws40.0 Ws41.0

TD15 260,000 West Africa China ws40.0 ws40.5

USA21%China

34%

Spore/Indo25%

Korea-Japan10%

NW Europe5%

India5%

VLCC AG Weekly Spot Fixtures by VolumeIntended Discharge (13 - 19 June 2013)

Long East49%

Short East29%

West22%

VLCC AG Monthly Spot Fixtures by VolumeFinal Destination (May 2013)

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20/06/2013

The status quo prevailed in West Africa this week as rates remained depressed. An early ws47.5 for the USG set the tone and despite a replacement fixing ws2.5 points above the market and a short Angola/South Africa at ws60.0, it was a late ws48.5 for Sines that offered a true indication of the state of play. Going east, a US$2m was fixed to West Coast India, but overall it was a quiet week of fixing, something owners will not have appreciated. With the market seemingly bottomed out - though we have suggested that prematurely on various occasions - an influx of cargoes was needed dearly and in the absence of this the situation for owners remains dire. In the Mediterranean, a couple of fixtures at healthy rates of ws56.75 for a prompt Sidi/Moham voyage and part cargo 80kt x ws97.5 (replaced at ws100.0) for a short cross-Med should not distort the equally grim picture. In reality, cross-Med rates are around ws50.0 off natural dates and the eastbound rates fared little better, exemplified later on by a China-bound Mediterranean cargo fixing sub-US$3m. The lack of activity in the Black Sea, with June dates closed out and July stems only just coming into play, did little to help. The sole fixture in the region went for a meagre 135kt x ws50.0. The North Sea did little to help matters, trans-Atlantic fixing at ws45.0 for USG and 135kt x ws43.75 for USAC, with US$3.1m fixed to Singapore. In the AG, a busy week of fixing did little to alleviate downward pressure, with westbound rates remaining particularly depressed despite a recent upturn of sorts in VLCC levels. Ws47.5 for South Africa, ws30.0 for USG and ws29.0 fixed/failed for Brazil were all achieved, with a ws27.5 to Sarroch rounding out the week. As for eastbound voyages, a high of ws65.0 for China was fixed from Bashayer, demonstrating the normal premium, with standard rates suggesting a far weaker market as ws52.0 for WC India and ws54.5 for Thailand indicated.

Suezmax

USA62%

India East25%

Med/Red Sea13%

Suezmax WAFR Weekly Spot Fixtures by VolumeIntended Discharge (13 - 19 June 2013)


TD5 130,000 Bonny Philadelphia ws50.0 ws50.0

TD6 135,000 Novorossiysk Augusta Ws50.0 Ws50.0

135,000 Mediterranean UK Cont ws50.0 ws50.0

135,000 North Sea US Gulf ws42.5 ws42.5

135,000 Ras Tanura South East Asia ws55.0 ws55.0

W Africa21%

AG24%

Med/Red Sea15%

Carib/EC Mex12%

USA7%

Black Sea7%

NW Europe14%

Suezmax Weekly Spot Fixtures by VolumeLoad Area (13 - 19 June 2013)


20/06/2013

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Aframax

A busy week for the North and Baltic, both areas with firming rates. Cross Continent is up at 90kt x WS80 being paid for a prompt market cargo. With the first decade of the programme now out for the Baltic and 1-5 July cargoes being covered at 100kt x ws62.5, rates have held steady so far. However, with the tonnage list constantly tight owners are still feeling bullish especially due to 100kt on unconfirmed subjects at ws80. Charterers may well hold off from covering their cargoes end first and early second decade dates in order to ascertain if this market firming is here to stay. A busy week for the Mediterranean and Black Sea with rates steady and firm at TD19 ws77.5. As July programmes have begun to start the tonnage list has thinned for prompt ships available to do the end month cargoes. This is reflected by a prompt replacement being done at 80kt x WS100 cross med. The black sea is also steady for the beginning of the new month with 80kt x WS75 being done consistently. With a busy month expected from the black sea on 80kt there is the sentiment there to remain steady and potentially firm further. This week, there has been a fair amount activity in the Far East, causing the amount of latent tonnage off Singapore to thin out considerably and rates to firm up to about ws80.0 Indo/Up off prompt dates and ws75.0 for end June. Meanwhile, eastbound rates from the AG continue to hover around the high/mid ws70s. While freight levels overall leave much to be desired, owners are hoping that a fresh influx of July cargoes next week will invigorate the market. A similar story is unfolding in the AG, although rates continue to move sideways and chartering activity remains subdued. There are, however, a few cargoes working privately below the radar but it seems they will do little to improve sentiment.

NW Europe39%

Med/Red Sea37%

USA24%

Aframax (West of Suez) Weekly Spot FixturesIntended Discharge Area (13 - 19 June 2013)

Baltic30%

Med6%

Black Sea19%

N Africa/E Med17%

W Africa4%

UKC7%

Carib/EC Mex13%

USA4%

Aframax (West of Suez) Weekly Spot FixturesLoad Area (13 - 19 June 2013)


TD7 80,000 Sullom Voe Wilhelmshaven Ws90.0 Ws85.5

TD8 80,000 Mina Al Ahmadi Singapore Ws77.5 Ws77.0

TD9 70,000 Puerto La Cruz Corpus Christi Ws82.5 Ws84.0

TD14 80,000 Seria Sydney Ws70.0 Ws68.5

TD17 100,000 Primorsk Wilhelmshaven Ws62.5 Ws62.5

TD19 80,000 Ceyhan Lavera Ws77.5 Ws77.0


20/06/2013

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ary

-20,000

-10,000

0

10,000

20,000

30,000

40,000

50,000

Ja

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Dec

US

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TD3 - 260 - Ras Tanura - Chiba TCE

2011

2012

2013

-10,000

0

10,000

20,000

30,000

40,000

Ja

n

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Ap

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Ma

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Ju

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No

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Dec

US

$/D

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TD5 - 130 - Bonny - Philadelphia TCE

2011

2012

2013

0

10,000

20,000

30,000

40,000

50,000

Ja

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No

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Dec

US

$/D

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TD7 - 80 - Sullom Voe - Wilhelmshaven TCE

2011

2012

2013

-5,000

5,000

15,000

25,000

35,000

45,000

55,000

Ja

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Ma

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Ap

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Ma

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Ju

n

Ju

l

Au

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Se

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No

v

Dec

US

$/D

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TD9 - 70 Puerto La Cruz- Corpus Christi TCE

2011

2012

2013


20/06/2013

Pro

jects

Time Charter

It’s been some time since we saw larger tonnage being chartered in. During this week two VLCCs have been reported to be fixed by two oil traders with rates ranging from US$18,000/day to US$20,000/day. Furthermore, an owner has fixed two of its Suezmaxes to an oil major and an owner/operator at rates around US$17,500/day. Finally, an Aframax and two MRs have been fixed at rates that do not deviate from last week’s expectations. Overall market rates are considered to remain stagnant for the time being.

1 yr 3 yr 5 yr

Handy 13,000 13,500 14,750

MR 14,250 14,750 15,750

LR1 14,500 15,500 17,000

Panamax 13,000 14,500 16,500

LR2 15,750 16,750 18,250

Aframax 10,750 13,500 16,750

Suezmax 14,500 18,000 22,500

VLCC 17,000 20,500 25,000

US$/day

Contact [email protected] London: Michael B. Friis / Mike Roberts Singapore: Iain Rennie / Ben Dudman

0

10,000

20,000

30,000

40,000

50,000

60,000

Jan

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-09

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Jul-

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Oct

-10

Jan

-11

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-11

Jan

-12

Ap

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Jul-

12

Oct

-12

Jan

-13

Ap

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US$

/day

1 Year Time Charter RatesPast 5 Years

MR Aframax VLCC

0

5,000

10,000

15,000

20,000

25,000

30,000

May

-12

Jun

-12

Jul-

12

Au

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Sep-

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-12

No

v-12

Dec

-12

Jan

-13

Feb

-13

Mar

-13

Ap

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May

-13

US$

/day

1 Year Time Charter RatesPast 12 Months

MR Aframax VLCC

Vessel Size Yard Built Period Rate Charterer

Patris VLCC Daewoo 2000 12m 18,000 EGPC

Formosa Petrochallenger VLCC IHI 2001 2 yrs 20,000 PKN Orlen

Almi Explorer Suezmax Daewoo 2012 12 m 17,500 Stena

Almi Odyssey Suezmax Daewoo 2013 12 m 17,250 BP

Sea Lady Aframax Sumitomo 2003 6/6 m 10,000 Shell

Apollon MR Hyundai 2005 2/1 years 16,000 Irving

Afrodite MR Hyundai 2005 2/1 years 16,000 Irving


20/06/2013

It appeared to be a promising start to the week for LR2 owners east of Suez as a number of cargoes were quoted on Monday and Tuesday, causing a slight stir in the market. In reality, these early week requirements were to be the only cargoes quoted and there was nothing to back them up and push momentum. As a result, the market has actually softened a touch. TC1 is on subjects twice at ws73.0 basis 75,000 tonnes of naphtha, earning round trip US$4,500/day. Voyages westbound have fared no better with US$1.9m, although unconfirmed, having been put on subs for 90,000 tonnes of gasoil from West Coast India to the UKC. Reliance beat the market up into East Africa by taking a ship on subs 80,000 gasoil x ws94.0. All in all, a disappointing week east of Suez. In the West, there has been a flurry of activity, admittedly the majority of which is driven by the naphtha arbitrage to the Far East, which will result in half of the vessels put on subjects failing if the past is anything to go on. Med/Japan is paying an even US$2.3m currently and there are four ships on subs for these routes and a further one already fixed. Distillate is moving out of the Baltic and ARA on these sizes too, and it will be interesting to see if all these ships get confirmed and the impact it will have on the market. Unfortunately, the tonnage list is still well-supplied with ships which poses the question: why would you quote a 2nd or even 1st decade July cargo now when rates are still stalling where they are? The LR1 market has been very quiet this week. TC5 is rating down as the week with the last done fully fixed vessel being confirmed 55kt x ws95.0, but there is a widely understood report that ws87.5 is on subs loading out of the AG. Reliance took a vessel on subs at US$2.275m Sikka/USAC off 5-10 July, which is back to the bottom levels we saw a month or so ago. 60 gasoil was confirmed Sikka/Red Sea at US$850,000 also, a far cry from the US$1.0m levels we were seeing a couple of weeks ago. All in all, a disappointing week for owners and the absence of fixing has only served to keep the market depressed moving into next week. The MR market has failed to excite this week. There has been a fair amount of activity off the prompt dates, but rates have remained level and there are little or no signs to suggest that next week things will improve. TC12 has fallen to 35kt x ws100.0 for WC India/Japan, AG/East Africa is on subs 35kt x ws172.5 and South Africa ws162.5. Cross-AG rates into Iraq are stuck at US$220,000 1:1, and AG/Red Sea rates are circa US$800,000 to Saudi Red Sea. There are simply too many ships fighting for the cargos. Charterers continue to run their stems prompt on as there is no need to fix ahead. They are then able to pick and choose which boat they want with a few days to spare and keep the market depressed.

CP

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Clean Products - East

-5,000

5,000

15,000

25,000

35,000

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US

$/D

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TC1 - 75 - Ras Tanura - Yokohama TCE

2011

2012

2013

-5,000

0

5,000

10,000

15,000

20,000

25,000

Ja

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Ap

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Dec

US

$/D

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TC5 - 55 - Ras Tanura - Yokohama TCE

2011

2012

2013


TC1 75,000 Ras Tanura Yokohama Ws74.0 Ws74.0

TC5 55,000 Ras Tanura Yokohama Ws95.0 Ws96.5

TC4 30,000 Singapore Chiba Ws121.5 Ws122.5

TC12 35,000 WC India Japan ws103..0 ws103.0


20/06/2013

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Clean Products - West

0

10,000

20,000

30,000

Ja

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TC2 - 37 - Rotterdam - New York TCE

2011

2012

2013

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Ja

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US

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TC3 - 38 - Aruba - New York TCE

2011

2012

2013


TC2 37,000 Rotterdam New York ws117.5 ws115.5

TC3 38,000 Aruba New York Ws140.0 Ws132.5

TC6 30,000 Skikda Lavera Ws125.0 Ws127.5

"I don't care too much for money, money can't buy me.... cargoes", seems to have been the chorus line of the week for the Flexi tonnage owners. The bottom line is that natural size cargoes for these ships have been severely lacking; it’s not even from an aggressive stance that rates have gone south, simply a lack of stems. And it wouldn't take too much for someone to take this to ws180.0, but currently owners’ hopes are a little above this. Handies have fared somewhat better than their smaller cousins. Rates have come off but at least there has been some enquiry. As expected after last week’s doldrums, the market is currently residing at 30kt x ws137.5. Expectation is still that there will be continued light activity, although most are doubtful rates will come off any more. TC2 this week has been a little disappointing, with an extra-ordinarily slow start to the week that would have made glacial shift seem hasty. A mid-week flurry has mopped up tonnage to the end of the month and hopefully bottomed out this market, with some prompt methanol tonnage taking a small hit at ws110.0; at its height this week we have seen ws120.0. With light activity forecast and no new cargoes on the books this morning, I would probably be calling this a ws117.5 market tran-Atlantic, with all eyes to next week. Across the pond is another story, with tonnage drying up from enquiry off the Gulf and tonnage reportedly ballasting across from West Africa. Rates have gone to ws100.0 for the back haul, which as a comparison is equivalent to time charter earnings of US$5,000/day. But in combination with TC2, this would be over US$15,000/day. Caribs/Up TC3 is also rising to ws140.0 as tonnage is sucked out of the area. Overall expectation is that this is due to continue as trading has seen that over 2m mts per month for July and August are booked USA into Europe, and the lion’s share of this is ULSD, at around 75%. The Mediterranean market this week continues to meet expectations of lacking anything meaningful to write about. Enquiry still very low and tonnage aplenty, meaning rates have stuck around the same point, currently 30kt x ws125.0, with no Black Sea/Med premium evident. "Send me a postcard, drop me a line, stating point of view".

20/06/2013

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The Cape market has seen significant gains over the week and rates being fixed continue to improve. West Australia/China has been reported at US$8.00/tonne for an early ship, with US$7.90/tonne levels being concluded for July dates. On time charter R/Vs, a 170,000 Dwt (1996 built) vessel has been fixed basis delivery Xingang at a firm US$11,000/day and another vessel is rumoured to have achieved US$12,000/day via EC Australia. The front haul market perked up today, with rumours of US$20.00/tonne achieved on a June cancelling cargo. Coupled with news of a modern 180,000 Dwt vessel achieving US$23,000/day for a trip east via EC Canada and a trans-Atlantic trade being concluded at US$10,000/day, we are seeing a few more owners willing to sail past Singapore and head to the Atlantic. Period fixing has led to short period rates improving to US$11,500/day on 170,000 Dwt vessels. We are not aware of longer being fixed at present, but if the spot market can maintain itself at current levels for a while longer, we expect this to change.

Capesize

0

2,000

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6,000

8,000

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-25,000

0

25,000

50,000

75,000

100,000

125,000

Jan

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Ap

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Ju

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9

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9

Jan

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Ap

r-10

Ju

l-1

0

Oc

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0

Jan

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Ju

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1

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-12

Ap

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Ju

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2

Oc

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2

Jan

-13

Ap

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BC

I

US

$/d

ay

The Baltic Capesize Index vs Atlantic & Pacific Earnings

Atlantic Pacific BCI

Dry

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20/06/2013

Positive sentiment from last week has been developing into firmer fixture numbers, with levels improved across both sides of the basin. In particular, the EC S America grain trade has shown a marked improvement, with eco-type vessels trading on APS basis at US$15,000/day plus US$500,000 for front-haul trips. Sudden improvements have caused forward grain freight spreads to widen at the near-term end of the curve as operators upwardly revise their freights by several dollars in the face of unexpected upward market adjustment. Encouraging signs have withheld some European head owners from rating fresh time-charter ideas whilst they contemplate the impact of the current trend. For the time being, market expectation is positive and the consensus view is for the rates to remain firm up to around mid-July dates.


Panamax

0

1,000

2,000

3,000

4,000

5,000

6,000

0

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20,000

30,000

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Jan

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Ap

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9

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9

Jan

-10

Ap

r-10

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l-1

0

Oc

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Jan

-11

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l-1

1

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t-1

1

Jan

-12

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r-12

Ju

l-1

2

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2

Jan

-13

Ap

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BP

I

US

$/d

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The Baltic Panamax Index vs Atlantic & Pacific Earnings

Atlantic Pacific BPI

Dry

Carg

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20/06/2013


North coast South America tonnage is tight, however we are seeing more and more ballasters from West Africa opt for north coast South America than east coast South America this week due to an indecisive grain market and an already long tonnage list in south Brazil/Argentina. There was talk of charterers aiming around the US$13,000/day level for a trip with petcoke ex north cost South America to Far East on a handymax. Voyage rates ex north coast South America to Far East are also stable with owners being bullish and looking to achieve around US$50/tonne about 40,000 tonnes cargo. In addition the US Gulf handy market has remained firm this week and look forward to these conditions to continue into next week. At the moment we are seeing a lack of prompt/2nd June capable tonnage in the handy sector on the Continent which, when combined with strong scrap rates on both voyage and TC are producing a very strong market. We have seen several owners with early July/very end June positions that are focusing on period (either two to three laden legs or three to five months) as they look to capitalise off the firm rates for 2nd June with quoted rates from owners around high US$9,000/day to US$10,000/day for modern/eco handies. Going forward into next week it seems that the vitality in the market will depend on how many positions for July we see circulated into the market in the next 10 days and whether owners will attempt to keep their tonnage off-market in order to perpetuate the feeling of a supply-tight market. Handy size vessels in the Far East have been seeing rates in the high US$5,000/day for 28,000 Dwt vessels and low mid US$6,000/day on the larger 35,000 Dwt for short duration Russian CIS/China coal business. Rates to east coast India have been a tick more, generally in the mid-high US$6000/day and tick over US$7,000/day for larger vessels.

Handy/Handymax/Supramax

0

1,000

2,000

3,000

4,000

5,000

0

10,000

20,000

30,000

40,000

50,000

Jan

-09

Ap

r-09

Ju

l-0

9

Oc

t-0

9

Jan

-10

Ap

r-10

Ju

l-1

0

Oc

t-1

0

Jan

-11

Ap

r-11

Ju

l-1

1

Oc

t-1

1

Jan

-12

Ap

r-12

Ju

l-1

2

Oc

t-1

2

Jan

-13

Ap

r-13

BS

I

US

$/d

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The Baltic Supramax Index vs Atlantic & Pacific Earnings

Atlantic Pacific BSI


20/06/2013

China scraps iron ore import licensing system to help companies China, the world’s largest iron ore buyer, has scrapped a licensing system for imports of the steelmaking raw material. The abolition of the permit system will allow small and medium-sized trading companies easy access to the raw material. Easier import rules may help cut shipment costs and make purchases more transparent and efficient for buyers. The changes won’t have much impact on larger companies as they held licenses under the previous system. China imported a record 745m tonnes of iron ore in 2012. Inventories at China’s ports and mills are at the lowest in 2 1/2 years at 20 days of demand. Monsoon covering India in record time may boost rice, sugar Monsoon season, which accounts for 70% of India’s annual rainfall, covered the entire country in a record time, accelerating plantings of crops from rice to soybeans and cotton. Rains covered the whole of India on Monday, the earliest ever and ahead of the normal date of July 15. Monsoon showers have been 48% above a 50-year average since they arrived June 1. The early arrival of rainfall has helped ease a drinking water shortage and relieved crops threatened by the worst drought in four decades in India’s western region. A bumper harvest may help Asia’s third-biggest economy curb food prices and revive economic growth from the lowest level in a decade. Oakajee port and rail to take five years Oakajee port and rail network aimed at opening up a new iron ore province in Western Australia will take at least five years to develop following the collapse of a $6 billion plan to build the infrastructure. Mitsubishi last week shelved plans to develop a port at Oakajee, 24km north of Geraldton, and a 570km rail network through the Mid-West, as well as its associated Jack Hills iron ore mine. The company blamed weaker iron ore prices and a failure to secure an equity partner to fund the massive project. Australian cane industry enjoying a period of ‘rejuvenation' This year's Australian sugarcane harvest has started in north Queensland amid a reversal of previous trends for cane fields to be taken out of production. The failure of tropical tree plantations such as mahogany and teak has opened up opportunities for the expansion of cane farming north of Mackay, as export prices look brighter due to the fall in the value of the Australian dollar. The move has been hastened by the new trend of cane fields to be bought by sugar mills, most of them now owned by foreign conglomerates. Over the past decade, cane plantings declined by 17% from a record 450,000ha harvested in 2002. For the first time, this year has seen a rebounding of previous declines, with 400,000ha of cane set to be harvested down the east coast of Australia between Mossman and Ballina between now and October. Adani to build $300m power line to Galilee Basin Indian energy giant Adani Group is planning to build a A$300m electricity transmission line to its proposed mine in the Galilee Basin in Central Queensland. Adani is confident its project, to mine up to 60m tonnes of thermal coal a year, is economically viable because it controls all the stages from “pit to port”, including the rail line, Abbot Point coal terminal to feed and power stations in India. NSW government plans sale of Newcastle coal port The New South Wales Government said it plans to sell Newcastle port, the world's biggest coal export terminal, meaning another chunk of the country's vast resources industry could be sold to foreign buyers. The state's budget for 2013-2014 delivered on Tuesday outlined plans to sell a 99 year lease to operate the port for an estimated A$700m. Newcastle exported more than 120m tonnes of coal last year, most of which was shipped to Asia for use in power plants and steelworks. West Africa piracy rises More seafarers were affected by piracy off the West coast of Africa last year than near Somalia, which has seen a dramatic reduction in attacks thanks to armed guards and naval patrolling. Armed attacks off the West coast of the continent affected 966 seafarers in 2012, compared to 851 in Somalia. However, the 349 seafarers taken hostage off Somalia still dwarfs the 206 captured in West Africa, where pirates often favour hit and run tactics, stealing cargo and possessions, rather than holding vessels and their crew for ransom. Somali pirates also hold hostages for an average of 11 months, compared to just four days in West Africa.

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20/06/2013


Containers

Vessel (TEU/HMG) Index + / -770/440 TEU (GL) 17.5 k 3.28 ► 0.00

1,043/660 TEU (GL) 18 k Eco 4.74 ► 0.00

1,100/715 TEU (G) 19 k 7.67 ► 0.00

1,700/1,125 TEU (G) 19.5 k 8.75 ▲ 0.30

1,740/1,300 TEU (G) 20.5 k 8.75 ▲ 0.29

1,714/1,250 TEU (G) 19 k Bkk Max 5.34 ▲ 0.06

2,500/1,900 (G) 22 k 4.51 ▲ 0.05

2,800/2,000 TEU (GL) 22 k 3.33 ► 0.00

3,500/2,500 TEU (GL) 23 k 1.61 ► 0.00

4,250/2,800 TEU (GL) 24 k 3.08 ► 0.00

5,500/4,200 TEU (GL) 25 k 3.33 ► 0.00

6,500/4,800 (GL) 25 k 4.69 ► 0.00

Index Total 58.20 ▲ 0.70

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The Box Index B O X i

A relatively quiet but steady week in the container market resulted in little movement in our BOXi, except for the 1,700TEU sector where a continued tightening of supply has seen rates rise further still as operators have to pay up to secure what little tonnage is available. Rates in the low to mid US$7,000s/day will be a welcome relief for owners who less than six months ago were struggling to hit the US$6,000/day mark and break opex. Indeed, the struggles of this size until recent months are possibly, somewhat ironically, part of the reason for the lack of available tonnage in this relatively elderly sector due to the impact it had on encouraging owners to go down the scrapping route. With only a modest orderbook in this size and the continued future need for feeder tonnage, a now popular thread of opinion is that this size will continue its upward trend. At the same time, however, owners of the smaller 1,100TEU size in the Far East struggle to find employment, and with vessels still fixing 12 month periods at mid US$5,000/day levels, it could be seen that owners here lack the optimism that is evident for their larger feeder cousins. The headlines were of course dominated by the news of STX Pan Ocean filing for bankruptcy and the resultant ramifications associated with charter hire payment defaults and service reshuffling among the partners. What is clear is that it will take some time for the dust to settle and until then it is difficult to speculate as to the impact this will have, if any, on the charter market as a whole. But it is inevitable that, whilst not to the same extent as in the dry bulk sector, a number of container owners' cash flows will be dramatically affected. Another development to grab the headlines was the naming of the first of Maersk's 18,000 triple E types - a potentially ominous sign for a market struggling to cope with overcapacity and the cascading process associated with large newbuild tonnage. However, at the same time positive news has emerged showing a sharp reduction in levels of idle tonnage - Lloyds List Intelligence has quoted a figure of 388,103TEU currently in lay-up, representing just 2.35% of the total global cellular fleet, compared to 5% as recently as April this year. The fact that the market is able to absorb this with rates continuing to show improvements, albeit modest, should be seen as encouraging.

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