Splash 247

Mixed bag good for brokers

Mixed bag good for brokers

Array
(
    [0] => WP_Term Object
        (
            [term_id] => 56
            [name] => Containers
            [slug] => containers
            [term_group] => 0
            [term_taxonomy_id] => 56
            [taxonomy] => category
            [description] => This is the Splash 24/7 news archive related to containers sector coming from all over the world. They're sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about containers. Browse Splash 24/7 for more maritime and shipping news.
            [parent] => 54
            [count] => 1108
            [filter] => raw
            [object_id] => 60950
            [cat_ID] => 56
            [category_count] => 1108
            [category_description] => This is the Splash 24/7 news archive related to containers sector coming from all over the world. They're sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about containers. Browse Splash 24/7 for more maritime and shipping news.
            [cat_name] => Containers
            [category_nicename] => containers
            [category_parent] => 54
        )

    [1] => WP_Term Object
        (
            [term_id] => 90
            [name] => Contributions
            [slug] => contributions
            [term_group] => 0
            [term_taxonomy_id] => 90
            [taxonomy] => category
            [description] => This is the Splash 24/7 archive related to contributions news and articles. News are sorted by release date, from the latest to the oldest.

Find here the updated list of the latest contributions articles and news. Browse Splash 24/7 for more maritime and shipping news.

            [parent] => 0
            [count] => 235
            [filter] => raw
            [object_id] => 60950
            [cat_ID] => 90
            [category_count] => 235
            [category_description] => This is the Splash 24/7 archive related to contributions news and articles. News are sorted by release date, from the latest to the oldest.

Find here the updated list of the latest contributions articles and news. Browse Splash 24/7 for more maritime and shipping news.

            [cat_name] => Contributions
            [category_nicename] => contributions
            [category_parent] => 0
        )

    [2] => WP_Term Object
        (
            [term_id] => 57
            [name] => Dry Cargo
            [slug] => dry-cargo
            [term_group] => 0
            [term_taxonomy_id] => 57
            [taxonomy] => category
            [description] => Stay updated on what's going on in the Dry Cargo sector while browsing the Dry Cargo news archive. 

Find the latest maritime and shipping news on Splash 24/7.
            [parent] => 54
            [count] => 1517
            [filter] => raw
            [object_id] => 60950
            [cat_ID] => 57
            [category_count] => 1517
            [category_description] => Stay updated on what's going on in the Dry Cargo sector while browsing the Dry Cargo news archive. 

Find the latest maritime and shipping news on Splash 24/7.
            [cat_name] => Dry Cargo
            [category_nicename] => dry-cargo
            [category_parent] => 54
        )

    [3] => WP_Term Object
        (
            [term_id] => 59
            [name] => Gas
            [slug] => gas
            [term_group] => 0
            [term_taxonomy_id] => 59
            [taxonomy] => category
            [description] => This is the Splash 24/7 archive related to the gas sector news coming from all over the world. News are sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about gas and logistics. Browse Splash 24/7 for more maritime and shipping news.

            [parent] => 54
            [count] => 529
            [filter] => raw
            [object_id] => 60950
            [cat_ID] => 59
            [category_count] => 529
            [category_description] => This is the Splash 24/7 archive related to the gas sector news coming from all over the world. News are sorted by release date, from the latest to the oldest. 

Get the updated list of the latest news about gas and logistics. Browse Splash 24/7 for more maritime and shipping news.

            [cat_name] => Gas
            [category_nicename] => gas
            [category_parent] => 54
        )

    [4] => WP_Term Object
        (
            [term_id] => 58
            [name] => Tankers
            [slug] => tankers
            [term_group] => 0
            [term_taxonomy_id] => 58
            [taxonomy] => category
            [description] => Stay updated on what's going on in the shipping and tankers sector by browsing the tankers news archive. Find the latest maritime and shipping news on Splash 24/7.

Find here the updated list of the latest news about tankers. Browse Splash 24/7 for more maritime and shipping news.

            [parent] => 54
            [count] => 1138
            [filter] => raw
            [object_id] => 60950
            [cat_ID] => 58
            [category_count] => 1138
            [category_description] => Stay updated on what's going on in the shipping and tankers sector by browsing the tankers news archive. Find the latest maritime and shipping news on Splash 24/7.

Find here the updated list of the latest news about tankers. Browse Splash 24/7 for more maritime and shipping news.

            [cat_name] => Tankers
            [category_nicename] => tankers
            [category_parent] => 54
        )

)

All week we’re looking at prospects for 2017. Today, chief correspondent Jason Jiang goes through the various sectors.

The year of 2016 has come an end. For the past 12 months, turmoil and volatility have become the most frequently used words in shipping news.

Will 2017 be a year for the shipping industry to rebound? After talking with a few research institutes and maritime professionals, the answers are still not optimistic.

Global research agency Moody’s has held a negative outlook for the global shipping industry in 2017. The agency believes that container shipping companies will continue to face oversupply, and profitability could be put under even more pressure if bunker fuel prices increase.

While consolidation in container shipping continues and may reduce price competition over time, Moody said that a lasting improvement in rates is not likely in 2017.

Noah Parquette, senior equity research analyst at J.P. Morgan reckons container rates should stabilise in 2017 as supply growth bottoms out.

“Demand growth will be the chief driver of the market and we will be looking to Trump’s new policies for direction. Barriers to trade could hamper global trade growth, while lower taxes/infrastructure spending could give a near-term boost to demand,” Parquette said.

Lars Jensen, ceo and partner at SeaIntelligence Consulting, agrees with Parquette’s view. “The container shipping in 2017 will start out no differently than 2016 in terms of global supply and demand. It is entirely plausible that rate levels in the beginning of 2017 will show marked improvements over 2016, but that is because the start of 2016 had rate levels hitting absurdly low levels on the back of a very low oilprice and a dysfunctional price-setting mechanism amongst the carriers,” Jensen said.

In dry bulk shipping, Moody reckons freight rates will remain low due to subdued demand, but that deferred vessel deliveries, cancellations and scrapping will help curb net capacity growth.

“While we are increasingly bullish on the prospects for dry bulk shipping, we do think that the surge in rates experienced in Q4 will reverse in Q1 as seasonal effects end and supply growth is temporarily increased. Profit taking at these levels is prudent, with the idea to re-establish positions at lower levels later in 2017,” Parquette said.

Parquette expects the rate environment to continue to deteriorate over the course of 2017 for crude tankers as supply growth peaks, however, optional upside could occur in the event of heavy floating storage. Depending on the course of new vessel ordering, the second half of 2017 could be an opportunistic time to re-invest in the sector.

Parquette believes the product tanker sector is the most attractive in shipping right now and he expects supply pressures in the sector to ease substantially in the second half of 2017.

“We look for a gradually recovering market for the LNG sector over the course of 2017 and we expect LPG rates to come off the bottom as heavy supply growth is coming to an end,” Parquette added.

One the ship sales side, Dr Adam Kent, director at Maritime Strategies International (MSI), believes there is little good news for vessel earnings or secondhand ship values in 2017.

Based on MSI’s latest forecasts, newbuilding prices across all sectors will continue to fall during 2017. At an aggregate level new ship deliveries will outstrip contracts and many yards will become increasingly desperate to attract new orders, at whatever price, in order to remain a going concern.

MSI predicts that five year-old bulker prices will, however, on average, increase by 5% when compared to 2016 and 2017 annual averages.

“Although bulker earnings have, relatively speaking, posted significant gains over the last 12 months, newbuilding prices have fallen and this has been more than sufficient to offset increases elsewhere,” Kent said.

MSI’s view is that 2016 will be the floor for dry bulk vessel values and that they will increase over the next five years. Though the increase is slight in 2017, it will be more significant between 2018 and 2020.

According to Kent, in the tanker sector, secondhand prices will struggle with the combined weight of both falling newbuilding prices and the continued deterioration in vessel earnings. The decline in values will be on average 16%, meaning five year-old VLCC prices will fall below $57m for the first time since 2013.

Kent reckons that companies with limited exposure to the direct drivers of asset values – newbuilding and scrap prices, together with earnings and life expectancy – look to be well-positioned for success in 2017.

Martin Rowe, managing director of Clarksons Platou Asia, gives the view that the shipbroking sector could have good prospects in 2017.

Rowe expects the number of dry bulk vessels sales in 2016 could end up 40% higher than in 2015.

“This higher transactional volume clearly then is good for shipbrokers. With a general consensus that second hand prices have bottomed out and a continued dearth of newbuild ordering activity we expect a trend of high second hand sales volumes in 2017 to be maintained,” Rowe said.

Rowe said the increase in S&P activity doesn’t yet however, appear to translate into much higher earnings for shipowners themselves since there’s still a substantial backlog of newbuild bulkers set for delivery in 2017, so whilst vessel utilization may remain fairly mediocre it’s also likely to mean more older vessels sent for scrap, which once again will translate into more work for shipbrokers.

“By the time we get to 2018 however, assuming projected trends in global seaborne trade are maintained; vessel utilization rates will tighten up, freight rates will go up and second hand prices should then go up too. At that point transactional volumes will likely decline as prospective buyers become price sensitive and the owners who wisely bought in 2016 and 2017 will by 2018 be the ones to be making the returns,” Rowe concluded.

Share this article

Related Posts