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Weekly Broker: Big ships face big problems

Entering the second quarter of the year, the large size shipping sectors in both bulkers and tankers remain in the gloom, with disasters, global economic turbulence and geopolitical issues being the major worries in the market.

George Lazaridis, head of research and valuations at Allied Shipbroking, believes the main damage being faced in the large size bulker market seems to still be running from the significant disruptions being caused in Brazil from the wake of the Vale dam collapse in late January.

“The aftershocks from this disaster are expected to ripple on beyond 2019, while a fair bit of production capacity likely to take a fair amount of time before it can be retrieved back. At the same time however, a number of other factors have only piled on the bad news currently faced by the capesize market. The further set back was caused by Cyclone Veronica as it caused serious disruptions in operations off the coast of Australia, with much of the Pilbara region now expected to note crippled activity levels for a little while longer,” Lazaridis noted.

Dimitris Kourtesis, a chartering broker at Intermodal, believes geopolitical risks around the world could potentially affect tanker trading patterns, supply/demand and freight rates directly or indirectly.

Kourtesis said a no deal Brexit could lead to a rise in the cost of energy imports. “It is clear that if tariffs or different tax regimes are introduced it would be extremely detrimental to their economy,” Kourtesis said, adding that buyers of UK oil like South Korea will have to make new arrangements since the UK will no longer be part of the free trade agreement between South Korea and Europe and 87% of UK’s natural gas demand is imported from Norway and the balance from Belgium and Netherlands, which means that the flow of natural gas will not stop but it will definitely become less efficient.

“The problems for Venezuela kept mounting with a second power outage taking place on Jose, one the biggest crude export terminals, last week. This did not only affect terminal operations but also the upgraders that turn heavy crude oil to light, while despite all the adverse developments, Venezuela will have to keep pumping oil as they have to ship crude to China and Russia as a part of an ongoing loan deal,” Kourtesis added.

According to Alibra’s weekly report, this past week the bad weather in Australia has put additional pressure on the capesize market, with Rio Tinto declaring force majeure on some iron ore contracts, the panamax market has seen some pockets of tightness around South America with a few short-term fixtures reported, while the market for smaller size bulker segments has started to drop off a bit following weeks of firm performance.

“As the gap between buyers’ and sellers’ ideas seems to be narrowing in the dry bulk secondhand market, activity has started to pick up, with interest in modern handysize tonnage being particular firm, while on the tanker side appetite is evident across all sizes,” Intermodal said in its weekly report.

More than eight shipbroking houses reported the sale of the 2004-built 77,000 dwt panamax bulker Cemtex Pioneer. The vessel was sold by Taiwanese owner U-Ming Marine to Chinese interests for $7.3m.

Allied Shipbroking, Lion Shipbrokers, Lorentzen & Stemoco and Andreas J. Zachariassen all reported that Greek owner Paul Coronis’ Primebulk sold its 2009-built supramax bulker Moonray to Chinese interests. The 57,000 dwt vessel has fetched a price of $9.2m.

Both Intermodal and Andreas J. Zachariassen listed an en bloc deal of three handy bulkers. Belgian owner Bocimar sold the 2012-built 33,500 dwt CMB Giulia, the 2011-built 32,600 dwt CMB Adrien and the 2012-built 32,600 CMB Catrine to Greek interests for a price of $27m in total.

“On the tanker side, things were sustained on the positive side, in terms of activity noted, for yet another week. This week’s volume
 was mainly driven by a single en bloc sale and leaseback deal. At the 
same time, it is important to note that buying interest is still relatively vivid and we should see a fair amount of activity take place over
the coming weeks, especially in the product tanker segments which hold more optimistic views as to their future prospects,” Allied Shipbroking said.

Allied Shipbroking and Andreas J. Zachariassen both reported Navigazione Montanari’s major sale and leaseback deal with Norway’s Sole Shipping Fund, involving 11 of the company’s tankers, made up of one suezmax tanker, two aframax tankers and eight MR tankers. Splash reported the deal in late December last year.

Splash also reported two tanker S&P deals this week – Greece’s Falcon Navigation is said to have taken over the 2008-built 51,000 dwt MR tanker Isola Bianca from Italian owner Finaval for just under $16m. Another Greek owner, Avin International, acquired the 2008-built MR tanker Ariake Maru from Japanese owner Asahi Tankers for $13.6m.

Banchero Costa, Optima and Clarksons all listed the sale of the 2003-built 112,000 dwt aframax tanker Gardenia, which has seen Greek owner Horizon Tankers make a quick $1.3m profit in four months. The company bought the vessel from DHT Holdings in November last year for $11.9m and sold it to Indonesian interests for $13.2m last week.

Multiple shipbroking houses including Lorentzen & Stemoco, Allied Shipbroking, Intermodal and Optima listed the sale of the 2005-built product tanker Princess Ruby. The vessel was sold by Japanese owner Tabuchi Kaiun to Vietnamese interests for an undisclosed price.

In the containership sale and purchase market, Andreas J. Zachariassen reported that UK owner Borealis has taken over two 2008-built 4,363 teu panamax boxships, Ital Moderna and Ital Milione, from French bank BNP Paribas for $10m each.

Following the sale, BNP Paribas has cleared out its shipowning fleet.

Jason Jiang

Jason is one of the most prolific writers on the diverse China shipping & logistics industry and his access to the major maritime players with business in China has proved an invaluable source of exclusives. Having been working at Asia Shipping Media since inception, Jason is the chief correspondent of Splash and associate editor of Maritime CEO magazine. Previously he had written for a host of titles including Supply Chain Asia, Cargo Facts and Air Cargo Week.
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