Container Thursday, 17 November 2011 Financialfiles.irwebpage.com/reports/shipping/0vbkwB5MWe...Keeping this huge fleet employed in the longer term will be difficult, but demand and

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Braemar Seascope Thursday, 17 November 2011

Market Indicator Wet 16-Nov-11 Oct Avg Avg YTD 2010 Avg

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

260,000 NHC AG/EAST TD3 15,500 -1,000 7,500 40,500

130,000 NHC WAFR/USAC TD5 5,500 17,000 11,000 24,000

80,000 NHC UK/CONT TD7 3,500 15,000 12,000 19,000

55,000 CLN AG/JAPAN TC5 2,000 2,000 5,500 9,500

37,000 CLN CONT/USAC TC2 7,500 9,000 11,500 12,000

38,000 CLN CARIB/USAC TC3 10,000 10,000 10,000 8,500

Dry 16-Nov-11 Oct Avg Avg YTD 2010 Avg

BDI 1,884 2,072 1,511 2,758

BCI 3,223 3,391 2,097 3,480

BPI 1,784 1,968 1,748 3,115

BSI 1,356 1,564 1,388 1,365

Container 14-Nov-11 Oct Avg Avg YTD 2010 Avg

B O X i 64.92 71.35 89.29 63.83

Financial 16-Nov-11 Oct Avg Avg YTD 2010 Avg

BRENT CRUDE US$/bbl 111.10 108.39 110.99 79.49

IFO 380 ROTT US$/mt 661.50 636.83 617.46 449.24

YEN/US$ 77.03 76.65 79.95 87.70

WON/US$ 1,134 1,152 1,102 1,155

US$/EURO 1.35 1.37 1.40 1.33

US$/STERLING 1.58 1.58 1.61 1.55

GOLD /US$ 1,772 1,670 1,560 1,224

Braemar Seascope Weekly Chartering Report 2

17/11/2011

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VLCC Bunker prices in the AG are giving owners the excuse they need slowly to increase their earnings while at the same time still maintaining reasonable relationships with charterers. We are coming off the back of a fruitful week of fixing, during which a rush of charterers have been looking to fix end-November stems, as well as trying to cover their early December positions in order to avoid disappointment. 120 cargoes have been fixed for November and already 32 for early December. Given that the December stems were only confirmed by ARAMCO today, this represents quite a lot of speculation by charterers. This increased demand, coupled with rising bunkers, has pushed rates higher and even the now legendary oversupply situation has been diminished, leaving quite a competitive market in its wake. Decem-ber might prove to be a successful month for shipowners if it continues at these volumes, and owners will be praying for a Christmas bonus. Keeping this huge fleet employed in the longer term will be difficult, but demand and specula-tion for the moment are working in owners' favour. West Africa is also an area of firmness, where a shortage of tonnage – especially for earlier dates – means that rates are strong and not showing any signs of weakening, especially while the usual party-spoilers from the East are having their own fun in their own theatre. Indian activity from W Africa remains limited, with only one cargo being fixed W Af-rica/WC India off 9th December at US$3.97m. Activity on this route is expected to rise together with rates for cargoes in the last decade of December, as only two cargoes have been fixed by Indian charterers for December laycans as yet. This is well below the usual volumes we have seen this year. Taking the firm sentiment prevalent in the VLCC market on all fronts, we are assessing W Africa/WC India at US$4.1m and W Africa/EC India at US$4.3m. The 30 day availability index shows 48 double hull VLCCs and the Antiparos still standing vigil at Fujairah, compared to 50 last week. If we can expect another 28-30 cargoes for the first half of the month, we still have a surplus of ton-nage. However, there is not much room for charterers to manoeuvre. The freight rate for 280,000mt AG/US Gulf is ws42.5, up ws2.5 points from last week. With bunkers at US$700/tonne, down US$4/tonne from last week, owners' earnings are: Double Hull TCE: US$2,000/day (US$-2,300/day last week) The freight rate for 270,000mt AG/S Korea is ws62.5, up ws5.0 points from last week, making owners’ earnings: Double Hull TCE: US$22,700/day (US$15,300/day last week)

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

TD1 280,000 Ras Tanura LOOP ws42.5 ws43.0

TD2 265,000 Ras Tanura Singapore ws65.0 ws62.0

TD3 265,000 Ras Tanura Chiba ws65.0 ws61.5

TD4 260,000 Bonny LOOP ws65.0 ws65.5

TD15 260,000 West Africa China ws61.0 ws61.0

China46%

USA16%

Korea/Japan10%

Spore/Indo25%

S Africa3%

VLCC AG Weekly Spot Fixtures by VolumeIntended Discharge (9th Nov - 16th Nov 2011)

Long East58%Short East

23%

West19%

VLCC AG Monthly Spot Fixtures by VolumeFinal Destination (October 2011)

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17/11/2011

It was a fairly quiet start to the week in West Africa, with no fresh cargoes appearing on Monday. Rates drifted away to ws75.0 with this inactivity as the tonnage list started building. By the time we had a mini-rush of cargoes in the middle of the week, any remaining sentiment amongst owners had fizzled out and rates quickly dropped to ws70.0. This is where the market decided it wanted to stop. Even though most cargoes getting quoted received seven to ten offers, the robust resistance of owners led the market to stagnate. Once the market got going, however, it did actually continue at a good rate through the week, but with the overhang of tonnage coming from November, rates stayed fairly consistent. There is still a decent level of slack that needs to be taken up in the list before we see rate rises. Bunker prices are cer-tainly underpinning owners’ resistance at the moment, which should continue into next week. There is a severe lack of natural West Africa VLCCs on the list, which may yet have an impact on the suezmaxes, although more likely into the second decade. Should charterers end up being pushed down the suezmax route, there is hope among the owning community that it will lead to a jump in market confidence. Next week is Thanksgiving, which may yet lead to a pre-holiday rush before the long weekend. The Mediterranean and Black Sea market followed a very similar path to West Africa this week. There was a single straggling cargo from November that had to be covered this week and after replacing the charterers managed to achieve ws75.0. This is very much in line with other cargoes off similar dates. Some charterers took the plunge early and started fixing off early December dates and unsurprisingly came up against similar levels again. One quoted cargo off 1-2 dates received six offers very quickly after quoting, so it was clear that this market was overtonnaged. Med/trans-Atlantic voyages demonstrated the weakness fully, with one cargo fixing at ws60.0, which is getting towards the lowest levels we have seen all year. The Turkish straits delays continued to reduce, taking even more pressure off an already long list. With West Africa showing weakness, it looks difficult for Med rates to show any positivity without a sustained period of bad weather in the straits. At this time of year this is a clear possibility which should lead charterers to take a conservative approach to fixing. The AG continued along the path that we have become familiar with. It is difficult to call the market completely stagnant, but it is not far off. We saw a single Ag/India fixture that fixed ws78.0 to the west coast. The AG/East market is un-tested, although we expect rates to come out at approximately ws80.0 as the list still looks relatively overtonnaged. The one positive for owners is the strong VLCC market, which may yet force some charterers to fix smaller vessels. At the moment we are not seeing the volumes of cargoes needed to change the rates, but the market remains hopeful that we will see them soon.

Suezmax

USA40%

NW Europe40%

S Africa10%

Australia10%

Suezmax WAFR Weekly Spot Fixtures by VolumeIntended Discharge (9th Nov - 16th Nov 2011)


TD5 130,000 Bonny Philadelphia ws72.5 ws75.0

TD6 135,000 Novorossiysk Augusta ws75.0 ws75.0

135,000 Mediterranean UK Cont ws70.0 ws72.5

135,000 North Sea US Gulf ws62.5 ws67.5

135,000 Ras Tanura South East Asia ws80.0 ws80.0

W Africa26%

Med/Red Sea31%

Black Sea14%

NW Europe5%

Caribs/EC Mex14%

S America10%

Suezmax Weekly Spot Fixtures by VolumeLoad Area (9th Nov - 16th Nov 2011)


17/11/2011

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Aframax

It has been a fairly uneventful week in the North Sea and Baltic. Only a handful of cross-North Sea fixtures were con-cluded, leaving the tonnage list growing by the day. Rates have remained unchanged since this time last week i.e. 80kt x ws96.25 and it remains to be seen whether they will go any lower, considering the current earnings for owners. In the Baltic, November stems have now all but been covered, leaving a bleak outlook for owners in the North Sea and Baltic. Primorsk/UKC rates have indeed also remained where they were this time last week at 100kt x ws80.0. Owners will be tested when early December stems come into play to keep rates above the ws80.0 level as it is inevi-table charterers will push for this, considering the way the market is taking shape at the moment. Aframax fuel oil de-mand has also been notably quieter this week. Generally, if the crude cargoes are hard to come by, this will help pre-vent the market from free falling. The Mediterranean and Black Sea witnessed a substantial amount of enquiry at the beginning of this week. Despite counting over 15 prompt ships on the tonnage list at one point, the demand was significant enough to see fixing levels rise. Having dropped as low as 80kt x ws82.5 for the cheaper voyages, currently charterers are paying 80kt x ws85.0 and ws87.5 for a Ceyhan load – the more expensive run for owners. For a Med cargo going up to the North Sea, Owners are now being fixed at ws5.0 points more at 80kt x ws85.0. Consequently, we can estimate now that a Black Sea to Med voyage is worth in the region of 80kt x ws90-92.5 for no heat crude. This said, today activity has been very quiet, and with such a deep tonnage list, it doesn't take much for the positive sentiment to be withdrawn from the market. At present, we can call the market at best flat to flat-strong, but by tomorrow, if demand doesn't pick up again, it will be flat-soft. As we anticipated last week, the Caribbean market firmed as charterers met stronger resistance from owners, which in addition to tonnage thinning has meant rates are currently up to 70kt x ws122.5. There has been a slight hold off by charterers, but we still expect rates to firm slightly further as next week we expect to see further increased enquiry.

NW Europe50%

Med/Red Sea42%

USA3%

India East5%

Aframax (West of Suez) Weekly Spot FixturesIntended Discharge Area (9th Nov - 16th Nov 2011)

Baltic33%

N Africa/E Med42%

Black Sea12%

UK Cont7%

USA3%

W Africa3%

Aframax (West of Suez) Weekly Spot FixturesLoad Area (9th Nov - 16th Nov 2011)


TD7 80,000 Sullom Voe Wilhelmshaven ws96.25 ws96.25

TD8 80,000 Mina Al Ahmadi Singapore ws110.0 ws109.5

TD9 70,000 Puerto La Cruz Corpus Christi ws122.5 ws109.5

TD14 80,000 Seria Sydney ws105.0 ws103.0

TD17 100,000 Primorsk Wilhelmshaven ws80.0 ws80.0

TD19 80,000 Ceyhan Lavera ws87.5 ws85.0


17/11/2011

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TD3 - 260 - Ras Tanura - Chiba TCE

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TD5 - 130 - Bonny - Philadelphia TCE

2009

2010

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80,000

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TD7 - 80 - Sullom Voe - Wilhelmshaven TCE

2009

2010

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-5,000

5,000

15,000

25,000

35,000

45,000

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TD9 - 70 Puerto La Cruz- Corpus Christi TCE

2009

2010

2011


17/11/2011

LR2 activity has picked up a little as December stems start to get picked off by the Korean and Japanese companies. However, rates are stuck firmly at the bottom with ws100.0 on subs and little to encourage any improvement looking for-wards. The opening up of the gas oil arbitrage from east to west has seen some ships taken to move oil in that direction which may be a useful clearout of tonnage. With newbuildings all but gone now until the New Year, it may at last be a chance for the coated ships to fix. The lack of activity on naphtha from the Middle East has created a tight tonnage list for ships in the North Asia region. LR1s have been very quiet, most of the cheap ships seem to have been cleared out, so we may well see a bounce in rates as remaining owners refuse to fix below levels around ws125.0, with ws115.0 the last done to Japan. Short haul business continues to dominate as owners just try to keep their ships moving and refuse to buy into the very low freight rates for longer voyages. MR activity remains brisk but rates are stable.

CP

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Clean Products - East

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TC1 - 75 - Ras Tanura - Yokohama TCE

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TC5 - 55 - Ras Tanura - Yokohama TCE

2009

2010

2011


TC1 75,000 Ras Tanura Yokohama ws102.5 ws102.5

TC5 55,000 Ras Tanura Yokohama ws115.0 ws117.0

TC4 30,000 Singapore Chiba ws155.0 ws153.5

TC12 35,000 WC India Japan ws152.5 ws148.5


17/11/2011

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Clean Products - West

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TC2 - 37 - Rotterdam - New York TCE

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TC3 - 38 - Aruba - New York TCE

2009

2010

2011


TC2 37,000 Rotterdam New York ws147.5 ws152.5

TC3 38,000 Aruba New York ws160.0 ws161.0

TC6 30,000 Skikda Lavera ws145.0 ws144.0

In the Continent. It has been a surprisingly lacklustre and directionless week. Any expectations of a pre-Thanksgiving upturn have proved to be utterly unfounded on both sides of the Atlantic. As a result, even though the pool of avail-able tonnage is smaller than it has been in recent weeks, activity has been commensurately lower as well, with all too predictable results. Starting at a soft 37kt x ws155.0, levels are now down to ws147.5, and what few cargoes there are are now for loading beyond the 25th/26th, with reasonable tonnage availability prior to that keeping the pressure on rates. Looking forward to next week, the Thanksgiving holiday on Thursday/Friday will obviously mean a short-ened week’s trading with a very quiet second half. Whether this will leading to a rush to fix early next week remains to be seen, but with the weakness in evidence at the moment it will take a significant amount of activity to have a notice-able impact on rates. The Mediterranean this week has stabilised up from 30kt x ws142.5 to ws145.0, but that's realistically all that can be said. There has been enough activity to keep the prompter units getting fixed but not enough for there to be any chance of a rally. Trans-Atlantic business has been ticking over, but mirroring the Continent, rates are softening from 35kt x ws160.0 to ws155.0 and potentially lower. The Caribbean market has stabilised this week after a slight wobble, but like the Continent, there has been no sign of the generally anticipated pre-Thanksgiving spike, as rates softened slightly to 38kt x ws155.0 before showing a slight rally to 38kt x ws160.0. Back haul has remained flat at 38kt x ws122.5 and as with the Continent, it will take a signifi-cant amount of early activity next week to impact rates before the country shuts up shop for their major annual holi-day.

17/11/2011

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The capesize market has seemingly lacked real direction in recent days, but owners’ confidence in the East has been buoyed by news of strong Atlantic rates being fixed mid-week. With just the one major in the East being active at the start of the week, we have seen little excitement in the Pacific. Despite this, a floor was seemingly found at the US$10.50/tonne level and with the ever more attractive option of ballasting on the cards, we feel owners were waiting for rates to improve. At the time of writing, there are rumours of US$11.25/tonne fixed for early December dates. With the onset of winter in China and a predicted record level of energy demand, RBCT coal cargoes to China have also been on the rise. Front haul rates have been variable. A mid-week TC fixture was done at US$54,500/day for a modern 180,000 dwt vessel loading in Narvik bound for the AG. There has been a gentle increase throughout the week on voyage, reach-ing US$29 basis Tubarao/Qingdao. Tonnage in the north Atlantic remains very thin, although we have seen an in-crease in ballasters from Chinese owners reaching for mid-December dates. There was some interest at the start of the week concerning period, with owners’ ideas increasing from US$17,500/day for a year at the start of the week up to US$21,000/day at the time of writing. We feel we are not quite there just yet, however it's worth a shot. Short period has been fixed at US$19,500/day for four to six months. As it stands, charterers have taken a backward step when discussing long period for obvious reasons.

Capesize

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The Baltic Capesize Index vs Atlantic & Pacific Earnings

Atlantic Pacific BCI

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17/11/2011

Despite a very slow start to the week, Atlantic activity is starting to kick up a notch with more grain cargoes coming into the market from the US Gulf and EC S America. So far, charterers preferences have been for 1-10 December positions and with early December positions slightly on the short side, we anticipate Atlantic rates to start climbing up again from next week. The decline in hire rates have stabilised in the Pacific. However, there is a significant gap in the physical rates which appears to be nestling around mid-US$12,000/day versus US$13,500-14,000/day. Some uncertainty remains about the market trend for next week. In the period market, charterers appear to be less active and seem to have their sights on 1Q 2012 for better long term deals.


Panamax

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The Baltic Panamax Index vs Atlantic & Pacific Earnings

Atlantic Pacific BPI

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17/11/2011


Whilst we are seeing more activity and cargo enquiry up to mid-December, there is still a lack of prompt requirements for the spot handy/supramax tonnage open in the Far East and SE Asia. SE Asia positions have also been affected by the lack of cargoes from Thailand as a result of the recent floods. However, the fall in rates has started to slow and the market in the Atlantic has improved with firmer rates being seen. The Far Eastern market has shown a slowdown on the fall in rates but there are still concerns over a real upturn in the market. An increasing number of owners are not willing to fix at rock bottom levels with forward laydays and long bal-lasts. On the other hand, the number of spot and prompt vessels is still very high and as a consequence owners find it still difficult to push rates up. Handysize vessels seem to be enjoying more loading out of N China, S Korea, CIS Pacific rather than SE Asia where a lack of Thailand cargoes is also having an impact. The East Indian market has picked up slightly out of the doldrums of the last two weeks, but still cannot be classed as any form of recovery. Rather, it appears to have bottomed out. More orders have been appearing on the market for supramaxes, however these would only be for December dates. Current vessels in the area are having to fix with load-ing ex-Indonesia or Australia. Currently, rates are around the US$8,000/day mark for a supramax. It has been another stable week for handys on the Continent, with a steady but slow continuation of orders and some new tonnage. We have seen several new scrap orders to E Med in the market, with owners rating high teens. Trips to EC S America and US Gulf at the same levels as last week US$9,000-11,500/day, depending on duration etc. Trips to the Far East are seeing levels in the low US$20s. The Continent has remained solid again this week on the handymax and supramax market. Supramaxes are still able to achieve around mid-US$20s for trips to E Med with scrap. Supramaxes are also achieving mid/upper US$20s for trip to India routing via the Cape. On the whole, the market here has been steady and despite a marginal tonnage increase on the larger sizes and more expected to come in the next month, owners will not be too unhappy with these rates as demand remains healthy. The US Gulf market proves to be the strong loading area once again. Not too much has been reported in this sentiment driven week. There is still a good amount of November tonnage in position there, aiming for respectable rates to the East. Although the index has kept its direction, supramaxes held their value, finding much needed cargoes. Ballasters seemed to be the charterers’ choice as a 53,000 dwt vessel has been rumoured to have gone at close to US$34,000/day APS for a trip to the Far East.

Handy/Handymax/Supramax

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The Baltic Supramax Index vs Atlantic & Pacific Earnings

Atlantic Pacific BSI


17/11/2011

China iron ore imports rise China has imported around 560m tonnes of iron ore up to October this year, an increase of 11% on the same period last year. Surprisingly, these figures were achieved despite an 18% decline in iron ore imports for the month of Oc-tober and an average iron ore price of around US$166/tonne, which is 33.5% higher than in 2010. China’s yearly domestic iron ore production through to October this year was estimated to be around 132m tonnes, a 41% increase compared to last year, according to the National Bureau of Statistics of China. China steel production in October down China’s steel production was around 73m tonnes in October or a decrease of 4.3% month-on-month. BHP approves development of Orebody 24 BHP Billiton has approved a US$698m investment to develop its ‘Orebody 24’ iron ore mine in Western Australia. Orebody 24 will have production capacity of 17m tonnes per year. Production from the new operation will com-mence in the second half of 2012. NYK receives new Capesize NYK has taken delivery of a 250,000 dwt capsize vessel named Wozmax. The vessel will be mainly used for W Australia/China iron ore trades. India sugar exports to possibly increase It is expected that yearly sugar output in India will be 26m tonnes this year, compared with 24.3m tonnes last year, according to the Indian Sugar Mills Association. Producers are anticipating exports to increase to 4m tonnes com-pared to 2.6m last year, based on the better than expected harvest. Japan buys corn from Ukraine Japan bought about 800,000 tonnes of corn from Ukraine last month after the country removed a tax on exports. Japan has imported 7.3m tonnes of corn in the nine months ending September 30. Japan sourced 90% of its corn last year from the United States, however drought has lead to Japanese importers seeking cheaper alternatives. Australia cotton record output expected It is expected that cotton output in Australia will be 5m bales, up from 4.5m bales in 2010, a 25% increase year-on-year. Cotton exports from India are also expected to rise by 14% to 8m bales weighing 170kg each starting from Oct 1, according to the Joint Textiles Commissioner of India. The International Cotton Advisory Committee expects China’s imports to climb to 3.3m tonnes in the year ending July 31, an increase of about 22%.

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ering

17/11/2011


Activity was certainly on the rise this week, with a large number of fixtures concluded, especially in the panamax sector. It must be said, however, that although the market saw a spate of requirements, a number of these were merely from charterers looking to gauge the potential competition for an extension candidate. Two major lines have been particularly active, taking advantage of cheap relet tonnage as well as fixing vessels for relatively long periods, some of which have been off forward positions. This suggests that these major players be-lieve there is little room for rates to drop further as we approach OPEX levels in the larger sizes. It also implies that owners are wary of the continued rise of the idle fleet which is predicted to increase by 50% to 600,000teu by the end of the year; this from a low of 100,000teu earlier in the year. These owners are therefore prepared to risk miss-ing out on possible rises in the charter market later next year in order to secure employment in the nearer future. Meanwhile charterers are continuing to look for ever more flexible periods, using this flexibility to provide the oppor-tunity to renegotiate rates after the minimum period has elapsed; a strategy that contains all the benefits to charter-ers of having an option but with added flexibility and no escalation in rate. With the historically high price of bunkers contrasting with low charter rates, vessel positioning has become an in-creasingly costly exercise for owners, especially when discounted against the daily hire rate of a short/flexible period. This has been a sticking point with negotiations as charterers are reluctant to entertain thoughts of a ballast bonus when the market is strongly in their favour. As we approach the year-end, it will be interesting to see whether the other major lines follow suit and capitalise on cheap rates thus helping to soak up some of the idle tonnage, or whether there simply aren't the volumes and mar-gins there to justify this action.

Containers

64.93

Vessel (Teu/Hmg) Gear Speed Knots Index + / -510/285 Gearless 15.5 4.11 ► 0.00

700/440 Gearless 17.5 4.90 ▼ 0.10

750/415 Geared 16.0 5.25 ▼ 0.11

1000/650 Geared 17.5 5.75 ▼ 0.10

1100/715 Geared 20.0 6.67 ▼ 0.17

1350/925 Geared 20.0 5.24 ▼ 0.03

1600/1150 Gearless 18.0 6.36 ▼ 0.13

1700/1125 Geared 19.5 5.67 ▼ 0.19

1740/1300 Geared 20.5 6.05 ▼ 0.14

2000/1600 Geared 21.0 2.40 ▼ 0.17

2500/1900 Geared 22.0 4.26 ▼ 0.22

2800/2000 Gearless 22.0 4.05 ▼ 0.23

3500/2500 Gearless 23.0 2.55 ► 0.00

4250/2800 Gearless 24.0 1.67 ► 0.00

Index Total 64.93 ▼ 1.63

Documents

Container Thursday, 17 November 2011 Financialfiles.irwebpage.com/reports/shipping/0vbkwB5MWe...Keeping this huge fleet employed in the longer term will be difficult, but demand and