Wednesday, October 29, 2008
Imarex Brief 29th October 2008
Tankers
Crude
VLCC Ag/East: ws 70 ($46k)
Suezmax Wafr/Usac: ws 160 ($60k)
Turkish Straits Delays: 1.5 north / 1 south
We have seen some increased activity in the past 24 hours – though rates are still declining. The position
list appears ample as we are still less than halfway through the expected fixing activity for the AG. Cal
Maritime’s Stetson-wearing-finest tells me that on Oct 29th of 2006 we also saw less than half the Nov
program concluded at that point in time. Recall that 2006 was a year with a very strong Q3 and a not-sostrong
Q4. This doesn’t mean that things will continue to weaken – but it is another indicator that the Q4
rally might be behind us. The good news of course is that the Wafr/Usac route has pushed up to 160. I
am not sure that Suezmaxes will lead a turnaround for the whole market, but good news is good news.
Also worth noting is that even with certain Worldscale rates on the decline, earnings are holding up
relatively well due to the falling bunker price.
Crude FFAs are in abeyance. With TD3 Nov and Dec at ws 68 – the forward curve is pancake flat.
Though the spot mkt on TD5 shows strength – the Nov FFA sits at 135 and Dec at 125, implying the party
will not last – if you accept the opinion of those with crystal balls.
Clean
37kt Cont/Usac: ws210 ($17k) 55kt Ag/East: ws 295 ($50k)
We have seen enough Atlantic basin activity to keep Cont/ta rates at the 210 level – though the
Caribs/Usac market still struggles at a soft 170 ($11k). The Usg/Europe route is enjoying an open diesel
arb, though not enough to bring life to the doleful Caribs mkt. Asian clean markets continue to soften –
with most routes losing another few points overnight.
Clean FFAs are quiet. TC2 Nov and Dec sit only a few points above the current spot level. This is
certainly not bad news – but nor does it represent any significant good news. A Cal 2009 deal was done
on TC2 at 151, a welcome increase of 2 points. Asian clean FFAs have come off a touch as well, though
volume is quite limited. TC5 Jan comes off 5 points to 127, while the Q1 falls 8 points to 122.
EIA Expectations – Reuters Poll
Crude + 1.3
Mogas + 1.2
Dist + .9
Dry Bulk
BDI 925 down 57
BCI 1345 down 55
BPI 736 down 66
BSI 655 down 46
BHSI 368 down 22
The market remains weak – with little or no positive signs emerging. There really isn’t much for me to
add.
Dry Bulk FFAs
Contract Close Current Diff
======================================
BDI Nov-Dec 1350 1125 -225
BDI Q1 1800 1525 -275
BDI Q2 2400 2000 -400
CS4 Q4 $12,751 $11,500 - $1251
CS4 Q1 $15,031 $13,250 - $1781
CS4 Cal 09 $21,411 $18,500 - $2911
PM4 Q4 $9,341 $9,341 - $1091
PM4 Q1 $11,050 $9,750 - $1300
PM4 Cal 09 $15,138 $13,250 - $1888
SM6 Q4 $9,565 $9,000 - $565
SM6 Q1 $10,125 $9,500 - $625
SM6 Cal09 $12,344 $11,750 -$594
Though volumes have improved a touch, the outlook remains funereal. As soon as I see good news, I
will report it. Today is not that day.
Equities
Many thanks to all those who helped close the GMR/FRO squeeze trade yesterday. It took time, but
George Glass finally made a few ducats on the transaction and was able to pull American Girl Doll Ebay
auction before someone claimed his kids Christmas gifts (from last year no less).
Anyone who has not read the press release from Britannia Bulk (DWT) – I would suggest you do so
regardless of whether you trade equities – or regardless of what shipping sector you are a part of.
http://biz.yahoo.com/iw/081028/0446976.html
In ratings news…
- Jonathan Chappell has lowered his rate and EPS estimates for dry bulk due to softer global demand,
though he is not changing his existing ratings for the names under coverage: DSX – Neutral, EGLE –
Overweight, GNK – Overweight, NM – Overweight. “Too late to sell, but too early to buy” is how he
sums up the environment.
- Scott Burk has decreased earning estimates for the tanker and dry bulk names under coverage, though
he maintains ratings as follows: GNK – Outperform, DSX – Outperform, CPLP – Outperform, GMR –
Perform, NAT – Perform, OSG – Perform, DRYS – Perform, EGLE – Perform, EXM – Perform
- Henrik With maintains a BUY on Golden Ocean. Read the note.
- Anders Rosenlund maintains a HOLD on Golden Ocean ($8). Read the note.
- Henrik With maintains a SELL on Exmar and expects to lower his target price. He cites weak operating
results and a poor LPG outlook going forward.
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