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Thursday, November 06, 2008

Imarex Brief 06 November 2008


 

Tankers Crude
VLCC Ag/Ea

 

st: ws 70-72.5 ($48,000/day)
Suezmax Wafr/Usac: ws 165 ($63,000/day)
Turkish Straits Delays: 2.5 north / 1.5 south (no change)
The AG fixing pace remains measured and rates largely unchanged. 72.5 was done on a replacement
deal, but other than that – status quo. We are now above 70 cgos for Nov – a fact which bears say
shows that demand has collapsed, while bulls feel that more cgos will indeed come to market and help
push rates into quasi-rally mode. Last year at this time, rates were at pretty much these same levels – yet
by mid-December they were at about ws 190. Things are different this time around though. Much
different. An explosion on the Kirkuk-Ceyhan pipeline will stop the flow of some 480k bbls/day until
repairs can be made. Some believe the pipeline can be repaired within 4-5 days.
Crude oil is down about $2 to $63.25, though Angola is reported to have implemented a 99,000bpd cut in
accordance with their OPEC quota. Global demand is still sketchy at best. FRO took a dive yesterday
alongside the price of crude and is showing itself down another 3% in pre-market NYSE.
Another slow day in TD3 FFAs. Spot, Nov and Dec all remain in the low 70s. Yawn!
Clean
37kt Cont/Usac: ws 175 ($14.5k)
38kt Caribs/Usac: ws 165 ($13k)
55kt AG/East: ws 255 ($43k)
Atlantic basin rates remain soft as Cont/ta loses another 5 points, as lack of demand in both directions is
apparent. Though some Eastern routes have held on the past day or so, others have given back more
ground. The trend remains soft.
TC2 FFA volumes have been fair with prices showing some upside. TC2 Dec trades up 5 points to 192,
while Q1 adds 11 points to 154. In the East, volumes have also been fair. TC4 Dec loses 2 points to 210
while TC5 Dec adds 9 points to 213. TC6 Cal 09 trades up 6 points to 165.
Dry Bulk
BDI 839 up 13
BCI 1162 down 23
BPI 831 up 59
BSI 521 up 9
BHSI 299 down 3
Not the worst set of numbers in terms of overnight changes, though in absolute terms – they are still ugly.
But we know this market is only as good as tomorrow’s numbers – so the trend provides hope. Further, it
appears that pent up demand for grain shipments is finally coming out based on the large amount of
Panamax vessels taken out of NoPac. There is still plenty of bad news out there, but finally we see some
hope. Additionally, Platts is reporting that spot market ore prices into China have reportedly stopped
falling. Back to the negative side…vessel asset prices are still under serious downward pressure.
DryBulk FFAs
Contract Close Current Diff
======================================
BDI Nov 1300 1300 flat
BDI Q1 2150 2000 - 150
BDI Q2 2725 2600 - 150
CS4 Q1 $16,406 $15,000 - $1406
CS4 Cal 09 $21,813 $21,000 - $813
PM4 Q1 $14,050 $12,500 - $1550
PM4 Cal 09 $16,100 $14,750 - $1350
SM6 Q1 $10,484 $9,750 - $734
SM6 Cal09 $12,504 $11,750 - $754
Volumes have been thin today as prices retreat. Though the big picture still appears ominous – some
relatively decent signs are emerging, though not enough to suggest a market turn just yet. The equities
provide a mixed and erratic glimpse at best.
Equities
The NM/GNK pairs trades went further pear-shaped in early trading yesterday, though nimble fingers may
have been able to add to their positions before just about everything turned south. The trade, starting last
week or so, is still very much underwater – and is showing signs of not coming back for a while. George
Glass has reduced his holdings for the time being.
- Glenn Lodden maintains a SELL on EGLE and reduces price target to $8, citing financing needs that
still need to be met and the current earnings valuation backdrop.
- Charles Rupinski maintains a BUY on EXM, however his estimates and price target are under review.
- Charles Rupinski maintains a BUY on EGLE, however his estimates and price target are under review.
- Glenn Lodden reduces d’Amico International to HOLD and sets a new target price of EUR 1.50.
- Anders Rosenlund maintains a HOLD on Odfjell ($7).

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