Tuesday, November 04, 2008
Imarex Brief 4th November 2008
Tankers
Crude
VLCC Ag/East: ws 70 ($47,000/day)
Suezmax Wafr/Usac: ws 170 ($65,000/day)
Turkish Straits Delays: 2.5 north / 1.5 south (no change)
We are just about 2/3rds of the way through finishing up November requirements – assuming that we will
see the standard 105 cargos or so. We had heard of a 72.5 reported AG/East – but many expect next
done to be at the ws 70 level.. At this stage, the person who knows for sure just how many November
cgos we will eventually see is the one who will make money here. Today’s atmosphere, in all markets,
limits certainty as to how accurately past data can be used to explain what is in front of us today. Qatar
has confirmed today that they have cut exports by 40,000bpd, in line with their quota. However, I have
been reading reports that the Saudi’s have yet to cut. The House of Saud holds the key. As I hit send,
Reuters is reporting that the Saudis have already made substantial cuts. Though credit markets are
reported to be thawing – it is hard to gauge true demand even in the very short term. The Wafr/Usac
Suez market is still showing good returns, though rates have come off their recent highs.
Crude oil is up about $2 to $66 – as the Alpha Male FRO continues its reign of terror on short-sellers. It’s
up 10% in pre-market NYSE on very good early volume. When you doubt JF, these things tend to
happen.
TD3 FFAs have seen fair activity. Though Nov trades flat at 70, Dec trades up 4 points to 72. While the
small move doesn’t mean we are breaking out the punch bowls, it does provide a bit of optimism in an
otherwise cruddy backdrop. TD7 Nov trades down 6 points to 130 on good volume.
Clean
37kt Cont/Usac: ws 185 ($16k) 55kt AG/East: ws 267.5 ($45k)
Though fixing activity has been fair, Cont/Usac has slid a bit further. We now have 185 reported on
subs. Caribs/Usac is still in a trance, with rates still at about 165 ($13k). Though naphtha prices moved
up off their recent 5 yr low, petrochemical demand in China has continued to wane alongside their
shrinking exports, according to the ATS Report. The resulting minimized demand is having a discernable
impact on Ag/East routes. Other trade lanes in the East are either losing ground – or steady but soft.
TC2 has seen limited trading today. With spot coming down, the curve is beginning to flatten as most
expect Nov and Dec to settle at about 185 throughout. In the East, activity has been better. Despite a
softening spot market and a weak naphtha price, TC4 Dec gains 5 points to 215 while TC5 Dec adds 9
points to 192.
Dry Bulk
BDI 815 down 12
BCI 1211 down 22
BPI 679 up 17
BSI 531 down 28
BHSI 312 down 6
If you wait long enough, non-negative things can happen. We see the BPI up a few points, and we also
hear of increased period demand in the Panamax sector. Commodore Landsberg is impressed by the
sudden period demand – calling it a “good sign”. The equities tend to agree – and continue their move
north. The futures, however, are still waiting for further confirm that a turn in the physical market is at
hand.
DryBulk FFAs
Contract Close Current Diff
======================================
BDI Nov 1300 1300 flat
BDI Q1 1850 2000 + 150
BDI Q2 2450 2600 + 150
CS4 Q1 $13,750 $14,500 + $750
CS4 Cal 09 $19,211 $20,250 - $1039
PM4 Q1 $10,638 $11,250 + $612
PM4 Cal 09 $13,625 $14,250 + $625
SM6 Q1 $9,469 $10,250 + $781
SM6 Cal09 $11,461 $12,500 + $1039
Today’s futures commentary comes to us from Anders Staubo Nordahl – the Seer of Baerum: “We are
seeing more action this morning as we are actually trading slightly up. Yesterday’s news of Vales
withdrawal from the price demands may have had an effect, though there is probably no reason to cheer
quite yet. Freight rates remain low, 2hand prices are down and although we heard rumours of Capes
sent to scrapping, the scrap market is also under pressure from the downturn, as prices remain weak.
Lloydslist report that there are still no new cargo flows in the Pacific, and “another dim week” is expected.
Equities
The NM/GNK spread did provide a few windows of opportunity to unwind the pairs trade at a profit – but
you had to move quickly. This trade still appears to offer a decent spread – but do not fall into the trap of
betting everything, and saying to no one in particular “This spread cant possibly get any wider”. George
Glass calls me every day to assure that any spread can always get wider. Also of note was the
GMR/OSG divergence yesterday. George Glass jumped on the G-Team bandwagon once again with
both feet, though he hedged with an equal short position on the top side.
In ratings news…
- Greg Lewis maintains a NEUTRAL on OSG ($75). He notes that today’s turbulent markets will create
winners and losers – and that OSG should be one of the Winners. (His note was released Sunday – and
should have been included in my report of yesterday).
DRYS
- Omar Nokta maintains a HOLD on DRYS, pointing out that the combined rig value and dry bulk value
adds up to about $21 – in line with the current price.
- Natasha Boyden maintains a BUY on DRYS ($35), significant shareholder value tied up in the planned
UDW spin-off, though she expresses concern on DRYS high spot exposure.
- Anders Rosenlund maintains a SELL on DRYS ($10), citing increased concerns on counterparty risk
and deteriorating asset values.
- Greg Lewis maintains an OUTPERFORM on DRYS ($50). Though he sees the drillship spin-off as “on
track”, he does seek more clarity on dry bulk counterparties.
Other
- Kevin Sterling maintains an OVERWEIGHT on SBLK ($9).
- Omar Nokta maintains a HOLD on SB ahead of the conference call.
- Charles Rupinski maintains a BUY on DAC ($44) based on the 7+% dividend yield on cash flow from
the completed fleet.
0 comments:
Post a Comment