Tuesday, December 16, 2008
Imarex Brief 16th December 2008
Tankers
Crude
VLCC Ag/East: ws 82.5 ($72 k/day) same
Suezmax Wafr/Usac: ws 147.5 ($57/day) slightly firmer
Turkish Straits delays: 2n / 2s steady
V activity has been negligible…leaving us to guess what January will bring. It’s
currently a waiting game ‐ which has been known to bring rate volatility to this
contest of musical chairs we play. At moment, there are plenty of chairs to go
around…but let’s see how many there are at the given moment that the music is
stopped. With reports that the strike in Lavera has ended, regional position
lists should soon start to shorten and sentiment should begin to come off
accordingly. Activity in Wafr has been good.
>From the ATS Report: “ China’s National Bureau of Statistics showed that the
country’s level of crude processing recorded the biggest drop in five and a half
years in November.” Crude is up 2% to about $45.50 as the world awaits word from
OPEC tomorrow. We know they will cut – and we know they will cut a lot. The
questions become – will they cut 2 million bpd or more…and most importantly, can
they abide by their cuts.
Henrik With at DnB estimates that a production cut ranging from 1.5 to 2m bpd
will reduce demand for VLCCs by about 45‐55, depending on your input assumptions
for AG/East versus AG/West.
Crude FFAs have seen moderate volumes. TD3 Jan and Feb trade flat at 59 and 57.
TD5 Dec trades flat at 160, just below the MTD value of 163, while TD5 Feb also
trades flat at 80.
Clean
37k Cont/Usac: ws 175 ($16k/day) same
38k Caribs/Usac: ws 165 ($14k/day) same
55kt Ag/East: ws 157.5 ($23.5k/day) touch softer
In the Atlantic basin, Cont/ta and Caribs/up remain the same – though we are
seeing good activity on the Usg/Europe route, as the arb is reported as wide open
for ULSD. In the East, it appears that some MR rates ex‐Spore have bumped up a
few points – though this hasn’t helped LR1s ex‐AG, as they continue their daily
giveback.
Clean FFAs have seen decent volumes. We have seen some trade along the TC2
forward curve, Q2 thru Q4 09 – though crystal ballers are betting that this
market stays flat for the year. Today’s pricing for 2009 Q1 thru Q4: 134 / 130
/ 130 / 132. Yawn. In the East, TC4 trades flat for Dec (193) and for the Cal
09 (130). TC5 Jan loses 6 points to 112.
Dry Bulk
BDI 828 up 25
BCI 1514 up 60
BPI 480 up 30
BSI 481 down 5
BHSI 300 down 4
Another decent day for Capes and Panamaxes. Before we see a major surge in rates
we will need to first see the lengthy position lists chipped away. Activity is
better, as is sentiment…though we have dug ourselves quite a hole which now
requires climbing out of. This will not happen overnight, though the steady
gains from the past week are a good start.
Dry Bulk FFAs
Contract Close Current Diff
======================================
BDI Dec 800 775 ‐25
BDI Q1 1675 1550 ‐125
BDI Q2 2000 1875 ‐125
CS4 Q1 $16,531 $14,500 ‐$2031
CS4 Cal 09 $21,102 $19,250 ‐$1852
PM4 Q1 $10,073 $9,000 ‐$1073
PM4 Cal 09 $13,212 $12,250 ‐$962
SM6 Q1 $9,013 $8,350 ‐$663
SM6 Cal09 $10,770 $10,500 ‐$270
Volumes are “fair” as prices give back some of their recent gains. Sentiment has
gone from an Armageddon outlook two weeks ago to one of mixed emotions today.
The recent gains made first by Capes and then by Panamaxes have provided hope
that the worst is behind us. On the other hand, however, we have concerns that
the global downturn may turn out to be prolonged, thereby minimizing demand for
raw materials and the ships that transport them.
Equities
In ratings news…
‐ Natasha Boyden downgrades OCNF to HOLD (from buy) and reduces target to $4
(from $10). Among other items, she cites their aging fleet, suspension of
dividend, high leverage and covenant issues.
‐ Urs Dur maintains a BUY on DSX ($14). He lowers 2009 estimates on recent
charters but believes dry bulk outlook appears to be improving off of recent
lows.
‐ Kevin Sterling maintains a BUY on ANW ($25), citing the recent buyback
announcement as evidence of ample liquidity.
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