Monday, December 22, 2008
Imarex Brief 22th December 2008
Tankers
Crude
VLCC Ag/East: ws 70 ($55 k/day) down 10 points
Suezmax Wafr/Usac: ws 130 ($50/day) rates have stabilized
Turkish Straits delays: 2n / 2s steady
Exxon dropped the hammer on the V market, and are reported to have done a twofer at ws 70 on
Friday. We knew momentum had slowed – and we knew that at some point the OPEC cuts
would hurt demand…but we did not expect a 10 point move on short notice. What we do know,
and have always known, is that anything is possible in this market. Anything.
As we enter the holiday week, FFA volumes are light. TD3 Jan trades down 1 point to 45. If the
physical market continues to dig deeper, we would expect Jan to keep moving the same way.
Clean
37k Cont/Usac: ws 190 ($18k/day) same
38k Caribs/Usac: ws 165 ($15k/day) same
55kt Ag/East: ws 145-150 ($22.5k/day) the slide has stopped
>From Trygve Skaar at Southport Maritime: “We have seen a few more ships taken out for
Cont/States runs and the rates being fixed are at about WS 190 level. We have seen a couple of
ships being fixed for early January loading as well around these numbers, but with 2008 flat rates
to apply. But, as we are in the Christmas week, and we only a couple of trading days left for the
year, it is probable that things will start to quiet down. The Caribbean market is non eventful and
the market is steady at WS 165 level for the regular 38,000 MT cargo liftings. True, we have
seen a few fixtures in excess of WS 170, but that is not the market, in our humble opinion. USG
export cargoes are still being fixed, and there is still a big gap between the high and low rates,
but we are pegging the market at about WS 120 as we have seen ships being fixed below this
number as well and we have a few owners willing to do this level, which still makes sense.”
Clean FFAs are exceptionally quiet today. With most of Dec already priced in – there is little
incentive for trading. TC2 Jan: 147, TC4 Jan: 130, TC5 Jan 119.
Dry Bulk
BDI 801 down 17
BCI 1373 down 50
BPI 583 up 8
BSI 442 down 12
BHSI 288 down 4
>From Commodore Landsberg’s Weekly Physical Update: Indian iron ore exports have finally
come back down to normal levels. 8 Indian iron ore fixtures were reported last week, 14 less than
the week before. China has started to take more iron ore from Brazil and Australia - a possible
sign of iron ore contract negotiations concluding much earlier than originally expected. Vale has
already been able to sign long-term agreements with two small Chinese steels mills, Jingcheng
Fushang Company and Zenith steel mill.
Dry Bulk FFAs
Contract Close Current Diff
======================================
BDI Dec 745 745 -flat
BDI Q1 1225 1225 -flat
BDI Q2 1500 1500 -flat
CS4 Q1 $12,844 $12,750 -$94
CS4 Cal 09 $17,664 $17,600 -$64
PM4 Q1 $8,773 $9,000 -$227
PM4 Cal 09 $11,820 $11,750 -$70
SM6 Q1 $7,906 $8,125 +$219
SM6 Cal09 $9,773 $9,750 -$23
More from the Commodore: 10 dry bulk vessels were reportedly sold for scrap last week. The
ships’ ages ranged from 24 to 31 years old and included 8 Handysize and 2 Panamax vessels.
Scrap prices are holding steady at $230 to $285/ldt, on par with last week’s levels.
Equities
In ratings news…
- Omar Nokta maintains a HOLD on EGLE, and remains cautious on both Eagle and the dry bulk
group in general on concerns of reduced worldwide industrial production.
- Scott Burk maintains a PERFORM rating on EGLE. He has reduced 2009/2010 estimates,
though believes cutting the dividend will enhance liquidity.
- Justin Yagerman maintains a MARKET PERFORM on EGLE ($6-7). He lowers 2009
estimates and feels the sector as a whole faces too much headline risk.
- Justin Yagerman maintains a MARKET PERFORM on TNK ($8-10). He lowers 2008 and
2009 estimates though believes their increased charter coverage should help support dividends.
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