Graph 1 : Shipping stocks since end of October 2018DSX, SBLK, SALT and GOGL equally weighted. Source : Bloomberg
Major bulk shipping companies gained an average 3.7% (on an unweighted basis) over the month, while their fellow tankers (transporting crude oil and petroleum products) rose 16.3% (also unweighted).
Spot market freight rates for Capesize and Panamax bulkers fell further from the decade record high reached at the end of August (when the Baltic Dry Index hit 2378), towards a more normal but still strong level (Baltic Dry Index at 1731).
One-year time charter rates were more or less flat in October, at ca. USD 20,500 /day for Capesize vessels and ca. USD 13,000 /day for Panamax vessels.
Freight rates in the dry bulk market should remain stable through at least the end of the year. Numerous vessels are scheduled for several weeks of dry docking (to install scrubbers), which will reduce the available capacity, while demand for transport tends to peak towards year-end.
In the tanker market, charter rates remain quite healthy, especially for larger vessels operating in the “dirty” segment (transport of crude oil). Spot rates for VLCCs (Very Large Crude Carriers), Suezmax and Aframax vessels more than doubled following the US sanctions announced in September against Chinese ship owner COSCO, which runs one of the biggest tanker fleets in the world. Given the considerable number of large tankers in, or heading into, dry dock for scrubbers to be installed, and with refineries working at full speed to produce IMO 2020-compliant low sulphur fuel oil and marine gas oil, freight rates will remain strong for the next couple of months. As regards product (“clean”) tankers, after a difficult summer of low freight rates, the situation reversed in the latter part of October. Long-range product tankers switched to the “dirty” segment, reducing the available capacity to transport “clean” products. Freight rates for medium-range and Handysize product tankers thus moved up significantly, and can be expected to remain strong through at least the spring of 2020.
Update : 11/2019