Friday Dry Bulk Report

Friday Dry Bulk Update:

The good news might be that this week is over. The numbers out of London show the only component indice in the green today is the BSI. Looking at the AG report we think the soups will enjoy the US harvest presently making its way down the river. We can expect high water levels to come into play both slowing the traffic and making barge rates rise, but nonetheless the soups will get loaded in the USG.

Spot:

Cape 4 T/C ~ $12,000 (-325)

Cape 5 T/C ~ $12,700 (-350)

BPI 4 T/C ~ $5,800 (-125)

BSI T/C ~ $7,100 (25)

BHSI T/C ~ $6,100 (-10)

Dry FFA:

The paper market started the day with Cape trades firming. The Panamax and Soups followed in kind…light volume Friday.

Q4-16

Capes $9,250 +250

Pmax $6,300 +100

Soups $7,000 unchanged

About that OPEC Cut

The OPEC cuts and what some of our favorite shipping seer’s are saying.

First, a quick note about our relationship with the analyst/broker community.

The analyst’s and ship brokers that send me their work have learned over the years that I can be trusted to present bits and pieces of the reports without letting out too much of the proprietary data. Said differently, I will extrapolate and paraphrase vs. cut and paste. I am not in the business of giving away another persons work. To reap the full benefits of the seer’s you should consider employing the service outright.

Greg Lewis – Credit Suisse

“An OPEC cut is a negative for tanker rates.” Greg goes on to point out the Saudi’s who normally ship export crude via VLCC’s through the AG will lose the most fixture volume. He also points out the deal vaguely outlines potential increases for other OPEC members that should partially offset the cuts in production.

Rob Perri – Axia Capital Markets

So, an OPEC Cap also happened, as on Wednesday night OPEC announced it would cap production at around 32.5 to 33.0 million barrels per day (in August OPEC produced 33.2 million barrels per day so this is up to a 700,000 barrel cut). VLCC rates rose 24.7% this week to $10,580 per day from $8,483 last week, while Suezmax rates increased another 27.3% to $38,397 per day from $30,157 per day. Aframax rates rose 38.2% to $16,839 per day from $12,185 last week.

Mike Webber – Wells Fargo

OPEC Clan Reunited? Still Hazy, But Any Regained Stability Helps
Positive For Marine MLPs/GPs/LNG, Marginal Negative For Tankers. OPEC Cut Agreement Seems Real, But Details Are Still Sketchy…First – What Do We Know? The details around the agreement are still hazy…Impact On Our Marine MLPs/GPs/LNG Names? We view the general notion of OPEC beginning to reestablish some control of pricing as a net positive for our Marine MLPs/GPs…Impact On Crude Trade Flows? Well, we had expected roughly 600-900 KB/d of incremental OPEC production in 2017E to support tanker tradeflows, mainly from Iraq and Iran….Impact On Our Tanker Names? Marginally lower volumes are obviously a negative for crude tankers, however…The Price Signal To North American Inland Producers Could Hurt Tanker Ton-Miles, Probably Neutral For Jones Act.

Andreas Wikborg – Arctic Securities

Vague OPEC deal can impact tankers in several ways / Dry bulk: State of confusion/ LNG: Spot rates remain at ease, but winter demand is on the rise…”Apart from details about the important monitoring and compliance issues (which have historically been poor, to say the least), the big question is still if the bulk of the burden will fall on Saudi, or if output from producers such as Iran and Iraq will be impacted heavily as well. Iran in particular is still aiming to boost output to pre-sanction levels north of 4mbblspd, and has until now been the piece to the puzzle that wouldn’t fit.”

Note: Seer pictured is none of the above mentioned seer’s.

Dry Bulk Ag Update

The Dry Bulk Ag Update:

From our friends at USDA

During the month of August, export grain inspections for the Great Lakes-St. Lawrence region are up 79 percent from the previous month, and up 58 percent from the same time last year. Inspections of corn and soybeans inspected for export in the region for August are up notably from last year. Grain shipments through the Great Lakes increased mainly due to increased demand for corn from Europe and Africa, and also because of higher demand for soybeans from Canada and China. During the last 4 weeks, Great Lakes export grain inspections are 44 percent above last year and 73 percent above the 3-year average.

For the week ending September 22, total inspections of wheat for export from all major export regions reached .921 million metric tons (mmt), up 52 percent from the past week, and 43 percent above last year. Weekly wheat inspections increased primarily to Asia, and were also the highest in 3 years. Inspections of corn increased 3 percent from the past week while soybean inspections dropped 49 percent. Total inspections of grain (corn, wheat, and soybeans) reached 2.63 million metric tons (mmt), down 1 percent from the previous week, up 30 percent from last year, and 49 percent above the 3-year average. Mississippi Gulf grain inspections decreased 12 percent from the previous week, but Pacific Northwest (PNW) inspections increased 43 percent. Outstanding export sales (unshipped) of grain were up for wheat and soybeans, but down for corn.

According to USDA’s September 27 Weekly Weather and Crop Bulletin, 8 to 10 inches of rain fell in several Midwestern communities from September 20 to 23. Flood levels in parts of eastern Iowa were the second highest on record since June 2008. Runoff from the rains has raised water levels on the Upper Mississippi River and caused some disruptions in barge movements. On September 28, the U.S. Army Corps of Engineers issued a status report indicating that Mississippi River Lock 17 (New Boston, IL), Lock 18 (Gladstone, IL), and Lock 20 (Canton, MO) may close beginning on October 1-4 due to high water conditions. As of September 27, St. Louis to New Orleans barge rates for grain were 420 percent of tariff ($16.76 per ton), 28 percent higher than last week, but 31 percent below the 3-year average. Barge rates could further increase depending upon the duration of the possible closures and high water conditions.

For the week ending September 22, 38 ocean-going grain vessels were loaded in the Gulf, 7 percent more than the same period last year. Sixty-seven vessels are expected to be loaded within the next 10 days, 10 percent more than the same period last year. For the week ending September 22, the ocean freight rate for shipping bulk grain from the Gulf to Japan was $30.25 per metric ton, 2 percent less than the previous week. The cost of shipping from the PNW to Japan was $16.20 per metric ton, 2 percent less than the previous week. For the week ending September 24, barge grain movements totaled 444,350 tons, 15 percent lower than last week, and down 10 percent from the same period last year. For the week ending September 24, 281 grain barges moved down river, down 16 percent from last week; 740 grain barges were unloaded in New Orleans, up 3 percent from the previous week.

Dry Bulk Update

Dry Bulk Update:

The day rates for Capes and Panamax fall further, while Soups & Handies are flat. The broader index (BDI) is again back down below 900 losing just under 3% since yesterday.

The BCI took the hardest blow as expected as rates came down almost 6%.

Cape 5 T/C ~ $13,050

Cape 4 T/C ~ $12,275

Pmax 4 T/C ~ $5,925

Soups T/C ~ $7,050

BHSI T/C ~ $6,100

Dry FFA:

The crew at FIS tell us in the morning report that the Capes began to rally on the Asia opening but when the European market began trading and then post index the gains were wiped out and now are below yesterdays levels.

Q1-14

Capes $4,400 (+50)

Pmax $4,800 (-50)

Soups $5,000 (-250)

The divergence between the physical and paper markets is striking for the Capes. It could be concluded that the paper market is underwhelmed by the physical, and rates are expected to fall over 50% from current spot rates.

What a 5 year old can tell you!

5 year old resale values:

A recent report from Seaport Global Securities (SGL) sheds light on current and past asset values.

Crude Tankers:

VLCC $63.0M down 20.2% ytd 2015 year end $80.0M

Suzi’s $45.0M down 25.0% ytd 2015 ye $60.0M

Afra’s $33.0M down 25.0% ytd 2015 ye $44.0M

Product Carriers:

LR2 $35.0M down 27.8% ytd 2015 ye $48.5M

LR1 $34.0M down 2.9% ytd 2015 ye $35.0M

MR $23.0M down 20.7% ytd 2015 ye $29.0M

Handy $20.0M down 20.0% ytd 2015 ye $25.0M

Dry Bulk:

Capes $24.0M down 17.2% ytd 2015 ye $29.0M

Pmax $13.8M down 11.3% ytd 2015 ye $15.5M

Soups $12.5M down 10.7% ytd 2015 ye $14.0M

Handy $8.0M down 33.0% ytd 2015 ye $12.0M

With the exception the LR1 class (-2.9%) all assets are in double-digit declines.

Next time your thinking of buying a vessel think long and hard about risk.

$NAP Navios Maritime Midstream Partners

Navios Maritime Midstream Partners

2016-09-28 12:20 PM

The bearish thoughts on NAP were confirmed right after we opened our fat mouth and said, “Watch out for 10.50,” or some such nonsense. This little run down might take a rest around the 9.75 region. Any recovery to 11.00 – 11.25 target level seems some time away at this point.

Previous ramblings on $NAP:

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Navios Maritime Midstream Partners

2016-09-25 6:43 PM

By week’s end NAP was stamping its feet hard on the floor a couple of times. We’re still somewhat hopeful for upward motion through 11.25 – 11.45, but watching 10.50 for some bearishness; there have been

a couple of pokes through that point already.

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Navios Maritime Midstream Partners

2016-09-20 12:51 PM

NAP has seen some flirting, (if not knocking on the door) with10.50 recently, but some recovery has been in the works over the last few days. However, a little price indecision this week suggests there’s nothing yet to push NAP back up. Anything above 11.30 – 11.40 could change our minds, though. Let’s keep an eye on that 10.50.

Hump Day…Dry Bulk Update

Dry Bulk Update:

A glance at the daily rate assessments from London today we are reminded of a report by Rob Perri of Axia dated Sep 16. The title and opening paragraph follow.

“Drybulk Shipping: Don’t believe the Hype, it’s a sequel – Getting closer but not there yet

Everything everyone predicted would happen was wrong… As we entered 2016, there were a few tightly held tenets about the drybulk market; China was slowing and that would have a negative impact on the market, India was growing rapidly and this would help the market, and increased scrapping would put a lid on the growth in the drybulk fleet. In every instance, the opposite happened (we told you predictions come here to die!).”

As we continue to witness the Cape recovery dissipate we feel all the more inclined to alert our readers to the precarious nature of shipping investments and the likelihood of prolonged recoveries in the dry bulk space. That said we look at the numbers.

Cape 5 T/C ~ $13,850

Cape 4 T/C ~ $13,075

BPI 4 T/C ~ $6,015

BSI T/C ~ $7,050

BHSI T/C ~ $6,115

Dry Bulk FFA:

The Capes began selling as the Asian bell opened trading. Panasister and Soup curves are pointing south as well.

Q4-16

Capes $9,250 (-400)

Pmax $6,400 (-200)

Soups $7,100 (-150)