Affinity Dry Index 3 Month Moving Average

Transcription

1 While Capesize returns were weaker this week there were positive returns on Tuesday. Bunker rates were stronger this week which may indicate the disparity between voyage rates on longer Atlantic hauls compared to the Pacific legs. On the Western Australia route rates declined on a week-on-week basis although activity was still at usual levels. All the majors were still in the market and were paying around USD 5.85 as of yesterday. The Tubarao routes were more steady with the longer C3 route actually rising over the last 7 days. Vale was in the market for June 5-20 dates which will usually end up appearing as relet cargoes closer to the shipment date by various operators. Anglo American was in the market earlier in the week for later May dates, the freight rates on this route now stand in the high USD 10 s, around USD Panamax rates continued their losing streak however losses were not particularly heavy over the 7 day stretch. There is however renewed sentiment that things may move upward shortly. Vessels are coming open and cargo remains steady so any upward movement would be capped. Out of Indonesia rates dipped below USD 6.00 for cargoes destined to East Coast India and to the west coast a 50 cent premium gave the applicable voyage rates. Ex Australia more activity is being recorded with rates fixed at around USD to India and USD 8.80 to China. The Indian Ocean market moved accordingly with the other routes and experienced a decline also. Supramax vessels in the south east Asia market are paying around USD 6,000 for Far East voyages. Handysize Pacific TC rates still remain in the USD 6,000s, however, 7,000 / day rates have been heard as owners attempt to add heat to the market again. Overall the smaller size markets recorded incremental decreases of around 4-5% on Supramax vessels and 2-3% on Handysize voyages. Refined Zinc imports to China are set to increase this month as dwindling local supplies of concentrate takes its toll on local output. China s domestic output has also been curbed by the country s war on pollution, with Beijing clamping down on mining and heavy industry, thus boosting the demand for overseas products. Following frantic efforts by Chinese coal producers to increase output following the end of the 276-day limit, restricting coal production and sending prices soaring last year, has caused a year-on-year increase of 9.9 per cent to 290 Mn tonnes in April.

2 ADI Affinity Dry Index 3 Month Moving Average

3 USD / T Mn T Colombia Thermal Coal Exports Est Source: Tradeviews Coal Colombia Spot Fortnightly For miners looking to attract foreign investment and begin new projects in Colombia, the future is rather uncertain. The country, which exported 92.8 Mn tonnes of coal (thermal and met) in 2016, has been affected by a string of recent court rulings against the mining industry which while accounting for around 28 per cent of national exports, has faced a popular backlash due to the impact on the local environment and the wellbeing of those living near mining facilities. While often affecting mining sectors with minimal impact on shipping such as gold, the image problem mining has in the country extends to coal. Importantly, the judicial uncertainty may very well put a damper on the growth outlook which improved as a result of the recent peace deal with the Farc guerrillas, spurring hopes of the country opening up new areas to development. For foreign mining investors, the attractiveness of a country is very closely linked to the political environment. The increased uncertainty has therefore led to the country slipping to 65 th place from 32 nd in 2012 on the Fraser Institute rankings of countries and jurisdictions most attractive for mining investment. So what will the impact on shipping be? With exports accounting for over 90 per cent of the country s exports, changes in the mining sectors productivity have a rather direct effect on the nations ability to export. While expected to grow this year, despite a generally weakening demand outlook for coal for energy generation, it is important to bear in mind the longer term impact of reduced investor confidence in the region on output. While the country s known coal reserves are theoretically large enough to support an output of 100 Mn tonnes per year for the next 67.4 years, legislative and demand side factors are the biggest threats to the continued contribution to seaborne demand which in 2016 stood at a total of 438 Bn tonne miles. In the end Colombia s attitude to mining depends on its population and local support. The latest polls, as reported by the FT, suggest only 28 per cent of Colombians have a positive view of the industry, compared to 42 per cent in Despite the economic dependency on mining, this results in increased political pressure that needs to be resolved should substantial growth be expected from Colombia.

4 USD/Day FFA 20,000 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2, TC_C 4TC_P 5TC_S TCH

5 The Affinity Dry Index (ADI) is calculated based on our freight rate estimates of the routes found in the route descriptions. Based on 7 January 2016, each Affinity index uses the average of freight rates for each segment compared to base rate as of the index start date (note that the Supramax rate is included in the Affinity Ultramax Index calculation). Please note: - As of 21 January 2016, the Affinity Dry Indices have been rebased to 7 Jan 2016, from their original starting point on 20 Aug As of 14 July 2016 routes H4 and H5 have been added to the Affinity Dry Index and the Affinity Handysize Index calculation, causing small negative changes in each index not reflecting actual market movements.

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7 The information contained within this report is given in good faith based on the current market situation at the time of preparing this report and as such is specific to that point only. While all reasonable care has been taken in the preparation and collation of information in this report Affinity (Shipping) LLP (and all associated and affiliated companies) does not accept any liability whatsoever for any errors of fact or opinion based on such facts. Some industry information relating to the shipping industry can be difficult to find or establish. Some data may not be available and may need to be estimated or assessed and where such data may be limited or unavailable subjective assessment may have to be used. No market analysis can guarantee accuracy. The usual fundamentals may not always govern the markets, for example psychology, market cycles and external events (such as acts of god or developments in future technologies) could cause markets to depart from their natural/usual course. Such external events have not been considered as part of this analysis. Historical market behaviour does not predict future market behaviour and shipping is an inherently high risk business. You should therefore consider a variety of information and potential outcomes when making decisions based on the information contained in this report. All information provided by Affinity (Shipping) LLP is without any guarantee whatsoever. Affinity (Shipping) LLP or any of its subsidiaries or affiliates will not be liable for any consequences thereof. This report is intended solely for the information of the recipient account and must not be passed or divulged to any third parties whatsoever without the written permission of Affinity (Shipping) LLP. Affinity (Shipping) LLP accepts no liability to any third parties whatsoever. If permission is granted, you must disclose the full report including all disclaimers, and not selected excerpts which may be taken out of context.