Weekly Market Report. Issue: Week 22 Tuesday 2 nd June Market insight

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1 Weekly Market Report Issue: Week 22 Tuesday 2 nd June 2015 By Vassilis Logothetis Research Analyst Market insight For some time now the Dry Bulk market has been severely affected by China s slowing GDP growth rate that occurs in the background of increased supply of dry bulk tonnage. Daily rates for Capes are now well below $10,000 from over $200,000 in 2008, while the BCI index reached its historic low at 311 points during January Hence, it comes as no surprise that numerous shipowners consider the demolition market as a possible solution to dispose of old large sized vessels that fail to cover their operating expenses at market s current levels. But to conclude a perfect storm, the steel market, that is the main driving force behind prices offered by cash buyers and recycling yards for the acquisition of vintage tonnage for demolition, is currently under strong pressure as well. The latter stem from increased exports of cheap Chinese steel that is not absorbed domestically and has flooded the Indian sub-continent. Moreover, prices offered by recycling yards are also negatively affected by the large volume of bulkers that are available to be sold for scrap. The aforementioned situation has resulted in prices offered nowadays for wet tonnage to range from 210 to 390, depending on the destination, and for dry tonnage from 210 to 370. Just a year ago prices ranged from 310 to 500 for the dry tonnage and 325 to 510 for the wet, a difference of more than 100 dollars per ltd. Nevertheless, the situation in the Dry Bulk market for the Capes is so difficult that we have seen a large number of vessels finding their way to recycling yards even at these low price levels. In May alone, 15 Capes have been sold for scrap, while the same number of Capesize vessels went for scrap during the entire first five months of last year. This is something that generally characterizes the market as demo activity across all segments is higher to the one observed last year. At this point in time and given the situation in the Dry Bulk market one should expect the increased trend of vintage bulkers heading for demolition to continue up to the point where the freight market reaches a more viable equilibrium regarding supply and demand of tonnage. Having in mind the large volume of the Dry sector orderbook this will definitely take some time and at the same time it will come as no surprise if current demo price levels slide further. Nonetheless, and despite any additional price softening that could be due, the demo market is expected to continue witnessing healthy activity, as long as the situation in the Dry Bulk market remains tricky. Chartering (Wet: Soft- / Dry: Stable + ) The Dry Bulk market moved sideways last week with the geared sizes still performing better compared to the bigger segments. The BDI closed today (02/06/2015) at 591 points, up by 2 points compared to Monday s levels (01/06/2015) and an increase of 7 points when compared to previous Tuesday s closing (26/05/2015). Softer enquiry in both the Middle East and W. Africa regions pushed rates for the crude carriers market down last week, while we expect things to stabilize in the following days. The BDTI Monday (01/06/2015) was at 848 points, a decrease of 53 points and the BCTI at 692, an increase of 37 points compared to previous Friday s (22/05/2015) levels. Sale & Purchase (Wet: Soft- / Dry: Soft- ) SnP activity noted an impressive slowdown across all sectors last week, signalling that this summer season we might be due to witness even softer activity than what we usually do throughout this period every year. On the tanker side, we had the resale of CarVal s New Times Hull (158,000dwt-blt 16, China), which was sold to Greek buyers for a price in the region of $59.5m. On the dry bulker side we had the sale of the SMARTY (45,499dwt-blt 00, ), which was sold to for a price in the region of $6.0m. Newbuilding (Wet: Stable - / Dry: Stable - ) The end of spring season found the newbuilding market in the same unchanged stage of the past months, with weak activity and nonexistent dry bulk ordering prevailing, while conversions and options are still making up a good part of the most recent reported deals. Prices appear to have momentarily stopped their downward movement but we reiterate our opinion that there is more room for further corrections during the summer season, where slower activity usually prevails. At the same time, the trend of converting bulker orders seems to be holding strong. Orders that were placed following the good market the sector enjoyed back in the end of 2013, continue to trouble owners behind them and it seems that a big part of those who still can, will opt for converting their order usually to a tanker one, while without trying to sound too pessimistic, we hope history won t repeat itself and whatever tanker orders - original ones or conversions - are currently being placed, won t come back to haunt their owners a couple of years down the line as it is currently happening with big bulkers. In terms of recently reported deals, China Shipping Development placed an order for four firm LR2s (115,000dwt) at Dalian, in China, for a price of $52.0m each and delivery set between 2017 and Demolition (Wet: Soft - / Dry: Soft - ) Demolition prices in the Indian subcontinent appear to have stabilized for now, following a month of significant discounts that have left the market with a lower new normal in terms of activity volume and price levels matching the year s lows back in the beginning of March. Whether the summer season will continue in the same mood is too soon to tell. Breakers in Bangladesh and Pakistan will focus on the outcome of their countries respective budgets, both due before the end of the week. Should rumors for increased tax on the industry are announce, this will normally affect both prices and breakers appetite to acquire tonnage. On the other hand things in India seem to be slightly better, and this is evident in the presence of sales involving Indian breakers, who now seem a bit encouraged by the revival of both local steel prices and the Indian Rupee. Prices this week for wet tonnage were at around $/ldt and dry units received about $/ldt.

2 WS points Dirty Clean Aframax Suezmax VLCC WS points Wet Market Vessel VLCC Suezmax Aframax Panamax MR Handy size Routes Week 22 Week ±% WS points Spot Rates WS points 265k MEG-JAPAN 62 60, , % 30,469 21, k MEG-USG 40 52, , % 17,173 7, k WAF-USG 75 71, , % 40,541 26, k MED-MED , , % 30,950 17, k WAF-USAC , , % 24,835 13, k BSEA-MED , , % 30,950 17,714 80k MEG-EAST , , % 19,956 11,945 80k MED-MED , , % 28,344 13,622 80k UKC-UKC , , % 33,573 18,604 70k CARIBS-USG , , % 25,747 16,381 75k MEG-JAPAN , , % 16,797 12,011 55k MEG-JAPAN , , % 14,461 12,117 37K UKC-USAC , , % 10,689 11,048 30K MED-MED , , % 18,707 17,645 55K UKC-USG , , % 23,723 14,941 55K MED-USG , , % 21,089 12,642 50k CARIBS-USAC , , % 25,521 15,083 TC Rates Week 22 Week 21 ±% Diff k 1yr TC 45,000 43, % ,346 20, k 3yr TC 41,500 40, % ,383 23, k 1yr TC 34,000 34, % 0 22,942 16, k 3yr TC 32,500 32, % 0 24,613 18, k 1yr TC 26,000 25, % ,769 13, k 3yr TC 24,000 23, % ,229 15,248 75k 1yr TC 21,500 21, % 0 16,135 15,221 75k 3yr TC 19,250 19, % 0 16,666 15,729 52k 1yr TC 17,250 17, % ,889 14,591 52k 3yr TC 16,000 16, % 0 15,604 15,263 36k 1yr TC 15,500 15, % ,024 13,298 36k 3yr TC 14,750 14, % ,878 13,907 VLCC Suezmax Indicative Market Values ($ Million) - Tankers Vessel 5yrs old Aframax LR1 MR Indicative Period Charters -12 mos - 'COSGRAND LAKE' ,100 dwt - - $45,000/day - Unipec -24 mos - 'SEA FALCON' ,300 dwt - - $23,500/day -Trafigura TD3 TD4 TD6 TD9 TC1 TC2 TC5 TC6 DIRTY - WS RATES CLEAN - WS RATES May-15 Apr-15 ±% KT DH % KT DH % KT DH % KT DH % KT DH % Chartering It s been a while since we last saw rates across the crude carriers market witnessing similar discounts in just a week s time, as one of the main characteristics of the past months has been the strong sentiment, which has been lifting the market up even at times when favourable enquiry was not there. As the number of Middle East cargoes significantly reduced last week, rates in the region followed course, with the spillovers quickly weighing down on the rest of the market as well, pushing rates south across almost all key trading routes. Bunker prices on the other hand kept siding with owners, while activity in the period market remained evidence of the still strong fundamentals of the market despite this recent decline. The VL market closed off on Friday with further reductions being noted and despite the fact that rates for both the Eastbound and Westbound voyages kicked off the week with signs of a stronger market, while we expect the market to stabilize in the following days. The W. Africa Suezmax market also remained on a downward slope last week, with even less fresh business circulating compared to the week prior, while this in the Med also slowed down mid-week onwards. With minor exceptions, the Aframax market was also under pressure last week, with cross-med and cross-ukc activity slowing down following a busy end of April and the Caribs Afra softening on the back of limited business. Sale & Purchase In the Suezmax sector we had the resale of CarVal s New Times Hull (158,000dwt-blt 16, China), which was sold to Greek buyers for a price in the region of $59.5m. In the chemical sector we had the sale of the CHEM ORION (10,307dwtblt 98, ), which was sold for $6.5m. Intermodal Research 02/06/2015 2

3 Handysize Supramax Panamax Capesize Index Dry Market Baltic Indices Week 22 Week 21 29/05/ /05/2015 Point Diff ±% Index Index Index Index BDI ,097 1,205 BCI 810 $5, $5, % 1,943 2,106 BPI 524 $4, $4, % 960 1,186 BSI 647 $6, $6, % BHSI 331 $4, $4, % Period Week Week ±% Diff K 6mnt TC 8,000 7, % ,020 17, K 1yr TC 8,250 8, % 0 21,921 15, K 3yr TC 9,750 9, % 0 21,097 16,599 76K 6mnt TC 6,250 6, % 0 12,300 12,224 76K 1yr TC 6,250 6, % 0 12,259 10,300 76K 3yr TC 7,750 7, % 0 13,244 10,317 55K 6mnt TC 7,500 7, % 0 12,008 11,565 55K 1yr TC 7,250 7, % 0 11,589 10,234 55K 3yr TC 7,750 7, % 0 11,585 10,482 30K 6mnt TC 6,000 6, % 0 9,113 8,244 30K 1yr TC 6,250 6, % 0 9,226 8,309 30K 3yr TC 6,750 6, % 0 9,541 8,926 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, ,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 Indicative Period Charters - 4 to 7 mos - 'KM OSAKA ' ,650dwt - Dalian early June - $ 8,000/day -Pacific Bulk - 3 to 6 mos - 'ABML GRACE' ,300 dwt - Singapore prompt - $ 6,850/day -E.On Baltic Indices BCI BPI BSI BHSI BDI Average T/C Rates AVR 4TC BCI AVR 4TC BPI AVR 5TC BSI AVR 6TC BHSI Chartering This has been another week that the Dry Bulk market failed to offer any positive surprises, while the BDI, which is still faring below 600 points, hardly moved compared to the week prior. The smaller size segments once more outperformed the market, while on the period front we saw slightly improved enquiry across all size segments. The summer season is not kicking off with too much promise for a positive reversal in the market and despite the fact that there has been a lot of talk in regards to China s iron ore inventories, with reports seeing opportunity for Capesize rates, we still maintain the view that a more dramatic fall in Chinese iron ore stockpiles needs to take place before we start talking about changing fundamentals for the segment. The Capesize market moved sideways last week, with both the spot and the period market seeing improved levels of activity, but rates seemed stuck around last dones, with no significant improvements being noted as the market slid into the weekend and holidays taking place as this week kicked off slowing down things further. Capesize Panamax Supramax Indicative Market Values ($ Million) - Bulk Carriers Vessel 5 yrs old Handysize May-15 Apr-15 ±% k % K % k % K % Sale & Purchase In the Panamax sector, we had the sale of the DOMINA (73,593dwt-blt 07, China), which was reported being sold for a price of $9.3m. In the Handymax sector we had the sale of the SMARTY (45,499dwt-blt 00, ), which was sold to for a price in the region of $6.0m. The Panamax market remained very quiet last week with rates moving downwards across both basins, while fresh orders from the ECSA during the second half of the week managed to improve sentiment just before the week came to a close. The Atlantic Handysize/ Handymax/ Supramax business was moving sideways last week, with certain owners becoming a bit more optimistic on the back of fresh enquiry out of the USG, while the positive sentiment was also supported by some decent fixtures reported in the Far East. Intermodal Research 02/06/2015 3

4 Secondhand Sales Size Name Dwt Built Yard M/E SS due Hull Price Buyers Comments SUEZ NEW TIMES , NEW TIMES SHIPBUILDING, China Tankers DH $ 59.5m Greek PROD/ CHEM CHEM ORION 10, ASAKAWA, B&W Sep-18 DH $ 6.5m undisclosed Bulk Carriers Size Name Dwt Built Yard M/E SS due Gear Price Buyers Comments PMAX STAR CHRISTIANNA 74, SASEBO SASEBO, B&W Mar-18 $ 4.5m undisclosed PMAX DOMINA 73, JIANGNAN SHIPYARD GROU, China MAN-B&W May-17 $ 9.3m undisclosed HMAX SMARTY 45, IMABARI MARUGAME, MAN-B&W Jun-15 4 X 30,5t CRANES $ 6.0m undisclosed HANDY GOURNIATI 28, IMABARI IMABARI, B&W May-16 4 X 30,5t CRANES $ 3.6m Turkish HANDY FREE HERO 24, SHIN KURUSHIMA ONISHI, Mitsubishi Sep-15 3 X 25t CRANES undisclosed BB back at $1,100/day HANDY FREE GODDESS 22, SAIKI HEAVY INDUSTRIES, Mitsubishi Jun-15 4 X 30t CRANES undisclosed Norwegian BB back at $1,100/day Intermodal Research 02/06/2015 4

5 million $ million $ Gas Tankers Bulkers Newbuilding Market Indicative Newbuilding Prices (million$) Vessel Week Week ±% Capesize 180k % Kamsarmax 82k % Panamax 77k % Ultramax 63k % Handysize 38k % VLCC 300k % Suezmax 160k % Aframax 115k % LR1 75k % MR 50k % LNG 160k cbm % LGC LPG 80k cbm % MGC LPG 55k cbm % SGC LPG 25k cbm % The end of spring season found the newbuilding market in the same unchanged stage of the past months, with weak activity and non-existent dry bulk ordering prevailing, while conversions and options are still making up a good part of the most recent reported deals. Prices appear to have momentarily stopped their downward movement but we reiterate our opinion that there is more room for further corrections during the summer season, where slower activity usually prevails. At the same time, the trend of converting bulker orders seems to be holding strong. Orders that were placed following the good market the sector enjoyed back in the end of 2013, continue to trouble owners behind them and it seems that a big part of those who still can, will opt for converting their order usually to a tanker one, while without trying to sound too pessimistic, we hope history won t repeat itself and whatever tanker orders - original ones or conversions - are currently being placed, won t come back to haunt their owners a couple of years down the line as it is currently happening with big bulkers. In terms of recently reported deals, China Shipping Development placed an order for four firm LR2s (115,000dwt) at Dalian, in China, for a price of $52.0m each and delivery set between 2017 and Tankers Newbuilding Prices (m$) Bulk Carriers Newbuilding Prices (m$) 180 VLCC Suezmax Aframax LR1 MR 110 Capesize Panamax Supramax Handysize Newbuilding Orders Units Type Size Yard Delivery Buyer Price Comments Dalian Shipbuilding, China Shipping 4 Tanker 115,000 dwt $ 52.0m LR2 China Development Co. Dalian Shipbuilding, Singapore based (Cara LR2, Capesize order 2 Tanker 115,000 dwt 2017 $ 52.0m China Shipping) conversion 2 Tanker 111,000 dwt New Times, China 2017 Norwegian (Frontline2012) $ 50.0m LR2 2 Tanker 34,500 dwt Taizhou Sanfu, China 2017 Singapore based (Nova Shpg & Logist.) undisclosed 1 Gas 84,000 cbm Hyundai, S. Korea 3/2017 Mexican (Tomza Group) undisclosed LPG 2 Container 11,000 teu Yangzijiang, China 2017 Greek (Cardiff Marine) $ 93.0m option Newcastlemax order conversion Intermodal Research 02/06/2015 5

6 $/ldt $/ldt Dry Wet Demolition Market Indicative Demolition Prices ($/ldt) Markets Week Week ±% Bangladesh % India % Pakistan % China % Bangladesh % India % Pakistan % China % Demolition prices in the Indian subcontinent appear to have stabilized for now, following a month of significant discounts that have left the market with a lower new normal in terms of activity volume and price levels matching the year s lows back in the beginning of March. Whether the summer season will continue in the same mood is too soon to tell. Breakers in Bangladesh and Pakistan will focus on the outcome of their countries respective budgets, both due before the end of the week. Should rumors for increased tax on the industry are announce, this will normally affect both prices and breakers appetite to acquire tonnage. On the other hand things in India seem to be slightly better, and this is evident in the presence of sales involving Indian breakers, who now seem a bit encouraged by the revival of both local steel prices and the Indian Rupee. Prices this week for wet tonnage were at around $/ldt and dry units received about $/ldt. The highest price amongst recently reported deals, was that paid by Indian breakers for the Container vessel AT 14 (9,868dwt-4,539ldt-blt 92), which received $385/ldt. Wet Demolition Prices Dry Demolition Prices Bangladesh India Pakistan China Bangladesh India Pakistan China Demolition Sales Name Size Ldt Built Yard Type $/ldt Breakers Comments ADVANTAGE 27,750 9, NKK CORP - TSU, GC $ 380/Ldt Indian BASHUNDHARA-1 46,874 8, GREAT PEACE 45,259 7, YAKIMA PRINCESS 42,475 6, AT 14 9,868 4, KAWASAKI HEAVY INDS -, TSUNEISHI SHBLDG - FUK, OSHIMA SHIPBUILDING, ORSKOV CHRISTENSENS, Denmark BULKER - Bangladeshi BULKER - Chinese BULKER - Indian CONT $ 385/Ldt Indian Intermodal Research 02/06/2015 6

7 380cst Currencies Stock Exchange Data MDO Commodities & Ship Finance Market Data 29-May May May May May-15 W-O-W Change % 10year US Bond % S&P 500 2, , , , , % Nasdaq 5, , , , , % Dow Jones 18, , , , , % FTSE 100 6, , , , , % FTSE All-Share UK 3, , , , , % CAC40 5, , , , , % Xetra Dax 11, , , , , % Nikkei 20, , , , , % Hang Seng 27, , , , , % DJ US Maritime % $ / % $ / % / $ % $ / NoK % Yuan / $ % Won / $ 1, , , , , % $ INDEX % oil Basic Commodities Weekly Summary Oil WTI $ Oil Brent $ Gold $ 1,350 1,300 1,250 gold 1,200 1,150 1,100 Bunker Prices 29-May May-15 W-O-W Change % Rotterdam % Houston % Singapore % Rotterdam % Houston % Singapore % Company Maritime Stock Data Stock Exchange Curr. 29-May May-15 W-O-W Change % AEGEAN MARINE PETROL NTWK NYSE USD % BALTIC TRADING NYSE USD % BOX SHIPS INC NYSE USD % CAPITAL PRODUCT PARTNERS LP NASDAQ USD % COSTAMARE INC NYSE USD % DANAOS CORPORATION NYSE USD % DIANA SHIPPING NYSE USD % DRYSHIPS INC NASDAQ USD % EAGLE BULK SHIPPING NASDAQ USD % EUROSEAS LTD. NASDAQ USD % FREESEAS INC NASDAQ USD % GLOBUS MARITIME LIMITED NASDAQ USD % GOLDENPORT HOLDINGS INC LONDON GBX % HELLENIC CARRIERS LIMITED LONDON GBX % NAVIOS MARITIME ACQUISITIONS NYSE USD % NAVIOS MARITIME HOLDINGS NYSE USD % NAVIOS MARITIME PARTNERS LP NYSE USD % PARAGON SHIPPING INC. NYSE USD % SAFE BULKERS INC NYSE USD % SEANERGY MARITIME HOLDINGS CORP NASDAQ USD % STAR BULK CARRIERS CORP NASDAQ USD % STEALTHGAS INC NASDAQ USD % TSAKOS ENERGY NAVIGATION NYSE USD % TOP SHIPS INC NASDAQ USD % Bahri wins sukuk OK Finance News The National Shipping Company of Saudi Arabia (Bahri) has won approval of its latest fund-raising effort. The country s Capital Market Authority (CMA) announced that it has approved a sukuk, the Islamic finance equivalent of the bond, for the shipowner. The total offering size will be determined at a later stage by the company, the authority said. However, executives said last month that it was planning a SAR 3.9bn ($1.04bn) Islamic bond offering, according to Reuters. The cash grab comes after Bahri announced last week that it is ordering five VLCCs at South Korea s Hyundai Samho Heavy Industries. The deal, first reported by TradeWinds in April, includes options for five more vessels. The Saudi shipowner said the firm VLCC newbuildings are due for delivery during No financial terms were disclosed. 77-ship fleet Led by chief executive Ibrahim Abdulrahman Al- Omar, Bahri controls a fleet of 77 tankers, bulkers and ro-ros. The company has recently signed a 10-year agreement with South Korea s S-Oil Corporation. Under this agreement, it will transport crude oil cargoes on VLCCs from the Arabian Gulf and the Red Sea to Ulsan in South Korea. (Eric Martin, Trade Winds) The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co. Compiled by Intermodal Research & Valuations Department research@intermodal.gr Ms. Eva Tzima e.tzima@intermodal.gr Mr. Vassilis Logothetis v.logothetis@intermodal.gr

8 You can contact us directly by phone or by ing, faxing or posting the below form completed with all your details: Tel: Fax: Intermodal Shipbrokers Co. 17th km Ethniki Odos Athens-Lamia & 3 Agrambelis street, N.Kifisia, Athens - Greece Select Price in US$ Weekly Publications Weekly Market Report Annual Subscription Free Monthly Publications Shipping Monthly Recap - free summary Annual Subscription - 12 issues Free Shipping Monthly Recap - full report Annual Subscription - 12 issues Please contact our department Your Contact Details Full Name: Company: Address: Title: Position: Country: Company Website: Post code: Telephone: Fax: Intermodal Shipbrokers Co 02/06/2015 8