Kevin Hazel, head of Marsoft’s shipping economics team, notes that although no progress has been made on the trade war front the shipping markets have been anything but dull.
Crude tanker rates went sky-high in October driven in large part by the ban on companies with ships trading with Iran - spot rates have since come back to earth. Other indicators remain strong and we expect the market to remain buoyant in the short term.
After a robust third quarter, dry bulk spot rates fell back significantly in early November, with Cape rates remaining relatively firm. Looking ahead, we expect a mild pullback in 2020.
Despite the worsening macroeconomic environment charter rates for large containerships are at four and half year highs, benefitting from an ever-increasing number of liner-operated vessels idled for scrubber retrofitting. Our updated 5-year outlook will soon be available to outline longer-term prospects, as will our updated gas tanker market analysis.
With the IMO 2020 deadline now just 6 weeks away, concerns about the availability of 0.5% sulfur fuel have largely dissipated, and the differential between the price of this fuel and conventional fuel is expected to average $235/tonne over the course of 2020, based on forward markets. Another noteworthy development has been the relatively low level of ordering in most shipping sectors so far this year. We attribute the slowdown to uncertainty about what the ‘fuel of the future’ will be. Of course, the longer that ordering stays low, the more likely it is that shipowners should be able to enjoy a relatively prolonged period of healthy earnings.
For further details on Marsoft’s approach and our shipping markets outlook do get in touch via one of our offices or on twitter.
Marsoft produces regular market reports and risk analysis to guide our clients with an objective and independent viewpoint.