In the Far East and South East Asia, it has been a very quiet week, with significantly reduced enquiry seen across the basin. Traders are finding it very difficult to secure business across almost all commodities, largely due to bunker prices caused by a lack of supply. As a result of these costs, it has been noted that more owners are using their own vessels, even when faced with larger than expected ballasts. This has therefore reduced the number of reported fixtures, further adding to the overall quiet sentiment in the area. Looking ahead, there seems to be little hope that the market will improve in the near term; at some point buyers may become more active, but for the time being this does not appear to be on the horizon.
Activity in the Indian Ocean remained subdued, with the majority of vessels still stuck in the Gulf unable to transit the Strait of Hormuz. While governmental talks about the safe passage of certain vessels are ongoing, it remains much the same as last week where transit is not possible. There are some Indian coastal trips being fixed, however due to the scarce availability of bunkers longer haul routes are very much on the back burner. Further South, there is a large amount of congestion building in East and South African ports, where lineups are ever increasing. While some cargoes are surfacing in the market, a large disparity continues to exist between the bid and offer, with end users unwilling to commit to today’s inflated numbers when tomorrow continues to remain so uncertain.
The Mediterranean and Black Sea had a stagnant week. Steel runs from Turkey to the Continent and the usual cargoes from Egypt have provided some support to an otherwise subdued Med market. A growing number of cargo enquiries ex-Black Sea were seen in the market this week. However, rising bunker prices have discouraged some of these cargoes from firming up, with stems instead being postponed to later dates. Thus the rates have been slowly declining in the basin due to the lack of firm cargoes.
The US market has continued to weaken this week at an accelerated pace. A significant drop in enquiry has led to a growing tonnage list, putting increasing pressure on rates. The Baltic front haul rate from the USG to the Far East has fallen by almost 30% this month. Fronthaul demand remains limited, with rates continuing to decline despite the unappealing conditions in the Far East. This lack of activity is further contributing to the build-up of tonnage, adding additional downward pressure on the market.
The ECSA market has had another soft week, with reduced cargo volumes leading to a decline in rates. However, sentiment suggests the market may be bottoming out, as owners appear more confident in managing elevated bunker prices and are beginning to commit to forward cargoes. The West African market has been supported by a steady flow of ores and concentrates, with owners commanding a premium for any direction outside of the Atlantic.
Bunkers continued to remain volatile, following Brent price movements. Brent pushed higher yesterday after reports of an Israeli strike on Iran’s South Pars gas field, the largest globally. This marks a clear step up in escalation, with energy infrastructure now in the crosshairs for the first time in this conflict, with Iran also targeting installations in Saudi, Qatar and the UAE. Bunkers currently sit at 1,115pmt in Singapore and 870pmt in Gibraltar further showing the regional split.
By Nexus Freight Solutions
