Dry Bulk FFAs
Contract    Close    Current    Diff
======================================
BDI Nov    950    950    -0
BDI Q1    1800    1825    +25
BDI Q2    2500    2525    +25  

CS4 Q1           $12,453     $12,500    +$47
CS4 Cal 09      $19,201    $19,500    +$299

PM4 Q1        $12,688      $12,750    +$62
PM4 Cal 09    $15,723    $16,000      +$277

SM6 Q1           $9,563      $9,750     +$187

SM6 Cal09     $12,398  $12,500    +$102

Volumes remain thin as many participants in the FFA world meet at London’s Baltic Exchange.

Fair activity on crude FFAs. TD3 trades up 3 points in Dec to 70, while the Q1 adds a point to 42.50. TD5 Q1 trades flat at 72. Little brother TD11 trades up 1 point in Dec to 156.

Clean
37k Cont/Usac: ws 180 ($16k/day)
55kt Ag/East: ws 230 ($39k/day)

Atlantic basin clean continues to see fixing, though rates remain the same. Even the Caribs/Usac route witnessed more action, yet rates havent budged. Out East, soft demand continues to bring us softer rates. Though we are not seeing any sort of rate collapse, we are seeing a steady slide. A few points here, a few points there...and of course that adds up over time. Am hearing that Reliance may send some test naphtha to the US once they get their production on line. This implies long haul demand – though how long this will go on for or when it will begin I don’t know. Anyone with thoughts/input here please let me know.

TC2 has seen neglible trading. Dec sits at about 192, implying the possibility of a slight upturn in the next few weeks – though nothing that Owners had been hoping for in the usually strong Q4. The East has shown good trading activity once again. TC4 Dec trades down 11 points to 175 while TC5 Dec only loses one point to 198.

- Omar Nokta maitains a BUY on DHT ($9).
- Natasha Boyden maintains a BUY on NM, though lowers target to $6 (from $10).
- Natasha Boyden maintains a HOLD on DSX ($15).
- Natasha Boyden maintans a BUY on DHT, though she lowers her price target to $12 (from $15).
- Natasha Boyden maintains a BUY on ONAV, though lowers price target to $12 (from $20).
- Erik Helberg maintains a BUY on DS Norden.
- Anders Rosenlund maintains a BUY on GOL.OL, though cuts target to $10 (from $22.50).
- Johannes Moller maintains a HOLD on DS Norden (DKK 170).

19 November, 2008

Clean Tanker FFA Summary:

TC4 (MR SG-JP 30KT) Spot lopped another 15 pts off the top to W205. Paper markets got a late start with the first trade concluded after 9pm. Nov started the ball rolling with 230 given and ended 230 at 235. Dec worked 182 at 188 and Dec/Jan spread traded in the mid 50’s a couple of times off screen. Late night saw Jan given at 128 then 122 and Feb was offered down to 120. Cal9 followed suit with 135 offer.

TC5 (LR1 AG-JP 55KT) James Brown had it backwards when he said, “Get on up to get down”. Spot went unched in Platts, but paper took a bit of a bumpy ride. Dec started with 207.5 given, stopped at 200 & 199 on its way down to 190 given, then bounced back up to 205. Much later, 202 & 199.5 were given for a finish of 198 at 201. The perception that LR1 vessels unfixed for Nov carriage would roll into Dec contributed to the downside.

TC2 (MR CONT-USAC 37KT) paper saw limited interest. Nov paper was lifted several times at 183, then 182 then ended with 180.5 given for a small loss on the day. Cal09 was lifted at 140, but overall interest was muted as spot remains range bound.

Physical market talking levels:

MR: Sing/Jpn estimate W205-200 With owners willing to go cheap just to reposition vessels North, the fun never ends. The Formosa12 was failed for Thai/Jpn for whatever reason and replaced by the Pro Diamond at w212.5 according to reports.

LR1: Ag/Jpn estimate W230-225 Despite yesterday’s fears that there would be a plethora of vessels rolling over from open Nov to open Dec, compounding the avails list, the spot held steady. A subsequent look at the market finds that activity is still apace and no such glut exists. The Summit Europe looks a bit pricey at W240 and could be an old fix.

LR2: Ag/Jpn estimate W190 Our sources are mixed from patronizingly optimistic to downright bearish on these vessels.

Reported fixtures:

In more positive news, financing and letters of credit seem to be slowly returning to the market. Three-month LIBOR is down to 2.22, a stark contrast to 4.42 seen just one month ago. Chartering activity was up significantly last week and has been decent over the last two days. A rumored 200 idling Capes, however, are still lurking at the moment. With this in mind, not much on the short-term to be excited about just yet.

Dry Bulk FFAs

Contract Close Current Diff
======================================
BDI Nov 1150 1150 -0
BDI Q1 1850 1850 -0
BDI Q2 2575 2575 -0

CS4 Q1 $12,469 $12,500 +$31
CS4 Cal 09 $19,203 $19,000 -$203

PM4 Q1 $12,525 $12,750 +$225
PM4 Cal 09$15,572 $15,750 +$178

SM6 Q1 $9,406 $9,750 +$344

SM6 Cal09 $12,148 $13,000 +$852

Thin volumes with prices still in contango.

- Omar Nokta maintains a HOLD on NM and expresses concerns over the lack of visibility into the conpany’s operations.

- Anders Rosenlund maintains a BUY on JIN.OL, though he cuts target price to $1.60, citing negative earnings revisions.

- Omar Nokta maintains a HOLD on ONAV.

- Anders Rosenlund maintains a HOLD on Camillo Eitzen ($4.30).

- Erik Helberg maintains a BUY on Camillo Eitzen (NOK 50).

- Glenn Lodden maintains a BUY on Camillo Eitzen (NOK 70).

Crude FFAs have seen fair volume. TD3 Dec trades up 5 points to 67, largely in line with the spot market.

Clean
37k Cont/Usac: ws 180 ($16k/day)
55kt Ag/East: ws 235 ($43k/day)

No changes in Atltantic bain clean. Cont/ta sees some fixing, but not enough to push rates up, while little brother Caribs/Usac sees random fixing activity at 165 ($13.5k). In the East, soft demand on most fronts keeps rates between soft and softer. Naphtha demand for petrochemicals is clearing ebbing – and is keeping downward pressure on rates.

TC2 remains dormant. Dec sits at 189, only a few points above spot. In the East, once again we see decent activity. TC4 Dec loses 4 points to 190 whie TC5 Dec loses 5 points to 205. Declining demand is taking its toll.

18 November, 2008

Clean Tanker FFA Summary:

TC4 (MR SG-JP 30KT) took a beating again. The assessed value dropped 15 pts to W220. At about the time that it was made known, Dec paper was given at 200 then 197. It dipped to 195 for a low and 196 last leaving 195 at 196 at the close. The Dec/Jan spread likewise broke off 56 at 57, giving a boost to Jan & Q1. Q1 left 129 bid on a spread, -1 vs TC5.

TC5 (LR1 AG-JP 55KT) paper started up from 214 to 215 in Dec, then slipped to 210 post-Platts. Nov/Dec spread was lifted at 25 in the

VLCC AG/East: ws 67.5 ($50k/day)

Suezmax Wafr/Usac: ws 115 ($43k/day)
Turkish Straits Delays: 1.5 north / 1.5 south

V rates were almost able to hold up since I last wrote – but did manage to slip another 2.5 points late last week. Suezmax rates, on the other hand, underwent a notable decline. The ATS Report mentions there are still 12-15 December cargos still available in Nigeria. You can see that TCE levels are still decent – though, the fact that Q4 is considered “rally season” is troubling. The low price of bunkers continues to assist Owners, although – cheap bunkers come from cheap crude oil, which is coming to us from declining demand. The other side of the sword is sharp indeed.

On top of this, we may have another potential OPEC cut (Cairo meeting Nov 29^th), though we know by now – unless the House of Saud buys into it – it’s not worth the microphone they announce it with. We also know that the High Priest of the Orinoco has a lot of promises to pay for and will be unable to cut. Too bad he threw out anyone who had the technology needed to pump the gooey stuff out of the ground. Container data from the Port of Long Beach confirms general demand is suffering, as the container activity continues to trend down across the board: inbounds, outbounds and empties.

We would also suggest you watch the development of tankers being used to store oil.

Crude FFA volumes have been moderate. TD3 Dec and Q1 both trade up 4 points to 62 and 43. With Dec trading 5 points below spot – the Q4 rally has officially been cancelled by the paper market. But, but for those who are looking for hope, and are willing to look back one year ago, the TD3 WS rate was at about WS 70 at this point in Nov. A week later it was at WS 125. A week later WS 172 and by mid December it had hit 319. I don’t think the issue is that anyone expects a repeat of that historical rate spike, but that things can happen quickly in bulk shipping. Keep your head on a swivel. TD7 has seen decent volumes, though Nov loses 4 points to 119 while Dec drops 6 points to 126.

Clean

37k Cont/Usac: ws 180 ($16k/day)
55kt AG/East: ws 235 ($40k/day)

Not much has changed in the Atlantic basin since I wrote over 7 days ago. A few cargos here – and a few ships there, and rates remain unchanged. Caribs/Usac sits pancake flat at 165 ($13.5k). In the East however, the softening continues on sliding demand.

TC2 is still in slumber mode after the weekend. With Dec priced at 195, about 15 points above spot, brighter minds expect a small year end boost. In the East, paper volumes have been good thus far today – though the continued softening of the physical is putting pressure on FFA prices. TC4 Dec loses 11 points to 195, while TC5 Dec loses 2 points to 212.

- Henrik With maintains a BUY on JIN.OL. Despite high uncertainty in the sector, he cites attractive pricing.

- Anders Rosenlund maintains a HOLD on JIN.OL (USD 2.00). He cites concerns over high leverage, lack of transparency and increasing costs.
- Frode Morkedal maintains a BUY on JIN.OL (NOK 20), citing high contract coverage and an orderbook at level with current market quotations.

Other

- Natasha Boyden maintains a BUY on ESEA, though she lowers her price target to $7 (from $12).
- Charles Rupinski maintains a HOLD on ESEA. He has lowered EPS estimates due to fleet exposure/age and a weaker rate environment.

- Johannes Moller maintains a HOLD D/S Torm but reduces target price to DKK 80 (from DKK 150). He primarily cites declining asset values.
- Anders Rosenlund downgrades Camillo Eitzen to HOLD (from buy). He fears “the trains are leaving the station.”