Tanker carriers are battling low earnings, and rates are far from high enough to secure black figures in the second quarter, says US firm Morgan Stanley. ShippingWatch has dived into a struggling market for a closer look.
The bottom line went from positive to negative for Euronav in the first quarter of the year. Critical interim results are underway from tanker shipping companies, which are struggling with highly negative conditions in the market.
Three listed dry bulk carriers will break the negative cycle and be the first to present positive earnings in the dry bulk market, according to Morgan Stanley, as rates on this market continue to rise.
Rates for supertankers in the Middle East have plunged to the lowest level since 2014 for this time of year, reports Morgan Stanley. The investment bank expects strained rates for some time going forward.
The fourth quarter is traditionally a good season for tanker carriers, but a surge in demand is currently keeping the vessels extra busy. A strong finish to the year for a segment which could face sliding rates following OPEC's announced cap deal.
Strong developments in coal and iron ore transports have sent the rates for the largest dry bulk ships, Capesize, into the black last week. But the increasing volumes are seasonal, and a significant fleet growth will likely bring renewed pressure on the rates, writes Morgan Stanley.
The dry bulk index BDI has reached an 11-month high. This is mainly attributed to an increase in the rates for Capesize vessels, but for the long term, analyst agency Morgan Stanley points to an overall improvement in the dry bulk market due to a potential increase in Chinese imports.
The spot rates for container have dropped six weeks in a row and Chinese New Year's, which is traditionally a time of increased demand, did not come to the rescue. Gloomy prospects for 2016, Morgan Stanley assesses, while overcapacity seems to be sticking.
Dry bulk shares took new beating on the exchanges, but also product tanker, with players such as Scorpio Tankers, Ardmore Shipping and Tsakos Energy Navigation, was hit by the downturn in China. Markets have recovered to some extend again.