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Red Sea conflict points towards elevated tonne miles into 2024.
Tensions in the Red Sea have continued escalating over the Christmas period as a Houthi rebel attack on a Maersk container vessel, “Maersk Hangzhou,” resulted in bloodshed as a US helicopter destroyed Houthi small boats that were firing on the containership.
“Shipping stocks rose over the holiday period as markets digest Red Sea conflict”.
Avoiding the Red Sea will require vessels to re-route via the Cape Of Good Hope, adding significant distance to routes from the Middle East to Europe from 17 days through Suez to 41 days around Africa. BP is the first major oil producer to pause transits through the Red Sea, and if/when others join them, significant tonne-miles will likely be added to the industry, which has driven a broad rally in shipping shares over the recent days.
Aframax ECO, 12 months TC
Aframax, Average spot
Suezmax ECO, 12 months TC
Suezmax, Average spot
Source: Clarksons Research
Panama Canal and Red Sea affecting Bulk into 2024.
Heading into 2024 Bulk markets continue facing major disruptions with two major shipping passages as the Panama Canal restrictions remain in place and are set for further restrictions from February 2024, while the Israel-Palestine conflict is causing avoidance of the Red Sea. The outcome is a significant rerouting of vessels traveling from the US to Asia and from the East to Europe. All else equal these restrictions should positively affect dry bulk rates.
“Bulk markets impacted by key trading route disruptions with some positive demand signals heading into 2024”.
Demand may also remain strong in 2024, with Asia continuing its strong demand for thermal coal, particularly from China and India. The demand is partly bolstered by stockpiling as increased geopolitical tensions and reduced energy security have inspired inventory accumulation.
Capesize, 12 months TC
Kamsarmax, 12 months TC
Source: Clarksons Research
PCTC markets look towards another strong year in 2024.
PCTC markets experienced incredibly strong markets in 2023 with high utilization, very high rates and ongoing demand strength driven by exports from China and Asia. Looking into 2024, many of those conditions remain, with China expected to continue growing its exports of EVs to Europe and elsewhere in the West.
“PCTC tonne-miles likely to expand due to Red Sea conflict”.
The PCTC market also experiences disruptions from the current conflict in the Red Sea and the partial closure of the Panama Canal. The effect on PCTC rates is still yet to be seen, but additional tonne-miles from rerouting is a likely outcome. PCTC owner share prices had mixed reactions in December, suggesting the market has not decided on the full effect of the Red Sea conflict yet.
5000 CEU – 12 months TC
6500 CEU – 12 months TC
Source: Clarksons Research
| Type | Tons | Week 51 | Week 47 | + /- |
|---|---|---|---|---|
| VLCC | 300t. | $ 56.000 | $ 57.250 | -2 % |
| Suemax | 160t. | $ 46.000 | $ 47.250 | -3 % |
| Aframax | 115t. | $ 45.750 | $ 47.500 | -4 % |
| MR | 50t. | $ 31.500 | $ 28.750 | 10 % |
| Type | Resale | 5y | 10y | |
|---|---|---|---|---|
| VLCC | 130.0 | 105.0 | 75.0 | |
| Suemax | 95.0 | 78.0 | 61.0 | |
| Aframax | 83.0 | 70.5 | 55.0 | |
| MR | 53.0 | 43.5 | 34.0 |
| Type | Tons | Week 51 | Week 47 | + /- |
|---|---|---|---|---|
| Capesize | 180t. | $ 20.500 | $ 18.500 | 11 % |
| Panamax | 82t. | $ 15.600 | $ 14.500 | 8 % |
| Supramax | 58t. | $ 13.000 | $ 12.375 | 5 % |
| Handysize | 38t. | $ 13.250 | $ 12.000 | 10 % |
| Type | Resale | 5y | 10y | |
|---|---|---|---|---|
| Capesize | 68.0 | 52.3 | 31.0 | |
| Panamax | 39.5 | 34.0 | 24.0 | |
| Supramax | 37.0 | 30.5 | 19.5 | |
| Handysize | 33.0 | 26.5 | 17.0 |
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