*TD3C Choices*
During the start of September we saw TD3C spot levels break through the floor of ws30 for the first time in 5 years, where it reached a yearly low at ws24.75 on (04/09). Over 2 months on from this date, there has been little change with spot printing on Tuesday (17/11) at ws25.83. Since spot values fell through the ws30 level, it has only managed little over week in mid-September back above, during which it reached a high of ws38.29 (14/09) before quickly falling again. Now, over halfway through November it seems 2020 is becoming a distant memory that leaves a mixed bag of feelings across the market. With an average TD3C voyage from Ras Tanura to Ningbo taking over 45 days (including load time) any hopes for a last minute turn in fortune is quickly fading.
Owners and charterers face a difficult conundrum as we enter into 2021. Looking at Time Charter Earnings, the Baltic Exchange priced TD3c on Tuesday (17/11) at $6,180 p/d. Do they fix a time charter at the current Cal21 prices, with current TCE earnings for 2021 returning circa $32.5k p/d and secure a significantly higher return then we have seen over the previous few months. Or….do they roll the dice and hope rates climb back up as we move through 2021 and make traction towards a more ‘normal’ life. The difference being now, the ‘fundamentals’ hinge on the progress scientists are making developing and testing suitable vaccines, as opposed to any of the normal new building/scrap prices, oil production/demand, tonnage availability and bunker prices that normally drive the market. (FIS, ICE, Baltic Exchange)
*2021 Flat Rates*
I am sure it comes as no surprise that the flat rate values for next year will be lower. The main cost component of voyages is fuel, and the bunker market has seen a similar year to wet freight with values coming off across the board. With flat rates reflecting the average cost of a voyage between certain ports, a fall in the bunker prices throughout this year have contributed to bringing down the flat rate values we will be using for next year.
The start of each new calendar year brings a new set of flat rates to allow worldscale to be calculated for the year. Looking at the change in bunker prices and underlying shipping costs, we estimate TD3C will be down circa 16.5% to around 18.23 and TD20 down circa 17% to around 14.12
TC2 and TC14 both seem to be down circa 16% with values at around 12.31 and 17.96 respectively.
When comparing this to a shorter route like TC6 which is down only circa 6.5% to around 6.51, you can expect that the longer routes will see a larger percentage change in flat rates as more fuel is required, compared to the shorter routes. (FIS, ShipandBunker, Worldscale)
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