Pacific Basin: Vessel Earnings Outperform Market Indices

Hong Kong-listed dry bulk shipping company Pacific Basin Shipping said that its vessel earnings outperformed the dry bulk freight market indices in the third quarter of 2016, which improved for all bulk carrier types from the historically low base recorded in the first quarter. 

The company generated average Handysize and Supramax daily TCE earnings of USD 7,040 and USD 7,360 per day net in the third quarter, and its year-to-date average Handysize and Supramax daily net TCE earnings increased to USD 6,400 and USD 6,430, outperforming the BHSI and BSI spot market indices by 44% and 21%, respectively.

As at September 30, Pacific Basin Shipping has secured 74% of its 10,910 contracted Handysize revenue days at around USD 7,960 per day net and 75% of its 4,950 contracted Supramax revenue days at around USD 7,460 per day net for the final quarter of 2016.

Additionally, the company has so far secured cover for 2017 for 18% of its 36,900 contracted 2017 Handysize revenue days at around USD 9,480 per day net and 27% of its 11,390 contracted 2017 Supramax revenue days at around USD 11,410 per day net.

“The market benefitted from seasonally strong US grain export volumes during the third quarter, as well as increased iron ore and coal imports into China. However, the market remains oversupplied with vessels, and conditions are still challenging for shipowners,” Pacific Basin Shipping said.

Market spot rates for Handysize and Supramax ships averaged USD 5,500 and USD 6,710 per day net, respectively, in the third quarter of 2016. Driven by increased cargo volumes and an improvement in market conditions since the historic lows recorded in February, these average market rates represent a 21% and 22% improvement on the previous quarter, but a 8% and 20% decline compared to the same period last year “illustrating that freight conditions remain depressed.”

While self-correcting supply-side dynamics forced surplus capacity out of the market place in the extremely weak first half of the year, scrapping reduced in the third quarter and it is expected that the global dry bulk fleet will still register a small net growth in capacity for the full year 2016.

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Posted on October 6, 2016

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