Manufacturers and traders in the US and Europe are waiting to
see if factory workers in China return to work next week, 17 February,
following the coronavirus outbreak as the western companies fear their
operations may grind to a halt if cargo does not start moving soon, says
Shipping industry sees
freight markets in complete collapse as Coronavirus paralysed demand
Athens-based broker Allied Shipping offers a more prosaic view
claiming, “The shipping industry sees freight markets in a complete state of
collapse as demand gets paralysed by the ensuing effects [of the coronavirus]”.
George Lazaridis Head of Research & Valuations at Allied,
believes that there has been a major correction since the beginning of this
year with both the dry bulk and tanker markets slowing significantly. These are
the primary building blocks for manufactured goods.
y-o-y economic expansion for Q1 2020 down to 4% slowest pace
According to Lazaridis, “This sparks further worries, as the
prevailing projections now are for China’s year-on-year economic expansion for
Q1 2020 to fall down to 4%, the slowest pace since China first started
publishing quarterly figures back in 1992.”
parts of the maritime sector taken a hit ; some traders to issue force majeure
In a rather bleak outlook Allied also notes that all parts of
the maritime sector have taken a hit including the shipbuilding, ship repair,
crewing, cargo loading and discharging as well as sale and purchase activity.
And this has led some traders to issue force majeure notices.
Larger volumes help recover lost
cargo revenues when virus emergency is over
Allied believes that the condensed nature of the economic
slowdown means that the industry will attempt recoup lost cargo revenues, when
it becomes clear that the virus emergency is over, by pushing through larger
volumes, while Lazaridis even speculates that the Chinese Government may
consider a monetary “stimulus package”
shares bleak outlook
rather bleak outlook is not entirely shared by brokers at Braemar they too are
a pessimistic about the broader economic picture, but Braemar researcher,
Jonathan Roach said the company had “noticed a healthy level of enquiry and
activity,” in the sale and purchase market.
Braemar quotes the acquisition of the Niledutch Antwerpen, a 3,510TEU,
geared vessel, built in 2015 by the Shanghai New Shipyard, on undisclosed
terms. In addition, it has been reported that the 2,764TEU, geared Gisele A,
built in 2004 by the Gdynia Shipyard, has been sold to UAE-based operators
Tehama for a price of US$6.8 million.
“Demo prices have continued to soften as we see large dry bulk vessels
entering the market for recycling, coupled with softening steel plate prices
and uncertainty caused by the Coronavirus,” said Braemar.