CLTX Weekly Market Summary

CLTX Weekly Market Summary

Summary Dry Bulk The main dry bulk index dropped to new historical lows Rates decreased for Capesize, Supramax and Handysize vessels Iron Ore and Steel ANZ bank cut its iron ore price forecasts for 2015 and 2016 Iron ore spot rates increased by 5.3 percent week-on-week Fuel Oil and LNG Ukraine hope to create $1 billion in reserves of natural gas and fuel oil Spot prices for fuel oil continued to rise Container Maersk Line have ordered 10 new 20,000 TEU capacity ships The WCI increased to $2,092.39 per FEU Fertiliser Fertiliser futures experienced a mixed week The dynamics of the North American nitrogen fertiliser sector will experience a major change in 2015

Dry Bulk Poor bulk commodity market conditions caused the Baltic Exchange s main dry bulk index to fall to new record lows last week, with the composite dry bulk shipping index hitting the previous record low set in July 1986 on Monday. Since then the index slid further, down 29 points or 5.2 percent week-on-week at 530 points on Friday. Data for the Baltic dry index dates back to January 1985. The Capesize index dropped by 59 points, or 8.6 percent week-on-week, moving from 689 points to end the week at 630 points, despite BHP Billiton, Rio Tinto, Fortescue Metals and Vale all chartering Capesize vessels. Average daily earnings for Capesize carriers dropped by around $600 per day week-on-week to around $5,100 per day on Friday. According to a Singapore-based broker, everyone expects chartering activity to be dead over the coming week because of the Chinese New Year holidays. The only dry bulk segment to increase last week was the Panamax segment, with the Baltic Exchange s Panamax index increasing by 69 points or 16 percent week-on-week, ending the week at 499 points. Panamax rates averaged about $4,000 per day on Friday, approximately $550 per day higher than a week earlier. Rates for the less volatile Supramax and Handysize bulk carriers continued to slide last week. Average daily rates for Supramax carriers dropped by approximately 8 percent week-on-week to around $5,100 per day on Friday. Average daily earnings for Handysize carriers decreased by approximately 11 percent week-on-week to around $4,000 per day, down from $5,150 per day a week earlier. In the futures market the March 2015 contract for the Capesize average of 4 routes fell to $6,500 per day on Friday. Capesize paper for the second quarter of 2015 dropped by $700 per day weekon-week, closing at $8,300 per day on Friday. As of Friday, March 2015 futures for the Panamax average of 4 routes were trading at $6,200 per day, 55 percent above spot rates. Panamax futures contracts for the second quarter of 2015 remained flat for the week with a few small moves along the way, closing at $7,400 per day on Friday. Iron Ore and Steel ANZ became the latest bank to cut iron ore price forecasts for 2015 and 2016. The Australian bank now expects iron ore to average $58 per MT in 2015 and $60 per MT in 2016. The reasons given for the lowered price forecasts include miners taking a more realistic view on profit margins. In a move that is likely to see an increase in the volume of iron ore imported to China from Brazilian miner Vale, the Chinese government has introduced a new rule which will allow bulk carriers with

capacities above 400,000 DWT to dock at its ports. This new limit is quite close to the capacity of the mega ore carriers operated by Vale, indicating that China is willing to deepen cooperation with Vale. The spot price for iron ore with 62 percent content delivered to Qingdao in China increased significantly last week. The spot price increased by its largest daily amount so far this year on Friday, climbing by 2.8 percent. This brought the week-on-week price increase to 5.3 percent, up from $61.80 per MT to $65.10 per MT. The increase comes as high cost supply is removed from the market. March 2015 futures for iron ore with 62 percent content delivered to Qingdao increased by $1.75 per MT week-on-week to close at $64 per MT on Friday, 2.8 percent higher than a week earlier. Third quarter 2015 contracts increased by $1 per MT week-on-week to close at $61.25 per MT on Friday. Fuel Oil and LNG During a speech given in Kiev on Thursday, the Ukrainian Prime Minister Arseny Yatseniuk announced that the country hopes to borrow $1 billion to create a reserve of natural gas and fuel oil. According to the Prime Minister, this money will be used to create a strategic reserve" amid increased uncertainty about Ukraine s natural gas supply from Russia. In other news, Opet Trade (Singapore) is expected to exit the fuel oil market in the second half of 2015, as the fallout from the OW Bunker Scandal continues. According to a recent publication by Platts, Opet Trade was exposed to over $33 million with OW Bunker Far East and its subsidiary, Dynamic Oil Trading. Spot prices continued to rise last week as Brent crude oil increased by 6.4 percent week-on-week. The spot price for 3.5 percent FOB barges Rotterdam fuel oil increased by nearly 5 percent weekon-week, closing at approximately $320 per MT on Friday. Elsewhere, spot prices for 180 CST FOB Singapore and 380 CST FOB Singapore fuel oil increased by around 1 percent for both grades. 180 CST FOB Singapore and 380 CST FOB Singapore fuel oil ended the week trading at around $355 per MT and $345 per MT, respectively. In the futures market, 3.5 percent FOB barges Rotterdam fuel oil futures for May and June 2015 deliveries closed the week at $326 per MT and $328.75 per MT, respectively. Elsewhere, 380 CST FOB Singapore fuel oil futures for delivery in March 2015 increased by 4.8 percent week-on-week, to close at $351 per MT on Friday. March 2015 contracts for 180 CST FOB Singapore fuel oil traded at $332.50 per MT last week.

Containers Maersk Line, the world's largest container shipping company, has ordered 10 new 20,000 TEU container ships worth an estimated $1.5 billion. This move is seen as a way in which Maersk can offer better efficiency and reduced operating costs in a world of lower rates. According to a Braemar ACM Shipbroking analyst, ship prices may go up in the latter part of the year," as more companies look to take advantage of the more economical ships. He also added that "new ships will replace smaller ones which will be cascaded to less-busy routes and put the pressure on smaller operators that can t match the 2M s capacity, port calls and fuel efficiency. The composite World Container Index (WCI) increased by $38.69 per FEU or 1.9 percent week-onweek, to $2,092.39 per FEU on Thursday. The largest weekly increase in rates for routes included in the WCI calculations was on the Shanghai to Los Angeles route, where rates increased by 7.9 percent to $2,170 per FEU. The next largest increase in rates was on the Rotterdam to Los Angeles route, where rates increased by 4.7 percent to $3,407 per FEU. Rates for the Shanghai to New York route increased again week-on-week to reach $4,893 per FEU, the highest level available from WCI historical data dating back as far as January 2010. Following an increase in rates of 13.8 percent during the previous week, rates on the Los Angeles to Rotterdam route experienced a more modest increase of 1 percent week-on-week, rising to $3,276 per FEU on Thursday. Other WCI routes to experience weekly rates increases were the Rotterdam to Shanghai, Shanghai to Genoa and Rotterdam to New York, which were at $859 per FEU, $2,882 per FEU and $2,333 per FEU, respectively on Thursday. The largest drop in rates was on the Shanghai to Rotterdam route, which dropped by $111 per FEU or 5.1 percent week-on-week to $2,087 per FEU on Thursday. Rates on the New York to Rotterdam route were also down compared to a week earlier. On Thursday container shipping rates from New York to Rotterdam were at $1,327 per FEU. There was no weekly change in rates from Los Angeles to Shanghai or from Genoa to Shanghai. Fertiliser In its latest report on North American agriculture, the Rabobank Food and Agribusiness Research (FAR) and Advisory group highlighted 2015 to be an interesting year for the North American nitrogen fertiliser sector. Amongst the reasons to expect an interesting 2015 are last years delayed harvest caused by adverse weather conditions and a change in the supply dynamics as a result of new nitrogen fertiliser projects. These projects will be the first nitrogen fertiliser projects to begin production in the U.S. and will reduce the dependency on imported fertilisers. The first plant to start production is expected to be the new OCI facility in Iowa. The Egyptian government have announced that they have reached an agreement with a number of Kuwaiti companies to begin new fertiliser and petrochemicals projects worth an approximated

$6.8 billion. Memoranda of understanding (MOUs) have been signed with a number of companies including Abu Qir Fertilizers Company, one of the largest producers of nitrogen fertilizers in Egypt and the Middle East. In the urea fertiliser futures market, granular New Orleans urea FOB barge March 2015 paper was up in the early part of the week, trading at $320 per ST on Wednesday, before dropping back to $315 per ST on Friday. As of the end of the week, futures contracts for April and May 2015 were trading at $313 per ST and $296 per ST, respectively, as the market expects the demand driven by spring application to cool off, causing a drop in prices. New Orleans FOB urea ammonium nitrate (UAN) with an April 2015 delivery was trading at $256 per ST on Friday, down $4 per ST from the $260 per ST price of a week earlier. Elsewhere in the fertiliser market, prices dropped slightly for New Orleans FOB diammonium phosphate (DAP) with a March 2015 delivery, which increased by $11 per ST or 2.5 percent weekon-week to $436 per ST.