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NOTOS NEWS | MARITIME MONTHLY 
DECEMBER 2021

Shipping stocks gained 5 percent overall in December and an impressive 78 percent over the whole year. Dry bulk, liner and container turned out to be the top performing sectors with a profit of well above 100 percent each.

OMICRON VARIANT STRIKES
Financial markets went on a roller coaster ride in December. In addition to the fourth Corona wave, new fears were stoked by the highly contagious omicron virus variant from South Africa which was sequenced at the end of November. The uncertainty regarding the effectiveness of the applied vaccines, potential mass incidencies and the possibility of global lockdowns and economic downturns caused the stock markets to suffer considerably by the end of November and in December.

CONFIDENCE RETURNED
Meanwhile the markets have regained confidence. First scientific findings suggest that the omicron variant, although highly contagious, usually takes a milder course than the delta variant, especially in case of vaccinations and booster shots. In any case, stock prices jerked up again towards the end of December.

SHIPPING'S TOP PERFORMERS
The shipping sector was not too badly impacted as its overall performance amounted to five percent in December and an impressive 78 percent for the whole year. At the very top are the dry bulk-, liner- and container-shipping sectors which gained well above 100 percent y-o-y overall.
 
These sectors benefited from sustained strong global demand for containerized goods and for commodities – especially iron ore and coal for China – on the one hand and extreme fleet inefficiencies on the other. Port closings for ships and crews, handling problems and a lack of container boxes bolstered earnings. Although, in the fourth quarter, containerized freight- and charter-rates seemed to have passed their zenith, and bulkers’ spot earnings corrected sharply, these three sectors wrote a superb success story in 2021.

WHAT WE EXPECT FOR 2022
For liners and boxship owners, we assume the very favorable fundamental market environment to go on for the time being. Supply disruptions and port congestions are very likely to continue or even intensify due to the omicron variant. Once omicron has lost its horror, there hopefully is rather a soft than a hard landing to lower but still satisfactory earnings levels.
 
The dry bulk sector is further supported by its very modest order book which may compensate for presumably lower Chinese iron ore imports in 2022. 

The tanker sector is finally in the starting blocks, particularly if OPEC continued to reverse its production cuts and other oil-producing countries expanded their output to satisfy the expected rising demand. After all, EIA predicts global oil demand to return to pre-pandemic levels in 2022. A mild omicron course of infection would also favor air traffic and product tanker trade. 

After the run of autumn 2021, LNG shipping is past its winter high and follows its usual seasonal downturn. LPG, by contrast, may be on the verge of taking off as the US oil production is expected to being ramped up. This is fueling the arbitrage between US and Asian gas prices and may favor LPG shipping.

SENTIMENT HAS PARTIALLY FOUND ITS BOTTOM
The Notos Maritime Sentiment Index and its three sub-indices have strongly dropped over the past three months. But there is also good news: It seems that the overall sentiment has found its trough around year-end. The same applies to the bulker- and the container-sentiment indices which are already a little further on their way up. Still, the bulker sentiment has not yet returned to positive territory after having made the steepest fall of all indices. The tanker sentiment, however, still lags behind in its recovery. Reacting most sensitively to fears of lower economic growth, this sector has once again skipped the winter season.

TRADING STRATEGY GAINS SIGNIFICANTLY
The Notos Maritime Strategy Index generated a considerable return of 6.3 percent m-o-m. Thus, it was able to beat its benchmark, the Notos Shipping Index (NSI), which was up 5.0 percent. For the whole year, the trading strategy generated strong returns of 57.4 percent, although it fell behind its benchmark (78.4 percent).
 
Our trading strategy currently focuses on sectors which are successfully running such as container- and dry bulk-shipping. Another focus is on markets that we assume to have the potential to take off in the new year such as LPG.
 
Please do not hesitate to contact us if you wish to know more about our trading strategies.

GLOSSARY
NOTOS SHIPPING INDICES | Measure the average performance of listed shipping companies in each sector
NOTOS MARITIME SENTIMENT INDEX | Measures the sentiment of global shipping markets, ranks between -1 and +1

NOTOS MARITIME STRATEGY INDEX | Discretionary trading strategy on shipping risks


DISCLAIMER
This document has been prepared and approved by Notos Consult GmbH and is for informational purpose only. The information presented in this report is intended for the recipient to whom it was delivered. Reproduction or distribution of this document in whole or in part is not permitted without the express written consent of Notos Consult GmbH.
This document contains forward-looking statements. We caution the reader that forward-looking statements are not guarantees of future performance. Past returns are no indication of future returns. The development of the industry,
markets and companies described in this document, may differ materially from the forward-looking statement contained herein.

Information and opinions contained in this document have been compiled from sources believed to be reliable. Unless otherwise stated, any statements herein are based on our own estimates at the time of publication. Notos Consult GmbH makes no representation as to the accuracy or completeness of any of the information contained herein and accepts no liability for loss arising from the use of the information provided. 

This document is not an offer of any kind. This report has been prepared separately from any proposed offering of any security and as such information herein must not be relied upon as having been authorized or approved by the issuer of such security.

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