27 JUNE 2022

Shipping stocks softened again last week, losing 1.9 percent overall. Thus, shipping stocks overall developed weaker compared to the global stock markets which saw a slight uptick last week.

When we look at the movement of the individual shipping indices, a new pattern has emerged. The high performers of last year - the bulker-, liner-,  and container-shipping sectors - have suffered the greatest losses and are now only in the middle or, in the case of the container sector, in the last place. Instead, the product shipping sector has taken the lead, and the gas- and offshore-sectors have moved up into midfield. While tanker stocks have recently shown relative strength against the broad shipping market, fundamentally tanker time charter rates are still lagging behind as shown in our 'Chart of the Week'. Traditional, non-eco VLCCs are currently earning around USD/day 16,000 for a one-year employment. Suezmax- and Aframax-tankers are doing better with rates above USD/day 20,000.

This new trend first of all reflects the direct impact of the worldwide sanctions on Russian oil and gas as both commodities now are on short supply and have to be provided by alternative sources. Consequently, vessels' trading patterns are changing as well. Aframax- and Suezmax-tankers in particular have benefited which, as mentioned above, is reflected in higher time charter rates. Secondly, the weakness in stock prices for the dry- and container-sectors over the last weeks mirrors investors' increasing fears of a global recession triggered by precisely these sanctions (together with globally rising inflation and interest rates). Especially in the last few days, the possibility of a recession in Europe has intensified as Russia may turn off European countries from its gas supply. During this week's summit, the G7 leaders will deal with various global crises and hopefully manage to adopt suitable actions. As just announced, the G7 countries aim to invest hundreds of billions of dollars in infrastructure measures.

Our trading strategy lost 2.4 percent w-o-w, slightly more than its benchmark. At the same time, the Notos Maritime Sentiment Index has moved further south and entered negative territory. Currently it is just above the threshold which would indicate a weaker market. We take this as a sign to continue to act cautiously and to wait for a favorable time to invest in a market that is picking up again.

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.

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