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Breakbulk July 2020

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Finding the floor? MPV charter rates to end seven-month slide By Janet Nodar THE TOEPFER MULTIPURPOSE Index (TMI) is expected to rise 0.2 percent in July, a small gain but one that ends a seven-month slide, possibly signaling an end to the COVID-19 rate slump. However, cutbacks in oil and gas spending loom threateningly over the segment. The July reading of the TMI, a forecast of average time-charter rates per day for 6- to 12-month charters for geared, 12,500-dwt F-type multipurpose ships, was $6,391, up from $6,381 in June, but down 16 percent from the July 2019 average of $7,610, according to the latest report from Hamburg-based shipbroker Toepfer Transport. A marked decline in the index kicked off in February, when the COVID-19 pandemic and global efforts to control its spread began to take hold. Low bunker costs have helped keep prices stable, Yorck Niclas Prehm, head of research with Toepfer, told The Journal of Commerce. Vessel operators are also reporting an increase in cargo inquiries, creating some "careful optimism" about the third quarter, he said. However, Prehm noted that while the multipurpose market has "probably reached the bottom of the corona-related rate decrease.… the consequences of the low oil price are still ahead of us," reflecting sector-wide apprehension about cutbacks to capital spending in the oil and gas sector. Although a truce was reached in the Saudi Arabia–Russia oil price war that flooded oil markets and drove forward oil contracts into negative territory in April, IHS Markit, the parent company of The Journal of Commerce, expects a "massive" surplus of excess oil to continue disrupting the market. Ending the price war did not solve the problem of collapsing oil demand owing to the COVID-19 shutdown. Thanks to this falling demand, national oil companies and oil majors including Royal Dutch Shell, Chevron, BP, Exxon, and Total have

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