A hefty risk premium is tempting some Chinese owners of older bulkers to take a chance on Iran trades as sanctions drive others to find new markets.
Iranian exports of iron ore and cement clinker are continuing to move despite renewed US restrictions, but not all traders, shipowners and intermediaries will touch the trade for fear of legal consequences that include having international dollar transactions frozen.
Risk takers
Some Chinese owners of older supramax and panamax bulker tonnage with limited exposure to international trading and financial markets are willing to take the risk and have been building up veteran fleets specifically for the trade.
The rewards take the form of gross voyage revenues that can easily pay off the purchase price of the ageing tonnage within four or five voyages.
Most ships that TradeWinds has identified as taking part in the trade do so with AIS transmissions switched off, typically going dark while westbound for Hormuz. The vessels then reappear two weeks or more later in the same place before making a fuelling stop at Fujairah and proceeding to a Chinese discharge port.
The cargoes go to a variety of coastal and upriver destinations in China, and sources informed on the trade say the charterers are typically traders rather than end users, whose link to the US-sanctioned trades would be easier to trace.
These ships are often in the hands of single-ship owners, or at least unidentifiable as part of a larger fleet.
But some owners in the trade do not conceal their voyages.
The 73,900-dwt CI Brave (built 1999) has shuttled between a Bandar Abbas bulk terminal and China ever since it was purchased from Genco Shipping & Trading last November, when it was the Genco Beauty, for a reported $6.7m.
Another ship managed by the same company — the 74,200-dwt Xing Meng Xiang (built 2002) — was bought from Orion Bulkers in June for a reported $7m under the name Banzai. It immediately proceeded to Bandar Abbas, where it is now loading.
The owner of the CI Brave could not immediately be traced, but Chinese dry bulk players believe it is one of five veteran panamaxes that a single Qingdao-based shipowner is believed to have purchased in rapid succession for the Iran trade.
The CI Brave and Xing Meng Xiang are technically managed by Peace Voyage Shipping, sometimes identified as Peace Partner Shipping, but TradeWinds was unable to confirm whether both are part of the same owned fleet.
Shanghai’s ATL Shipping is one company that has also rapidly built up a veteran fleet during the present year but has made the opposite decision.
A person with knowledge of ATL's business told TradeWinds that the company has pulled its fleet of four panamaxes out of the Iran trade and is now cleaning up the holds in preparation for shifting them to the Brazilian grain and soybean trade.
"In the past, the Iranian ore trade was legal business," the source said.
Panamaxes purchased
ATL bought two panamaxes from Taiwan’s Ta Ho Shipping this year as well as a pair of geared panamaxes from Norden. AIS records show that upon delivery, all of the vessels soon headed towards the Middle East Gulf to work the Iran trade until renewed US sanctions made this impossible.
A fifth ATL ship — the 68,500-dwt geared panamax Pacific Knight (built 1996) — was exclusively employed in the Iran trade until it was sold earlier this year. However, its unnamed Fuzhou-based buyer appears to have kept it in the trade.
In general, internationally oriented chartering brokers and dry bulk owners admitted to knowing very little about the specifics of the current Iran dry bulk trades, and even Chinese domestic-tonnage players said it is "sensitive" and participants keep the details to themselves.
But some with insight into the business believe panamax owners have been able to command rates of between $23 and $30 per tonne on a voyage basis for carrying iron ore from Bandar Abbas to Chinese discharge ports.
The voyage takes less than a month one way but queues and loading times on the western end can be unpredictable.
However, on the basis of a 60-day round trip carrying 70,000 tonnes, those rates imply gross revenues of between $1.6m and $2.1m per trip — or a time charter equivalent of between $27,000 and $35,000 per day, which is roughly double the spot rates available in the wider market.
This story has been amended since publication to reflect that two panamaxes purchased by ATL Shipping soon headed to the Middle East Gulf, rather than immediately.
