WORLDWIDE SHIPPING INDUSTRY
Baltic index falls on sliding Capesize rates
The Baltic Exchange’s main sea freight index fell for a second straight session on Wednesday to its biggest one-day decline in nearly six months, as rates for capesize vessels fell after a strong run. The Baltic index, which tracks rates for ships ferrying dry bulk commodities, fell 7 percent, or 151 points, to 2,014 points, its biggest one-day drop since January 31. The index has still more than tripled since February, mainly driven by strong demand for vessels that ship iron ore from Brazil into China. Brazil’s mining regulatory agency had ordered Vale to halt operations at Vargem Grande in February to guarantee the stability of its dams. The capesize index slipped 507 points, or 11.8 percent, to 3,808 points, its worst one-day percentage fall since early May.
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UK oil tankers flee Persian Gulf as tensions rise over Hormuz
Two weeks ago there were six British-flagged oil tankers in the Persian Gulf going about their business. A week later there were none. Iran’s threat to seize a British ship in retaliation for the arrest of the Grace 1 off Gibraltar has effectively closed the world’s most prolific oil region to UK carriers. The tankers in the Persian Gulf on July 9 were all registered in the Isle of Man, a self-governing British crown dependency, but that wasn’t enough to spare them from Iranian harassment. One of them, the British Heritage, left the region without loading its intended cargo of Iraqi crude and needed the Royal Navy frigate HMS Montrose to chase off Iranian patrol boats as it entered Hormuz. At least two others were also escorted out of the Gulf. There are 243 oil tankers — either listed as crude oil tankers, oil products tankers, or chemical/oil products tankers — sailing under the flag of the United Kingdom, the Isle of Man, or Gibraltar, according to tanker tracking data.
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Bunker market looks for extended credit lines as IMO 2020 nears
Shipowners and creditors are scrambling for additional credit lines to cover the anticipated rise in low sulfur fuel oil prices post IMO 2020, market participants said this week.
About $4 billion/month of extra credit will be needed starting 2020 to cover the rise in demand for LSFO and shipowners are already demanding longer payment windows as the market dynamics shift, Adrian Tolson, Senior Partner at 2020 Marine Energy quoted as saying to S&P Global Platts. “There will undoubtedly be more [credit] risk…unless customers opt for scrubbers, each client will need a larger credit facility to buy today’s equivalent of new compliant products,” a Middle Eastern bunker trader said.
Valuations for low-sulfur fuels are set to rise going into 2020, with a gradual uptrend in demand starting this year as the industry gears up for the new sulfur cap. The premium of Marine Fuel 0.5percent FOB Singapore cargo assessments over the high sulfur fuel oil 380 CST Mean of Platts Singapore strip averaged $101/mt in July so far, compared with $88/mt in the second quarter this year and $46/mt in the first quarter, Platts data showed.
The premium of Singapore-delivered marine gasoil (0.1percent) over the Mean of Platts Singapore 10 ppm gasoil assessments averaged $20/mt in July so far, compared with $9/mt in first half of 2019 and $7/mt in the second half of 2018, according to Platts data.
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Iran warns Brazil over stranded ship barred from refueling
Iran has threatened to cut its imports from Brazil unless it allows the refueling of at least two Iranian ships stranded off the Brazilian coast, in a sign of the global repercussions of US sanctions on the Islamic republic. Iran’s ambassador in Brasilia, Seyed Ali Saghaeyan, told Brazilian officials on Tuesday that his country could easily find new suppliers of corn, soybeans and meat if the South American country refuses to permit the refueling of the vessels. Brazil exports around $2 billion to Iran a year, mostly commodities like corn, meat and sugar. Tehran buys one third of all Brazil’s corn exports.
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India govt to bring down logistic costs to 9pc of GDP
In his address to stakeholders of the shipping industry, Indian Minister of Shipping Mansukh Mandaviya said the Centre plans to bring down logistics cost down from 14 percent of the GDP to 9 percent.
The Minister was speaking at FICCI’s summit on Fueling the Maritime Sector: IMO 2020 and Beyond. He said that he would represent India and its interests at the next meet of International Maritime Organisation (IMO).
He also stated that very little has been done on coastal shipping and inland waterways in the past, and there is a need to work on the grassroots level in the shipping sector. Citing avenues for job creation in shipping sector, he said that more than 50 lakh jobs can be created. “If there are 2 lakh ships with a crew of 20 in each, we can easily reach this target,” he said.
The government is also considering alternative fuels such as LNG and methane to reduce emissions and comply with international standards.