Tankers steal the show among newbuilding contracting
Ship owners turned to tanker ordering over the course of the past week. In its latest weekly report, shipbroker said that it was a week in which tankers attracted all of the attention in the newbuilding market, after a prolong period of relative absence, while the dry bulk market remained quiet. In particular, we witnessed just one new order being reported in the dry bulk market last week, with an order for two Kamsarmaxes being placed from Hong-Kong based interests. The sector’s freight market remains robust, with fundamentals relatively healthy, but it seems that most potential buyers have taken a step back as of late. The increased interest that was noted in previous weeks seems to have only partially materialized over into actual transactions.
China offers hope for long term dry bulk market growth
China’s economic recovery of late bodes well for the long-term prospects of the dry bulk market. However, there are still many hurdles to be overcome, until analysts can be confident in a full-blown freight rate resurgence. In its latest weekly report, shipbroker said that the critical role China plays on the global dry bulk shipping market has been an undisputed fact for many years now, as it’s not only the country with the 2nd highest GDP figure in the world, but also the top importer of iron ore and soyabeans. The importance of China has been highlighted further this year as it has played a massive role in the rebound noted in the dry bulk freight market after the catastrophic FebMarch period. As such, there seems to be no better time to further examine China’s latest developments and see if the support it has offered can still hold. Furthermore, the economies resilience has mainly been due to increased government spending and a fair cap on China’s COVID19 spread. Meanwhile, the latest forecast from the World Bank states that it expects economic growth to bounce back to 7.9 percent in 2021, a fairly positive sign.
New risk on 10-year shipping horizon
Last year, the number one risk for the maritime industry was the barrelling-down threat of a global economic crisis according to the Global Maritime Issues Monitor. This year, that risk is vying for pole position with a lack of preparedness for a future pandemic, which was added as a risk to the joint Global Maritime Forum, Marsh and International Union of Marine Insurance (IUMI) report for the first time this year. While the industry grapples with the current pandemic, research among senior maritime stakeholders around the world found that horizon scanning for the next pandemic is already taking place. This year’s Monitor worked to ten-year horizon and included a special focus on Covid-19. Respondents reported that the pandemic has revealed weaknesses in the maritime value chain, including the inability to protect seafarers’ wellbeing.
National minimum wage for seafarers
The UK’s National Minimum Wage (Offshore Employment) (Amendment) Order 2020 (the Order) came into force on 1 October 2020, widening the scope and application of the National Minimum Wage Act 1998 and extending its provisions to individuals in offshore employment who are working, or who ordinarily work, in the territorial waters of the United Kingdom. The Order also applies to those individuals on ships engaged in activities connected with the exploration of the sea-bed or subsoil, or the exploitation of their natural resources, in the UK sector of the continental shelf. The intention behind the Order is that these seafarers become entitled to be paid at least the National Minimum Wage (NMW), irrespective of the ship’s flag or individual’s nationality. The amendments mean that ships in the course of navigation, or engaged in dredging or fishing, are now included within the scope of NMW legislation.
Ship recycling activity slows down because of Asian holidays
Ship recycling activity has taken a U-turn of late, with slowdown widely noticed as a result of various National holidays in the Asian region, predominantly China. In its latest weeky report, shipbroker said that with various National holidays in Asia this week including Golden week in China starting from today, there has been a significant slowdown in activity which is expected to continue during the whole of next week. Another factor has been the firming freight markets which continue to be fruitful for Owners, clearly resulting in a lack of workable candidates for the ship recycling sector. This means that price estimations are difficult to assess or be provided accurately and certainly more units are required in the market to test the waterfront and know where the market sentiment truly lies. The news last week concerning the newly established Cartel that was formed in Bangladesh to reduce the over aggressive rates being offered by cash buyers has snuffed the life out of the Bangladesh market and reports suggest that as of this week, no sales have yet been concluded through the cartel.
Dry bulk market could end 2020 on a high
Known assumptions could be a wrong guide, when it comes to assessing the dry bulk market’s direction during the final quarter of the year. In its latest weekly report, shipbroker said that as we enter the fourth quarter of the year, many are now debating to what extent we can really expect a firm dry bulk market to take shape in the final few months of 2020. Amidst a tail risk regime, it would be rather risky to rest in known assumptions and past experiences, trying to choose the best strategy, even in the case of a short-term outlook. It is said that this year has its unique characteristics, being in the midst of a transition over to a different and new era, in terms of how we conduct business, or even how we value risk. Still though, it is too early to say if these trends of late are really here to stay. For the time being and with some sort of certainty, we can say that this shock event will leave its mark. Based on this, can we expect global markets to react differently compared to what we have seen up to now in the event of any further escalations being noted to the current Covid-19 pandemic?