Lack of tonnage prevalent in the demolition market
Alack of tonnage is becoming evident in the ship recycling market, as the firming up of the freight market has limited selling opportunities among ship owners. In its latest weekly report, shipbroker said that with owners still enjoying the fruits of the continued firm freight markets, particularly in the dry sector, the alarming lack of tonnage in the market gives a barren feel to discussions. There seems to be no stimulus at present, with the industry crying out for a spark which could ignite a flurry of transactions. The only glimmer of hope is that tanker rates continue in the doldrums and are the lowest seen for over twenty years, which is why many are surprised we have yet to see a large uptake in candidates flooding the recycling shores. It is therefore hoped that the tide could turn quickly in the coming months ahead when finally, these vintage wet units are disposed of. Fortunately, we are also starting to see some recovery from the Covid pandemic crisis as economies around the world start to rebuild. This in turn should aide infrastructure and building, which will ramp up steel demand globally and increase prices.
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Bimco: US crude oil production takes 1.1m bpd hit due to snowstorm
The Snowstorm that hit Texas in the middle of February caused a 1.1 million barrels per day (bpd) drop in US crude oil production between the second and third week of that month. In the week ending 19 February, US crude oil production averaged 9.7m bpd, its lowest level since late August 2020 when Hurricane Laura hit production. Texas is by far the largest crude oil producing state in the US, accounting for 43.0 percent of total US crude oil production in 2020. In a distant second place is North Dakota, accounting for 10.4 percent of total US production. Adding to the recent production drop caused by the snowstorm, the pandemic and a number of developments in the oil market in 2020 has caused the lowest start to the year for US crude oil production since 2018, pausing many years of growth driven by the boom in US shale oil industry.
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Newbuilding orders pick up pace
Ship owners have been more active in the newbuiding market after China’s return from its New Year festivities. In its latest weekly report, shipbroker said that interest remained strong for yet another week in the newbuilding market, but with a relatively small number of transactions being concluded as of yet. In the dry bulk market, the overall bullish momentum in the segment has boosted appetite, with a further 3 new units being added to the orderbook this past week. With earnings still on the rise, we expect interest to remain vivid in the segment, with the overall focus divided evenly between the different size segments. However, the increases being noted in terms of newbuilding prices as of late are a slight overhang, dampening further growth in activity as we move forward. On the tankers’ side, it was another week with moderate activity, with orders for 3 VLCCs and 4 product tankers being reported.
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150 shipowners join forces for more real-time transparency in the bunker market
The bunker market has one big problem and that’s a lack of transparency, says Ove Munthe-Kaas. Munthe-Kaas is working with a team to develop a bunker procurement tool that is bringing shipowners together for more transparency in the bunker market. Buying bunker fuel has long been an opaque ordeal. For decades bunker buyers have been in the dark, trying to catch up with scattered and transient information from bunker ports around the world. Ship operators might spend hours gathering information, calling around to ask for fixing levels seen in Singapore or Rotterdam, and the latest price indications and fuel availability estimates in other ports along the route. By the time they have gathered all that data, the first part of it might already be outdated, so they will have to start over again to get the latest.
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IMO publishes guidelines to port state control for on board fuel oil sampling
The 75th session of International Maritime Organization’s (IMO) Marine Environment Protection Committee (MEPC 75) has in November 2020 adopted amendments to MARPOL Annex VI, introducing a method for fuel oil sampling from ships’ fuel oil tanks to verify the sulphur content. The new amendments will enter into force on 1 April 2022. As a result of the introduced method, shipowners and the officers on board ships should be prepared to handle potential requests from port State Control (PSC) to sample from the ships’ bunker tanks and not only from the fuel oil line between the service tank and auxiliary engine(s). IMO has in addition released new guidelines for on board sampling of fuel oil intended to be used or carried for use on board a ship.
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Trade agreements could offer additional boost to the shipping markets
With the past four years being marred by various trade frictions, the US-China being the biggest one, it’s expected that trade flows could start to normalize, with new agreements in the works able to shift and even enhance flows in the future. In a recent weekly note, shipbroker said that it has been a year of considerable re-shuffling in global trade, with China’s role progressively enlarges. Traditional trade flows amongst major world economic power houses such as the European Union (EU) and the US seem to be losing ground, while the pandemic of 2020 has surely played a considerable role in this regard. However, the question that arises is if this shift in trade volumes is a short-term event as part of the rapid recovery of China, or if it is a much longer-term fundamental change.