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Newbuilding contracting picks up pace

Proman Shipping announced signing for a further two firm 50k MRs, with delivery of both vessels set for 4Q 2023, bringing the series to six overall”. The renewal process of the global fleet has picked up pace in 2021, after a lackluster couple of years. In its latest weekly report, Clarkson Platou Hellas said that “in tankers, STX Jinhae have announced a plethora of deals this week. The yard has signed six firm 50k dwt MR’s with an unknown owner, with deliveries to begin in 2Q 2023 and run through until the end of 2023. STX also signed contracts for two firm plus two optional 115k dwt Aframax’s, also with an unknown owner and deliveries of the firm vessels set for 1H 2023. Finally at STX, they signed for two firm 10k dwt Chemical tankers, again with an unknown owner, with delivery expected within 2023. In other tanker news,

Ship recycling market back to firmer ground

With vintage tonnage in demand, the ship recycling market is firing on all cylinders. In its latest weekly shipping report, shipbroker said that there appear to be conflicting reports from varied sources in the industry with some talking of a correction in India and Bangladesh, however others predicting the market to hold and continue in its current firm stance through the summer/monsoon season. Certainly, demand for steel remains strong and with the production line on the waterfront most likely to slow due to the monsoon season, we do not foresee any significant change to the current price indications, what with the lack of available candidates and the promising future sentiment in the steel industry Meantime, the Covid pandemic continues to affect particular regions of the industry at different times. Bangladesh announced a strict seven-day lockdown starting from June 28 after a dramatic surge in the Delta variant cases nationally with reports of an extension for a further period if the situation does not come under control. However, whilst banking activities have been affected, local Government offices closed, vessels arriving to the anchorage at Chattogram are being given inward clearances and subsequent beaching of vessels are taking place, the shipbroker noted.

Extreme spot rates heading for $20,000

In April’s Logistics Executive Briefing, Drewry flagged the issue of “extreme freight rates” and predicted that spot rates would continue to increase. Three months on, spot rates have jumped by another 70 percent or so and we expect rates to get close to $20,000 on some lanes. The difference between this year’s container shipping market and that of the last 5 years has become stark, as spot rates broke inflationary record after inflationary record. Average Asia-US West Coast port-to-port spot rates topped $4,000 per 40ft container back in September 2020, slowly rose past $5,000 in May 2021 and then rapidly sailed past $6,000 (June), $8,000 (also June) and $9,000 (July). We have heard reports of $15,000 from China to the West Coast and are aware that carriers are charging additional premiums on top to prioritise the loading of a late booking ahead of normal FAK rate cargoes.

Container shipping: who wants to be a (multi) billionaire?

Drewry’s latest Container Forecaster report includes huge upgrades for freight rates and carrier profits as market faces extended period of under supply. The latest edition of Drewry’s Container Forecaster finds that 2021 will be the first year in the history of container shipping when carrier profits approach $100 billion and average freight rates jump by 50 percent, against a background of huge operational disruptions to the port and ship systems. Many of the themes covered in the latest edition will be familiar. Port congestion and equipment availability challenges, for example, have not gone away and continue to drive market prices, but what is different from three months ago is that some of the numbers are much bigger.

Tanker owners looking forward to a rise in crude oil production

Tanker owners are eagerly awaiting for an increase in crude oil production. Still, according to shipbroker, the tighter OPEC keep things today, the greater the potential future rewards from higher US exports could be. In its latest weekly report, shipbroker also said that with oil prices racing back up to $75/barrel and the very real prospect of sustained demand rising in the near term, the time to open the taps, you would think would be now. However, as with everything that has happened over the past 18 months, it isn’t as simple as that. OPEC+ have instigated monthly meetings to keep an eagle eye on prices, demand and production. This has allowed them to fine tune its quota system. At the time of writing OPEC+ was yet to reach a cohesive agreement on production volumes for August onwards, although most members supported a monthly increase of 400kb/d. furthermore, over in the United States, things are slightly different. The shale producers are keeping output flat and showing considerable restraint on spending despite the rise in current oil prices. Historically, when oil prices rose, the US shale producers would have piled in and increased production. But this time, investors are demanding better financial returns over more volume and energy financiers are shifting their focus to renewables.

Methanol – a bright future as a marine fuel

Drewry believes methanol can play a major role in meeting the IMO’s emissions reduction targets for the maritime sector for 2030 and zero-emission targets for 2050. By 2023, the goal for the sector is to reduce the emission of greenhouse gases (GHG) through fuel-efficiency, slow-steaming and using LNG as fuel, among others. However, to meet the medium-term (between 2025 and 2040) goal of a heavy cut in emissions of GHG and particulate matter (PM), we expect methanol to play a key role as marine fuel, even though it is not a zero-emission fuel such as hydrogen and ammonia.

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