Shipping moving towards zero-emission period
More needs to be done, in order for shipping to transition to the zero-carbon era. In a recent weekly report, shipbroker said that “energy is at the core of the global climate dialogue as the climate challenge is essentially an energy challenge. Policy experts around the world are focusing on reducing climate risks, accelerate the adoption of clean energy technologies and secure the transition towards new clean energy industries, while ensuring security on energy supply. As reported, net zero carbon targets have to quickly turn into real world action in order to reach long-term climate goals, as action must start now. The shipping industry has a central role in the global supply chains with vessels on average carrying more than 80 percent of worldwide trade by volume. Regulators, maritime companies and financial institutions act to drive the sector towards decarbonization. The maritime industry is one of the few sectors not particularly discussed on the Paris Agreement on climate change. The industry is estimated to be responsible for approx. 3.0 percent of global CO2 emissions, but several scientists have projected that the sector could account for 17 percent of the total annual CO2 emissions by 2050”.
Bimco’s shipping number of the week: Chinese iron ore imports fall
Chinese iron ore imports fell to 88.5 million tonnes in July, the lowest level since May 2020. The fall in July means that accumulated imports are lower than in the first seven months of 2020. Imports this year have totalled 649.0 million, a 1.5 percent decline from January to July 2020. In July, imports were down 21.4 percent from the same month in 2020 when they reached a record high of 112.7m tonnes.
In addition to the July drop in iron ore imports China’s steel production fell to 86.8m tonnes (source: NBS China) as the government seeks to impose limits on steel production to meet climate emissions goals. Chinese steel production was strong in the first six months of the year, and with a resilient domestic demand, it appears that the government restrictions are limiting further growth rather than the actual appetite for steel.
Tanker market in the doldrums
In stark contrast to the dry bulk and container segments which have been rallying for much of 2021, the tanker market is more than lackluster. In a recent note, shipbroker said that “the tanker market has been off balance for quite some time now, while expectations W-O-W change for an imminent improvement have failed to come to fruition one after another so far. Owners have seen their liquidity drained, as earnings have remained below OPEX levels for several quarters now. As a result, newbuilding projects have been anemic, while SnP business has been mainly driven by speculation”.
According to Research Analyst, the key concern for market participants is undoubtedly demand, as figures are showing a persisting reduced consumption globally, pressured by COVID-19 disruptions in mobility and production. In NW Europe, oil imports have been held back during the summer period, with volumes in June and July remaining below the average import quantity witnessed in the year so far.
Goods barometer hits record high
Global merchandise trade is continuing its robust recovery from the shock of the COVID-19 pandemic according to the WTO’s Goods Trade Barometer, which hit a record high in its latest reading issued on 18 August. The Goods Trade Barometer is a composite leading indicator providing real-time information on the trajectory of merchandise trade relative to recent trends ahead of conventional trade volume statistics. The latest barometer reading of 110.4 is the highest on record since the indicator was first released in July 2016, and up more than 20 points year-on-year. The rise in the barometer reflects both the strength of current trade expansion and the depth of the pandemic-induced shock in 2020. It is notable that, while still well above trend, the index has started to rise at a decreasing rate, which could presage a peaking of upward momentum in trade. All of the barometer’s component indices were above trend in the latest month, illustrating the broad-based nature of the recovery. Indices for air freight (114.0), container shipping (110.8) and raw materials (104.7) in particular continued to rise, signalling faster than average trade growth.
Prices could move more vintage tonnage towards demolition
Activity is starting to ramp up in the ship recycling market of late. In its latest weekly report, shipbroker said that “it is not just the typical rainy British summer being experienced at present, but a large glut of wet units are finally finding their way into the market as Owners reap the benefits of these impressive numbers still on offer from the recyclers. These have ranged from smaller chemical units with high value Stainless Steel content and larger tanker units, as evidenced with the sales below. As stated previously, the flow of tonnage and market activity is slowly but surely creeping back, nowhere near the active years of 2018, but a glimmer of hope for industry players to hold onto. There is an upbeat feel from cash buyers who seem more eager than ever to acquire units with sentiment across the board continuing to remain strong. There have been a few murmurings of a negative price correction this week following the iron ore price hitting a three-month low, but the hope is that it is just a minor blip with some stability returning, and despite this, market tonnage are still receiving bids in excess of the USD 600/ldt level.