Scrubbers for the future
Almost as long as scrubber technology has been commercially available for shipping, questions have been raised about the potential longevity of the technology. The potential for extending the scope of scrubber technology beyond reducing SOx emissions from high sulphur fuel oil was not a commercially viable research area for a mono-fuel world. However, scrubber manufacturers are now starting to look at how the technology can evolve over time as demands for a wider range of emissions reductions technologies builds. Manufacturers of scrubbers do not anticipate that demand for these systems will ebb, but expect that these systems will also play a part in cutting emissions in the future as well.
Ship recycling activity looking for direction after prices drop
With prices offered for vintage tonnage under correction, buyers are pondering their next moves as there are various, contradicting opinions, on the future direction of prices. As such, activity has lowered during the course of the past week. In its latest weekly report, shipbroker said that “with a correction in pricing witnessed, specifically in Pakistan and Bangladesh, Buyers have been slightly cautious again this week with even a ‘watch and wait’ attitude creeping back in. Without a strong flow of tonnage, this price drop is being seen as a small dip and we will need to see how the Indian Buyers respond should any tonnage be destined for their shores. Until some sales are concluded, we will not know the true extent of this correction with each cash buyer having their own opinion on where pricing is at and, the speculative numbers they are willing to gamble on. This has also resulted in less enquiry from Owners who wish to dispose of their units, with themselves too being slightly tentative on the current market sentiment.
Rising long-term rates and port congestion compound cargo owner woes
After another month of high demand, over-stretched infrastructure and difficult negotiations for shippers, long-term contracted ocean freight rates now stand 85.5 percent higher than at this point last year. Although August saw rates rise by a relatively modest 2.2 percent (contrasted to July’s astonishing 28.1 percent jump) there appears to be little sign of relief on the horizon, with increasing port congestion and relentless demand ahead of the all-important pre-Christmas period. Container ship operators are reaping record-breaking financial rewards as a result. The latest data comes courtesy of Oslo-based Xeneta, which crowd sources real-time rates from leading shippers to produce the Long-Term XSI® Public Indices, delivering detailed insights of the very latest market movements.
Just five older VLCCs have been scrapped during 2021
Despite elevated ldt prices for ship scrapping, vintage tanker tonnage and more particularly VLCCs, have remained far from the scrapyards so far in 2021, adding to the supply side of a lackluster tanker market. In its latest weekly report, shipbroker said that “the latest VLCCs that have been reported as scrapped have joined a small, but up to recently growing number of tankers heading to recycling yards. The Sea Coral (1996-built, 298 k dwt) and the Jubilee Star (1996-built, 310 k dwt) have both been sold for record high scrap prices. The Jubilee Star was sold for $24.5 million, or equivalent to $572 per ldt, while the Sea Coral was sold for $24.7 million, equating to $578 per ldt.
Capesizes ends the week on a high
Both the overall index and 5 time charter (5TC) average climbed back to positive territory at the end of the week after a mid-week decline. BCI closed the week at 6162, which is slightly higher than the Monday opening at 6114. The 5TC recorded an improvement of $986 to $51,099 on Friday. The key indicator, C5 west Australia to China run, slipped under $15 whilst the related transpacific round voyage was now at $47,592 for a 35 to 45 days trip. C3 Tubarao to Qingdao run recorded $35.77 on voyage basis whilst the related China-Brazil round trip reflected the voyage level at $47,060. During the week, there were rumours of a Capesize vessel being primed to transport containers.
Russian crude oil trade shrinking
The Russian crude oil export trade has been yet another reason of frustration for tanker owners, as a dismal 2020 is now been followed by an even worse 2021 so far. In a recent weekly report, shipbroker said that “2020 was overall a very negative year for crude oil trade. Total loadings in the 12 months of 2020 were down -6.2 percent y-o-y to 2032 million tonnes, according to vessels tracking data from Refinitiv. 2021 so far is faring even worse. In the first 6 months of 2021, global seaborne crude oil trade declined by -8.9 percent y-o-y to 964.8 million tonnes”. According to Banchero Costa, “what’s worst is that so far there is no sign of things turning a corner. The first quarter of 2021 recorded a -12.0 percent y-o-y decline to 478.1 million tonnes. In April 2021 trade was even more disappointing, as crude oil loadings were down -16.2 percent y-o-y from the same month in 2020, at 162.0 million tonnes. In May 2021, things might appear as if they were stabilizing, as loadings were down only -1.2 percent y-o-y compared to May 2020, as well as up +3.3 percent month-on-months, at 167.3 million tones. In June 2021, global crude oil loadings were 160.3 million tonnes, which was nominally +4.9 percent y-o-y compared to June 2020, BUT it was down -3.1 percent month-on-month from May 2021, and -11.7 percent from June 2019”.