LNG shipping rates climb to multi-month highs on demand for vessels
Freight rates to ship liquefied natural gas (LNG) rose to multi-month highs this week as a surge in demand for the super-chlled fuel has increased the need for vessels to move supplies, multiple trade and shipping sources said. The daily charter rate for a tri-fuel diesel-electric (TFDE) vessel that can carry 160,000 cubic metres of LNG to Pacific basin ports rose to $76,000 a day on Tuesday, the highest since February, according to data from Spark Commodities. For the same type of ship moving in the Atlantic Basin, the rate rose to $67,750 a day, the highest since August, Spark data showed. European TRNLTTFMc1 and Asian LNG-AS natural gas benchmarks have surged to record highs and U.S. prices NGc1 have climbed to a 12-year high as demand for the fuel has increased amid low inventories.
Dry bulk market rally triggers newbuilding investment spree
Ship owners are ramping up their newbuilding ordering activity, loading up with new bulkers, as the market’s prospects appear to be quite bright once again. However, some delays could be expected. In its latest weekly report, shipbroker highlighted that “many yards, particularly in China, are experiencing production difficulties as a result of equipment suppliers’ inability to obtain raw materials on time. Yasa Shipping Turkey ordered two 64,000 dwt ultramax ships from Dalian Cosco KHI (Dacks) for delivery in mid-2023 at a cost of $33.0 mln each. CDBL Leasing went to New Dayang for 6 x 60,000 dwt for delivery beginning in January 2023 and ending in January 2025 at an undisclosed level”. In a separate note, Shipbroker said that it was “an active week for the dry bulk newbuilding market, with several new orders being added to the total orderbook and the majority of these being Ultramax units.
Extended supply chain woes to pump carrier profits
Supply chain turmoil will last longer than thought, forcing big upgrades to container freight rates and carrier profit forecasts in Drewry’s latest Container Forecaster report. A longer than anticipated period of supply chain disruption has forced Drewry to once again raise our forecasts for container freight rates and industry profitability in the latest edition of the Container Forecaster. While the container shipping network is clearly under intense pressure, a lot of goods are still getting through (eventually). Drewry expects world port handling to increase by 8.2 percent this year, or 7.2 percent against pre-pandemic 2019. This is a downgrade on our previous guidance of 10.1 percent given three months ago, since when disruption in the supply chain crisis has worsened as cases of Covid-19 temporarily shuttered some Chinese terminals, while extreme weather events have compounded the problem. Drewry does not expect to see operations normalise until the end of 2022.
Baltic index extends rally
The Baltic Exchange’s main dry bulk sea freight index extended its rally on Wednesday as robust demand and port congestion propelled the capesize index above 10,000 points for the first time in more than 13 years. The overall index, which factors in rates for capesize, panamax, supramax and handysize vessels, rose 238 points, or 4.4 percent, to 5,647, its highest since September 2008. The gains in the main index were mostly driven by a jump in the capesize segment, which added 723 points, or 7.4 percent, to 10,475, a more than 13-year peak. “Port congestion in China, general changes to trade patterns that have occurred this year, high Brazilian iron ore exports along with demand for thermal coal is driving the capesize market,” BIMCO Chief Shipping Analyst Peter Sand said. Average daily earnings for capesizes, which transport 150,000-tonne cargoes such as iron ore and coal, rose $5,993 to $86,870.
Dry bulk shipping rates hit $80,000 per day
Yet another sign of stress for energy supplies and global supply chains: Spot rates for large dry cargo ships just topped $80,000 per day for the first time since 2009, and freight derivatives for the fourth quarter — a period when rates for these vessels normally pull back — just spiked. Not long ago, it was a different story. On Sept. 20, headlines were dominated by Chinese property developer Evergrande and its impending collapse; fallout to construction and steel demand would assumedly hit future Chinese buying of commodities carried on dry cargo vessels. Dry bulk stocks plunged. While spot rates for Capesizes (bulkers with capacity of around 180,000 deadweight tons) held firm at $53,800 per day, forward freight agreement (FFA) derivatives did not. Amid what one broker called “mayhem,” the Q4 FFA contract sank to $36,750 per day, with the December contract all the way down to $29,500. The FFA market signaled: Party over.
Russia’s my 2021-2022 wheat exports slip 9pc on year
Russia’s wheat exports fell 9 percent on the year to 12.2 million mt as of Sept. 30 for the marketing year 2021-22 (July-June), the Russian Federal Service for Veterinary and Phytosanitary Surveillance said Oct. 5. In the week to Sept. 23, Russia’s cumulative wheat exports stood at 11.1 million mt for MY 2021-22. Turkey, that has bought 2.8 million mt of wheat so far in MY 2021-22, remained the largest buyer of Russian wheat, followed by Egypt and Saudi Arabia. Egypt purchased 1.5 million mt, while Saudi Arabia imported 600,000 mt of Russian wheat. Russia’s wheat exports are estimated to be lower during the current marketing year. S&P Global Platts Analytics has reduced its estimate for Russian wheat exports in MY 2021-22 to 36.5 million mt from its previous projection of 38.6 million mt. According to data from the US Department of Agriculture, Russia shipped 38.5 million mt of wheat In MY 2020-21. The pace of Russian wheat exports has been slowing over the past few weeks because of rising export taxes on wheat shipments, traders said.