Russian seaborne lng exports reached 30.3mn tonnes
The current situation in Ukraine is having a direct impact on the shipping markets, with Russian seaborne exports being driven off the market. In its latest weekly report, shipbroker Banchero Costa said that “Russia is the fourth largest seaborne exporter of liquified natural gas in the world, after Qatar, Australia, and the USA. In calendar 2021 the country exported a total of 30.3 mln tonnes of LNG by sea, according to Refinitiv vessel tracking data, an increase of +5.4 percent y-o-y. This amounted to 7.8 percent of global seaborne LNG exports. The majority of LNG exports from Russia are currently sourced from the Yamal LNG project, the northernmost industrial facility on the globe, and loaded at Sabetta Port on Russia’s Arctic coast. Yamal LNG is served by a fleet of 15 ice-class 170,000 cbm LNG carriers”. According to Banchero Costa, “in 2021, exports from Yamal LNG reached 19.5 mln tonnes (64 percent of Russia’s total).
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Ship recycling market looks alive
The ship recycling market has livened up over the course of the past week. In its latest weekly report, shipbroker Clarkson Platou Hellas commented that “whilst levels in Bangladesh and Pakistan remain firm, but steady to an extent, prices from India have increased significantly this week, as evidenced by the sale reported below of a capesize bulk carrier. Steel producers in India and local Sellers of the inventories are anticipating increased exports to Europe and higher steel production costs due to the possibility of tighter steel and coal supplies because of the conflict in the Ukraine. Russia and Ukraine are among the top global exporters of steel with the majority being exported to European countries. The shipbroker added that “now, reports suggest that Indian Sellers are witnessing increased inquiry from European buyers on the back of an almost suspension of the Ukraine steel industry and sanctions affecting trade from Russia.
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War in Ukraine will hurt growth in all shipping segments
Though much uncertainty remains, the immediate commodity price increases and supply challenges caused by Russia’s invasion of Ukraine are likely to be felt throughout 2022. Also, recently implemented sanctions on Russia are not likely to be lifted any time soon. This may have sustained spill-over impact on the global economy. Ukrainian ports are closed and though apparently not yet hindered much by sanctions, many shipping companies have vowed to disengage from the Russian export and import markets. Many other companies are divesting or putting their activities in Russia on hold. At the same time, the EU is contemplating to follow the UK and ban Russian-owned vessels from the region’s ports. The global economy is already suffering from increased commodity prices. Oil, wheat, and maize (all key exports from Russia and Ukraine) are trading at decade highs, at least.
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Massive spreads on long term contract rates from the far east to the US
The first TPM since 2019 is well underway in Long Beach, US, and though the location and many of the faces may be the same, the negotiated rates and the conversations around them are most definitely not. As the theme of this year’s TPM: ‘Relationships Matter’ suggests, carriers, shippers and freight forwarders need to work closely together to find the best solution. This might not be an easy feat given the record-high amounts that the shippers have been paying for record low service in the past two years. The one thing that is clear going into TPM is that long term contract rates will dramatically increase in 2022 from deals done last year and any time before that. Still, in today’s market, the success criteria for negotiations have a much broader scope than price.
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Capesize market in normal mode
The Capesize market had a mild trading range this week hitting a high of $15,258 and a low of $13,414 to settle Friday at $13,560. While events in Europe have been disruptive, the trading activity was generally back to normal this week as most shipping routes are business as usual – albeit without the Black Sea trade routes. The Pacific was definitely the more volatile region with the transpacific C10 swinging positive by weeks end to $13,008. In comparison, the Transatlantic C8 was stable but softening throughout to close at $14,425. The Ballaster route C14 continues to trade at a discount at $8,845. Most voyage routes have seen solid gains this week. However, the underlying timecharter equivalent values have been battling to maintain parity as bunker levels have been rallying strongly with volatile swings..
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Container ship owners need clarity on CII implications
The whole container ship fleet will be affected by the IMO’s new carbon intensity indicator (CII) regulation from next January, but its full impact remains unclear. Clarification on how CII will be implemented in the short run, and how it may tighten as a regulation between now and 2030, is urgently required by shipowners faced with setting up compliance strategies that will necessitate significant investment. At present, owners are left “second-guessing” the implications of CII, with older tonnage and ships trading on short-sea feeder routes most at risk of getting caught-out. Ultimately, if CII proves too onerous, a significant number of these ships will be forced to the scrap yard, compounding supply chain woes and resulting in cargo moving via other, potentially less efficient, modes of transport.