Industry partnerships key to decarbonizing the commodity value chain
The COP26 summit in Glasgow in November highlighted the increasing pressure for all industries, including the shipping industry, to decarbonize. The challenge for the Australian petroleum industry and other major users of deep-sea shipping will be to start preparation, and to find the most cost effective and low-risk ways to reduce emissions with seaborne logistics
The Call to Action for Shipping Decarbonization at the COP26 was developed by a multi-stakeholder taskforce stressing that full decarbonization of international shipping is both urgent and achievable, calling on governments to work together with the shipping industry to deliver policies and investments required to decarbonize global supply chains.
Dynamic newbuilding activity focused on container and lng ships
The newbuilding market is exceeding expectations so far this year, with slots being snapped up quickly mainly for the construction of LNG and Container ships. In its latest weekly report, shipbroker said that “the newbuilding market recorded a strong performance for yet another week with the containership sector still taking up the lion share of fresh projects reported. With containership earnings still showing a fair bit of strength, we continue to see a fairly well distributed diversity in the orders being placed, with this weeks orders indicative of this trend. Also noteworthy is the upward course of the dry bulk sector and especially in the smaller sizes, which can be attributed to a fair degree to the positive momentum seen in their respective freight markets. Newbuilding prices remain at five-year high levels. Compared to the rest of the main sectors, the tanker market is still holding inactive for the time being, held back by the persisting poor performance still being seen in the freight market.
Reefer rates from north europe to far east: first signs of easing for long-term rates
Despite months of softening on the backhaul North Europe to Far East trade, with rates on the spot market closing in on USD 1 000 per FEU for normal-dry containers, spot rates for reefer containers on this trade have been stable since early 2021, averaging USD 5 300 per 40’ reefer on 11 April.
The long-term market, on the other hand, has shown its first signs of easing this year, dropping between Q1 and Q2, though only by USD 200 per reefer, still leaving the average long-term contract signed within the past three months at USD 4 300 per 40’ reefer, close to double what they were in 2019. North Europe to Far East trade is a backhaul trade when looking at total container volumes, but when it comes to reefer containers only, this eastbound trade is the busier of the two, with around twice as many reefer cargoes going from North Europe to the Far East compared to the other way.
Ship recycling market expected to quiet down as Ramadan started
The ship recycling market has seen quite a lot of activity of late. However, it’s bound to quiet down, as a result of the Ramadan period. In its latest weekly report, shipbroker said that “as we entered Ramadan this week, there was a subdued feeling across the sub-continent as end recyclers started to observe the holy month and retreat home. This has been a familiar theme of a quiet market across sectors in all regions for most of the year with a distinct lack of tonnage continuing to starve the ship recyclers. However there was an impressive price received for the below reported Capesize, which has been a rarity this year with the firm freight markets on offer. This price follows an announcement from the Central Bank in Pakistan that imposed a 100 percent cash margin on the importation on 177 items including Steel products.
Russia-Ukraine conflict puts fragile global trade recovery at risk
The organization now expects merchandise trade volume growth of 3.0 percent in 2022—down from its previous forecast of 4.7 percent—and 3.4 percent in 2023, but these estimates are less certain than usual due to the fluid nature of the conflict .
The most immediate economic impact of the crisis has been a sharp rise in commodity prices. Despite their small shares in world trade and output, Russia and Ukraine are key suppliers of essential goods including food, energy, and fertilizers, supplies of which are now threatened by the war. Grain shipments through Black Sea ports have already been halted, with potentially dire consequences for food security in poor countries.
The war is not the only factor weighing on world trade at the moment. Lockdowns in China to prevent the spread of COVID-19 are again disrupting seaborne trade at a time when supply chain pressures appeared to be easing. This could lead to renewed shortages of manufacturing inputs and higher inflation.
EU: 40 million tons of coal will need to be sourced from elsewhere after ban on Russian coal
With the EU ready to ban Russian coal imports, it’s worth taking a look at what this means for the seaborne coal trade in general. In its latest weekly report, shipbroker said that “following a disastrous 2020, with the world hit by lockdowns and recession pretty much everywhere, global seaborne coal trade managed to rebound to some extent in 2021. In the full 12 months of 2021, global seaborne coal exports increased by +4.4 percent y-o-y to 1149 mln tonnes, from 1101 mln tonnes in 2020, according to vessels tracking data from Refinitiv. This however was still well below the levels we had in pre-Covid times, being -9.9 percent down from the 1276 mln tonnes shipped during 2019. In the first quarter of 2022, however, global coal trade declined again”.Furthermore, in the January to March period of 2022, global coal loadings declined by -6.0 percent y-o-y to 256.3 mln tonnes, from 272.7 mln tonnes in the first quarter of last year.