PRISMA DRY AND TANKER MARKET REPORT 18/12/2017

DRY

 

China will cut, remove export tariffs on some steel, fertiliser

China will cut export taxes on some steel products and fertilisers and ditch those for sales abroad of steel wire, rod and bars from Jan. 1, the Ministry of Finance said on Friday, in a series of measures that could boost shipments. The move is likely to stir concerns among foreign competitors in the United States and Europe that China, the world’s top steel producer, may be looking to sell its excess product abroad. (Reuters)

 

Australia cobalt rush accelerates on electric vehicle demand, DRC troubles

Australia, home to the world’s second-biggest cobalt reserves, is seeing a rush of interest in projects still years from production as makers of batteries used in electric vehicles (EVs) seek supplies of the metal from a more costly but less risky source than top miner, the Democratic Republic of Congo. As auto makers seek to develop greener cars, shares in Clean TeQ owner of one of the largest cobalt deposits in Australia – have trebled this year. Minnows Cobalt Blue, Australian Mines, Artemis Resources and Aeon Metals have also seen shares surge. (Reuters)

 

Natixis bank broadens metals fraud lawsuit, targets Glencore unit

French bank Natixis has broadened its $32 million lawsuit over fraudulent receipts for nickel stored at warehouses in Asia by adding a unit of commodities giant Glencore as a defendant, a court filing showed. Glencore’s warehouse unit Access World rejected the accusations, according to the court papers. (Reuters)

 

Drought leaves U.S. Plains wheat vulnerable to freeze damage

A combination of delays to autumn planting and dry conditions in the southern U.S. Plains have left the hard red winter crop vulnerable to freeze damage, crop experts said, which could further tighten supplies of high-protein wheat. A cold spell is forecast for later in December. Any freeze in coming months could pose an outsize threat to supply, given there is already a shortage of high-protein wheat. U.S. data in January is expected to show farmers have planted even less winter wheat than a year ago, when U.S. acreage fell to the lowest level since 1909. (Reuters)

 

National Australia Bank to cease lending for new thermal coal projects

National Australia Bank announced Thursday it will no longer provide financing for new thermal coal projects.

“While we will continue to support our existing customers across the mining and energy sectors, including those with existing coal assets, NAB will no longer finance new thermal coal mining projects,” the company said in a statement.

NAB, one of Australia’s four major banks, said it has an important role to play in the transition to a low carbon economy.

“An orderly approach to the low carbon transition is critical to ensure Australians can continue to have access to secure, reliable and affordable energy and support our economy,” NAB said.

The announcement come after the state government of Queensland earlier this week asked the national government to veto a federal loan worth A$900 million ($681 million) to fund infrastructure to advance Adani’s 60 million mt/year Carmichael thermal coal project in the state.

A number of Chinese banks have also recently announced they will not finance the Carmichael project.

Another of Australia’s four major banks, the Commonwealth Bank, announced in mid-November that it intends to reduce financing to coal projects, S&P Global Platts reported earlier. (Platts)

BALTIC INDEX 

Last Index Published Date: 18 DECEMBER 2017

Baltic Exchange Dry Index             1588  -31

Baltic Exchange Capesize Index     3656  -121

Baltic Exchange Panamax Index    1643  -34

Baltic Exchange Supramax Index     943   +1

Baltic Exchange Handysize Index    637   +1

 

TIMECHARTER

‘Anangel Innovatiion’ 2004 172220 dwt dely Caofedian 21/22 Dec trip via Australia redel Singapore-Japan $24,600 – Korea Line

‘Tai Keystone’ 2017 84000 dwt dely Mizushima 17/19 Dec trip via East Australia redel Japan $13,850 – MOL

‘Star Renee’ 2006 82295 dwt dely Lingkou 15 Dec trip via Philippines redel Japan with sinter ore $15,000 – K Line

‘Infinity’ 2010 80282 dwt dely EC South America 28 Dec trip redel Singapore-Japan $15,500 + $550,000 bb – Norden

‘King Loong’ 2006 77430 dwt dely EC South America 05 Jan trip redel South East Asia $15,250 + $525,000 bb – Omegra

‘Framura’ 2014 76833 dwt dely Japan spot trip via NoPac redel China $11,500 – Proline

‘Fair Lady’ 2005 76608 dwt dely Kandla spot trip via Amazon and Iran redel PMO $13,500 – Amaggi

‘Coral Diamond’ 2007 76596 dwt dely US Gulf 01/02 Jan trip redel China $15,750 + $575,000 bb – Ausca

‘Omicron Nikos’ 2003 75730 dwt dely retro Port Dickson 03 Dec trip via EC South America redel Singapore-Japan $12,650 – Cofco

‘Zheng Hao’ 1997 73049 dwt dely Ningbe 16/17 Dec trip via Indonesia redel South China $13,000 – Cosco

‘Platon’ 2011 58502 dwt dely El Dekheila 17/22 Dec trip via Black Sea redel Portugal $9,750 – Cargill – <recent>

‘Bonny Island’ 2013 58044 dwt dely Adabiya 18/22 Dec trip via Aqaba trip redel India $19,000 – SSIPL

‘Ocean Feather ‘ 2011 56762 dwt dely Lianyungang prompt trip redel South East Asia approx. $6,250 – Winning

‘Wuchow’ 2013 39090 dwt dely Barranquilla prompt trip redel Singapore-Japan $23,000 – cnr

‘Ioanna D’ 2012 35000 dwt dely Oran 17 Dec trip via Morocco redel Black Sea intention phosphate $8,500 – cnr

‘Bunun Hero’ 2010 32688 dwt dely Damietta 21 Dec 2/3 laden legs redel Atlantic $10,900 – MUR

 

 

COMMODITY NEWS

Oil prices rose amid an ongoing North Sea pipeline outage and signs that booming U.S. crude output growth may be slowing, although the 2018 outlook points to ample supply despite production cuts led by OPEC. Gold prices edged lower, pressured by firmer equities and a buoyant dollar after a bill to overhaul the tax system in the United States moved a step closer to ratification. Shanghai nickel jumped 4 percent, tracking a move in London after China said it would cut duties on some steel exports, which raised expectations for demand. Chicago wheat futures rose to a one-week high, heading for a third session of gains in four, with prices underpinned by concerns over dry weather hurting the U.S. winter crop. (Reuters)

 

 

TANKERS

 

UK Forties oil cargoes delayed for weeks by pipeline shutdown

The loading dates of Forties crude cargoes, which help set the global Brent benchmark, have been delayed by at least two weeks and further hold-ups are likely, trade sources said, after the closure of the North Sea Forties pipeline for repairs. The 169-km (105-mile) pipeline, which carries about a quarter of all North Sea crude output and about a third of Britain’s offshore gas production, has been closed since Monday, following the discovery of a small crack in part of the system onshore in Scotland. (Reuters)

 

Iraq plans oil pipeline network to cover all its territory

Iraq plans to build a pipeline network to carry oil products across all its territory as an alternative to expensive and hazardous transport by tanker truck, Oil Minister Jabar al-Luaibi said on Saturday. The network is part of a “strategic” plan for oil transportation that includes pipelines to deliver crude and oil products to neighbouring countries, he said. (Reuters)

 

ExxonMobil, BHP end Australia gas sales joint venture

ExxonMobil Corp and BHP Billiton Ltd have agreed to end a nearly 50-year-old gas marketing joint venture in Australia, bowing to pressure from the nation’s competition watchdog amid concerns about gas supply and soaring prices. The Australian Competition and Consumer Commission (ACCC) and the companies said on Monday they would start marketing their gas from the Gippsland Basin separately, starting in 2019. (Reuters)

 

Saudi Aramco has supplied 1 mln barrels of crude to Egyptian refineries in Nov, Dec

Saudi Aramco, the world’s largest oil producer, has supplied 1 million barrels of crude oil to Egyptian refineries, Egypt’s Petroleum Minister Tarek El Molla told Reuters on Sunday. Egypt and Saudi Arabia will be studying the economic feasibility of continuing to refine Saudi crude in Egyptian refineries by the start of 2018, El Molla said. (Reuters)

 

Colombia begins importing bulk LPG as natural gas reserves, output fall

Colombia has begun receiving is first sustained imports of bulk liquid propane gas, with volumes expected to rise significantly in the coming years as the country’s natural gas reserves and output continue to decline.

Juan Manuel Morales, an attorney and spokesman for G-5, a Bogota-based consortium including Colombia’s five largest LPG distributors, said Thursday the group took receipt of its first shipment of 1,600 mt on Novmber 14 at a port near Cartagena from Vitol, the London-based energy trading, refining, and transport firm. The LPG was produced by a US Gulf Coast refiner and delivered via bulk cargo ship.

Terms of the six-month firm contract the consortium signed with Vitol, which has offices in Houston, call for the Colombian group to receive at least 4,000 mt/month of LPG through April. By mid-2019, Morales said imports likely will have doubled to 7,000-8,000 mt/month, possibly reaching 10,000 mt/month by 2022. So far, five additional cargoes of 1,600 mt have arrived since the initial shipment.

Colombian domestic consumption of LPG is stable at 49,000-51,000 mt/month, Morales said, so current and projected imports by the consortium represent a significant portion of the gas that Colombians consume. G-5 members serve 80% of the domestic liquid propane consumers.

The consortium members are LPG distributors Vidagas , Almagas, Chilco and Inversiones de Nordeste, all based in Bogota; and Montagas, based in Pasto. Also a partner is Okianus Terminals, owner of the jetty, pipeline and terminal near Cartagena at which the LPG imports are being received.

Morales said shipments are expected to increase in the next few years because of Colombia’s ongoing decline in both reserves and production of natural gas, from which LPG is made. Colombia’s oil and gas fields have suffered sharp decreases in capital investment with the decline in global prices of crude and gas in recent years.

The country has not booked what the industry considers a significant crude or natural gas discovery since 1992, according to the Colombia Petroleum Association trade group.

State-controlled Ecopetrol is by far Colombia’s largest producer of LPG, producing about 40,000 mt/month. The oil giant sells LPG to the five G-5 distributors and 60 smaller marketers who then distribute across the country. Other smaller domestic producers provide about 5,000-6,000 mt/month to the Colombian market.

“There is currently a shortage each month of (domestically produced) 5,000 to 6,000 mt of LPG that must be imported,” Morales said. “There is not enough Colombian gas to keep the market going.”

The pricing of imported LPG is tricky and it must be blended with domestic product, Morales said. Liquid gas is heavily subsidized by the government and sold at a discount to reference prices such as the Mont Belvieu, Texas, hub. Sharp price increases only have the effect of depressing consumption, he said.

The Okianus terminal near Cartagena on Colombia’s Caribbean coast includes a 450-meter jetty, an 800-meter pipeline and five truck-loading facilities. It doubles as a terminal for vegetable oil shipments.

The consortium began looking for a port facility to receive LPG imports last year after an analysis of volumes being offered by Ecopetrol showed the Colombian market would have a problem this year, Morales said.

Colombia’s first acute LPG shortages occurred in October, he added.

Another factor that could drive greater future demand for LPG imports is the assumed desire of Ecopetrol to produce more profitable products than LPG at its two refineries in Cartagena and Barrancabermeja, Morales said. The recently opened Reficar refinery near Cartagena is an ultramodern facility capable of selling high-margin, clean-burning diesels and other fuels. (Platts)

 

US Gulf Coast ULSD shipments to Brazil slowing down: market sources

US Gulf Cost ULSD exports to Brazil have been slowing down this month, according to market sources, pressured by high freight rates, falling renewable fuel obligation costs and weaker prices in Brazil.

“Brazil has slowed down some, but not completely,” one ULSD market source said.

The US typically sends about four to five cargoes of ULSD to Brazil per week, but market sources said that there have been fewer shipments this week.

The softening has coincided with an array of factors, including high shipping costs. Freight rates from the USGC to Brazil have been rising and hit a multi-month high Thursday, when S&P Global Platts assessed the route for 38,000 clean tankers at $29.77/mt. The last time it was higher was on March 30, at $31.12/mt. Rates have surged from $22.32/mt on December 1 and $19.62/mt on October 2.

Another factor pressuring shipments is the weakening price of renewable volume obligations in the US. In general, a higher RVO obligation gives refiners an incentive to export ULSD to avoid the cost of meeting the US regulation. The RVO is comprised of RIN prices, which have also been falling.

Platts on Thursday assessed the RVO 0.0569 cents weaker at plus 8.5913 cents/gal. The market has tumbled from a plus 10.1368 cents/gal assessment on December 1.

Brazil is historically one of the largest consumers of US ULSD. The country in September took around 22% of all ULSD exported from the US, 6.752 million barrels, according to the most-recent information from the US Energy Information Administration. The only country to receive more US ULSD that month was Mexico.

In August, Brazil was the top importer of US ULSD, taking 7.050 million barrels. The country has taken an average of 5.521 million barrels of US ULSD per month this year.

Brazilian state energy company Petrobras has altered the dynamics of the domestic fuels market there since implementing a new policy for its ex-refinery prices in June. Under the new approach it can adjust prices up or down several times a week, giving it more flexibility to fight for market share and also stay aligned with the international market.

Since December 1, it has cut its domestic ex-refinery price for diesel by 4.8%, according to Petrobras data compiled by Platts Analytics unit Kingsman, although its prices are still up 20.8% since the new policy came into effect.

The reduced import interest from one of the US’ largest customers has helped depress the price of USGC ULSD, sources said. Platts assessed the Gulf Coast ULSD market on Thursday at minus 8.25 cents/gal, a slight rebound from its second-lowest point of the year hit on Wednesday. (Platts)

 

 

SHIPPING

 

Dania Ship Management moves into dry bulk with Clipper partnership

Dania Ship Management, the Danish chemical tanker management company formed by V.Group and Nordic Tankers, has formed a partnership with Clipper Fleet Management to extend its capabilities into the dry cargo sector.

Clipper Fleet Management currently has full technical management of 26 bulkers from both Clipper Group and third parties, and the new partnership will see them transfer over to Dania Ship Management along with 28 shore-based employees and close to 1,000 seafarers.

Carsten Brix Ostenfeldt, CEO of Dania Ship Management, commented: “Our aim when we created Dania Ship Management as a partnership agreement between Nordic Tankers and V.Group was to develop a strong Danish ship management solution. Extending our capabilities to include dry cargo management is an important next step and we are delighted to welcome the partnership with Clipper Fleet Management. The two companies will operate under separate Documents of Compliance to ensure we continue to meet the specialist requirements of both tanker and dry cargo clients.”

Peter Norborg, CEO of Clipper Group, added: “This new partnership agreement with Dania Ship Management provides Clipper Fleet Management the perfect platform for future growth – benefiting our clients as well as the organisation and employees – both on shore and at sea. And with both companies having a strong commitment to safety, efficiency and quality, I am confident of a successful transition.”

The transition of Clipper’s fleet and staff to Dania begins immediately. (Splash247)

 

Further tanker consolidation predicted

Further tanker consolidation is likely, Clarksons Research predicts in its latest weekly report.

With 2017 marking a year of massive merger and acquisition activity for the tanker sector, the fundamentals of the segment still lend themselves to more deals being hatched, the British research outfit maintains.

“Publicly traded companies continue to look for consolidation opportunities as the tanker markets remain under pressure and pricing appears attractive,” Clarksons Research reported, adding: “It remains to be seen what the ownership landscape will look like in 2018, but chances are we can expect some changes.”

Clarksons went on to note that it is seeing a “slow trickle” of more modern tankers coming to market in recent days with mounting interest among buyers although it had no confirmed sales to report. (Splash247)

 

Over 100 Jobs Lost as Burgess Marine Goes into Administration

UK-based maritime engineering firm Burgess Marine Ltd has filed for administration, resulting in job losses for over 100 people.

BDO LLP business restructuring partners Danny Dartnaill and Colin Haig were appointed joint administrators over the company on December 13, 2017.

Following the appointment of administrators, a partial sale of the company took place.

Namely, the company’s offices in Devonport, Portchester, Portsmouth and Southampton ceased trading and 106 employees were made redundant.

“A skeleton staff of three has been retained at this time to assist with an orderly wind-down of the business,” BDO informed.

The business and assets at three of the company’s trading locations – in Lowestoft, Avonmouth & Poole – were sold to Southampton Marine Services Limited.

The 45 employees will retain their positions and be transferred to the new company.

“All other associated trading entities within the ‘group’ of companies are unaffected by the administration,” BDO said in a statement.

Speaking of the reasons behind the administration, Dartnaill, said that “difficult trading conditions and a shortfall in the company’s working capital position – contributed to by a failure to secure the final payment due in regard to a recent major refit project – significantly affected the business and its ongoing viability.”

“Going forward, the joint administrators will be seeking to maximise recoveries for the benefit of all creditors and will continue to liaise with customers regarding any outstanding contracts.”

Burgess Marine, which focuses on commercial marine, defense and superyacht sectors, is based in Dover and Kent and was traded from eight sites across the South of England. (World Maritime News)

 

Foreship: One Third of Shipping Will Choose Scrubbers

Up to 30% of commercial shipping will gravitate back to high sulphur fuel oil by 2030, engineering consultancy Foreship believes.

With just over 100 ships running on LNG today, the number in service is likely to be significantly below 500 by 2020 when the International Maritime Organization’s (IMO) 0.5% sulphur cap on marine fuels comes into force.

At the same time, while the 0.1% fuel sulphur content limit inside emissions control areas has brought 1,500 scrubber installations, yard capacity could only grow that number to 3,000-4,000 by 2020. Most ships will run on 0.5% sulphur content HFO to meet the cap, Foreship informed.

Post 2020, 0.5 % sulphur content fuel will be blended from distillates and HFO of up to 2.5% sulphur content, Foreship Head of Machinery Department, Olli Somerkallio, explained.

Higher sulphur HFO (HSHFO) can be used as a marine fuel where scrubbers are installed, but could also be a substitute fuel in gas powerplants in former Soviet countries, or a coal substitute. This will change the pricing dynamic of HSHFO: to compete with coal, prices would have to be relatively low. The implication is that HSHFO will return to favour as a marine fuel after the dust settles.

“We have faced and overcome a broad range of installation challenges, including the fact that scrubbers eat into the revenue-earning space required for passengers or freight,” Somerkallio concluded. (World Maritime News)

 

Chairman: Newcastle Port Needs to Diversify Its Business

Australia’s Port of Newcastle could turn away from coal as its new chairman said there is an “urgent need” to diversify the regional economy and the port’s business.

Professor Roy Green, who has been appointed Chairman of the Port of Newcastle Board, informed that coal “has been at the heart of” the Hunter’s economy for the better part of two centuries, and it will continue to be central to the prosperity of the region and Port of Newcastle for some time to come.

“However, there is also an urgent need to diversify the Hunter economy and the port’s business,” Green added.

Port of Newcastle has already started diversifying, through investments in a new cruise terminal and non-coal freight facilities.

“But we must build significantly on this platform and create world class port facilities that are able to meet the needs of a rapidly changing Hunter and NSW economy. With a 98 year lease, the Port of Newcastle is obliged to think long term, and it will,” Green commented.

“Clearly the long term outlook for coal is a threat to the port and Hunter region, but it is also a huge opportunity. While the world’s demand for our coal is beyond our control, our ability to invest in new sources of growth and innovation is not,” he continued.

Additionally, Green said that ensuring a level playing field for the development of a viable and competitive container terminal will be among other challenges.

Port of Newcastle’s Shareholders are The Infrastructure Fund and China Merchants Group who have an equal 50/50 shareholding. (World Maritime News)

 

Containers : Asia to WCNA Sees Rise in Demand, Rates Still Weak – Drewry

The eastbound Asia to West Coast North America market continues its six-year run of strong demand growth, but weak spot rates will damage carriers’ income, shipping consultancy Drewry said.

Headhaul Asia to West Coast North America container traffic was buoyant in the third quarter, rising by 6.7% year-on-year, although a disappointing return for October when volumes slid by 1.9%, dampened the year-to-date rate to 5%.

“With more capacity expected to arrive, carriers will be pinning their hopes on a strong pre-Chinese New Year cargo rush to revive flagging spots rates ahead of the annual contracting season,” Drewry concluded.

October’s slightly weaker throughput growth is somewhat distorted by Hanjin’s collapse of a year ago, the consultancy informed. Although eastbound flows have been decreasing, they are expected to lift off again in January as importers replenish inventories before factories in Asia close for the Chinese New Year holidays in mid-February.

The US West Coast terminals continue to face an uphill struggle to limit the seepage of cargo either to the Canadian ports of Vancouver and Prince Rupert or to an eastern seaboard routing. In the first 10 months of 2017, USWC imports grew by only 1.4% whereas discharges over the Canadian berths climbed by 18% and USEC ports saw volumes rise by 6.6%. The much smaller US Gulf Coast market recorded nearly 30% uplift in Asian imports.

Nonetheless, there is tangible growth in the market and Drewry expects the eastbound Asia-WCNA trade to surpass the annual rate achieved in 2016 of 4.6%, as the 12-month rolling average showed growth of 5.7% as of October. (World Maritime News)

 

 

S&P

 

Weihai Samjin to Build Chemical Pair for Ocean Tankers

China’s Weihai Samjin shipyard has signed a contract with Singapore’s shipping company Ocean Tankers for the construction of two 11,000 dwt chemical tankers, China Association of the National Shipbuilding Industry (CANSI) said.

As informed, the two IMO-II oil tankers were the first alternative orders for the construction of 4 + 2 + 2 + 2 ships placed by Ocean Tankers at the abovementioned shipyard last year.

The exact prices of the two new ships were not announced, however, last year, Ocean Tankers’ four vessels were priced at USD 18 million each, according to CANSI.

The newbuilding type is a Class II chemical tanker designed by Shanghai Oudeli Design. It has a length of 139.98 meters, a width of 20.2 meters, a depth of 10.08 meters, a draft design of 7.20 meters and a design speed of 13 knots.

The vessels will be used for the transportation of refined oil and chemicals.

Ocean Tankers’ ships will be classed by classification society ABS. (World Maritime News)

 

COSCO Shipping Energy Orders Seven Tankers

COSCO Shipping Energy Transportation is moving forward with its fleet renovation plans with an order for seven more ships at compatriot Guangzhou Shipyard International Company Limited (GSI), owned by CSSC Offshore & Marine Engineering Company Limited.

The order will include two 64,900 dwt crude oil tankers, two 109,900 dwt LR2 vessels and three 114,000 dwt crude tankers, totaling in an investment worth approximately USD 323 million (RMB 2.14 billion.).

The delivery of the Panamax tanker pair is expected in the first quarter of 2020, while the LR2/Aframax duo is to be handed over to its owner in October 2020 and 2021 respectively.

The final trio from the batch should join the company’s fleet in April and August 2020 respectively, the company informed.

In October this year, CSET revealed plans to order 14 tankers at compatriot yards, including four 32,000 dwt and three crude oil tankers of 160,000 dwt at Dalian Shipbuilding, five tankers at GSI and two 65,000 dwt oil tankers at China Shipbuilding International Trading.

In order to finance the acquisition, the company said it would raise funds worth RMB 5.4 bn (USD 814 mn) by issuing new shares. (World Maritime News)

2017-12-19T16:59:24+00:00