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BALTIC INDEX INCHES HIGHER

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, edged up on Wednesday as panamax vessel rates rose to a more than two-month high.

The overall index, which factors in rates for capesize, panamax, supramax and handysize shipping vessels, was up 12 points, or 1.4 percent, at 871 points. The panamax index was up 46 points, or 4.62 percent, at 1,041 points, the highest level since Jan. 13.

Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tones, added $370 at $8,366 – its highest since mid-December. The supramax index rose 8 points to 833 points, and the handysize index was up 7 points at 451 points. The capesize index fell 27 points, or 2.64 percent, to 994 points.

DRY BULK MARKET ON THE RECOVERY PATH

Expectations were high entering in 2017, regarding the prospects of a much-anticipated dry bulk market recovery and one could claim that “so far, so good”, in terms of the course of the freight rate market.

It is reported last week that the dry bulk market has started to show a glimpse of better days, with the Baltic Dry Index managing to rise ever closer to the psychologically significant 1,000 points.

DEVELOPMENTS IN INTERNATIONAL SEABORNE TRADE, SELECTED YEARS (Millions of tons loaded)
Year
Oil and gas
Main bulk commodities (iron ore, coal, grain, bauxite and alumina and phosphate rock)
Dry cargo other than main bulk commodities
Total (all cargo)
2013
2 829
2 923
3 762
9 514
2014
2 825
2 985
4 033
9 843
2015
2 947
2 951
4 150
10 047
NEWBUILDING ACTIVITY ON THE RISE

Newbuilding activity has picked up this year, as the aggressive pricing policies by many shipyards has proved to be enticing enough for some shipowners.

This trend could soon pick up more pace. According to shipbroker Allied Shipbroking, “prices have held stable overall this week, though given the recent push being seen in the market by shipbuilders looking to unveil any hidden opportunities and buying interest, we could see some further pressure being mounted on the pricing front.

 

SAUDI ARABIA SEES SUPPLIES CUT IN CRUDE OIL

Saudi Arabia’s shipments of crude oil fell last month, indicating OPEC’s biggest producer is continuing to cut supplies by more than it originally pledged.

The world’s largest crude exporter shipped 7.04 million barrels a day in February, a drop of 126,000 barrels a day from January. Measured against the country’s own figures, outflows are down by about 1 million barrels a day since December.

Saudi Arabia is at the forefront of an agreement by the Organization of Petroleum Exporting Countries to curb output for at least six months to reduce a worldwide surplus that depressed oil prices since mid-2014.

MED-NORTH HIGH SULFUR FUEL OIL SURGES

The physical Med/North high sulfur fuel oil spread — the difference between FOB Mediterranean cargoes and FOB Rotterdam barges — has hit a six-week high as a result of strong bidding interest.

The spread hit $1.50/mt late Tuesday, a rise of $2.25 on the day, after reaching lows of minus $2.25/mt in the last 10 days of February.

The HSFO complex in the Mediterranean was bearish for most of February, with differentials negative due to an oversupplied market. However, a recent strong surge in buying interest, namely from Cadoil, has provided premiums in the Med with an upward push.

SHARP INCREASE IN IRAN’S CRUDE OIL SHIPMENTS TO EUROPE

Iran is making rapid forays into the European crude oil market and selling its parcels to countries such as France, Italy, Greece and Spain, UK-based global shipping consultancy, it is said on Wednesday.

Following the removal of sanctions, new players have emerged in the mix. Iran’s crude oil shipments have been delivered to destinations ranging from Malaysia and Singapore in Asia to Syria in Africa, it said.

In 2016, the number of voyages delivering crude from Iran to France are estimated at 21, while Italy, Greece and Spain took 15, 14 and 13 shipments respectively. This includes shipments in VLCC, Suezmaxes and Aframaxes.

PORT KEMBLA COAL TERMINAL SHIPMENTS RISE

Coal exports from the Port Kembla Coal Terminal in New South Wales, Australia, recovered in February after slumping in January.

Around 535,514 mt of coal was shipped from the port in February, up 24.28 percent from 430,904 mt in January. Shipments dived 41 percent month on month in January. Since the start of the financial year on July 1, the terminal has exported 5.39 million mt of coal.

If it maintains this rate, it will ship 8.01 million mt for the 2016-2017 fiscal year. Port coal stocks ended February at 372,508 mt, down 3.94 percent from 387,770 mt at the end of January. There were two vessels queuing to load coal at the time and three assembled, compared with one queuing and one assembled a month earlier.

REFORMS IN JAPAN’S TANKER MARKET

Japan used to be one of the most important markets for the tanker industry, as crude oil imports, mainly from the Gulf Arab region were the norm for decades.

This is beginning to change these days, with shipbroker Gibson noting that “the Japanese refining industry has been experiencing challenging circumstances for a number of years, with significant rationalization of refining capacity.

Reform in the Japanese refining sector is not a particularly new story; however, in March 2017, a government directive will come into effect, forcing refiners to further boost efficiency, whilst enhancing output of higher value clean products such as diesel and jet fuel.

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