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Container Shippers And Lines Battle Over Emergency Bunker Fuel Surcharges

Several of the world’s largest container shipping companies have imposed emergency bunker surcharges upon their customers in the past two weeks, seeking to claw back revenues lost to rising fuel bills caused by the jump in crude prices in recent months.

France’s CMA CGM announced a $55/TEU surcharge for dry cargo, Israel-based ZIM introduced surcharges ranging from $18-$65/TEU and the Mediterranean Shipping Company (MSC) announced an undetermined surcharge. Hapag-Lloyd and Maersk are reported to have made similar announcements to their customers.

Container Market Optimism Over Higher Trade Demand Dampened

In the month of June the mood in the container industry is generally one of optimism as trade demand is higher than last year, while consolidated carriers and new alliance structures are bringing added value to the ocean part of the supply chain.

However, that optimism has been somewhat dampened by carriers’ financial results, which have not been as promising as first anticipated. Bunker costs are the main culprit.

The Platts West Coast North America IFO380 bunker assessment averaged $450/mt in May, up from around $325/mt in May 2017.

This is alongside a lower trans-Pacific eastbound annual contract average for May 2018 of $1,100/FEU compared to May 2017 averaging around $1,200/FEU. This has placed pressure on carriers to try and recover costs quicker than previously agreed in the bunker contracts with the shippers.

Slower Steaming Still An Option For Tanker Owners

The VLCC markets have staged a modest recovery ahead of market speculation that OPEC may relax production cut discipline and rising bunker prices which are providing a negotiating point for owners.

The VLCC market remains oversupplied with tonnage, but there are other tools at the immediate disposal of owners. The average speed of the VLCC fleet has not dropped to the levels seen in historical data in the high oil price environment and low earnings of 2013. Slowing ships down further could help reduce the supply of available vessels.

Queue At Australian Pwcs Coal Terminals Rises

Port Waratah Coal Services’ two terminals at Newcastle port in eastern Australia had 28 ships waiting offshore, last week compared to 20 a week ago, the Hunter Valley Coal Chain Coordinator said in its weekly report.

The queue is expected to amount to eight ships at the end of the month, HVCCC said.

A total of 1.61 million mt of coal was shipped out of the PWCS terminals in the week ended Sunday, up 300,400 mt from a week earlier. Month-to-date exports totaled 1.29 million mt, according to the report.

Hyundai Merchant Marine To Sign Deals For 20 Vessels

Hyundai Merchant Marine Co, South Korea’s biggest shipping line, said last week that it plans to sign deals with the country’s three major shipbuilders for 20 vessels.

Hyundai Merchant Marine said it has selected Hyundai Heavy Industries Co., the world’s biggest shipbuilder by sales, for eight 14,000 twenty-foot equivalent unit container ships.

Dalian Iron Ore Futures Slip

Chinese iron ore futures dropped nearly 1 percent last week as steel prices retreated and stockpiles of the steelmaking raw material at China’s ports surged to record levels.

Iron ore stocked at China’s major ports reached 161.98 million tonnes on Friday, up 1.4 million tonnes from the previous week, data tracked by SteelHome consultancy showed. The inventories have risen 9 percent this year.

Paraguay To Export Record Soybean

Paraguay is forecast to export more soybeans than neighboring grains powerhouse Argentina for the first time this year as growers in the smaller country push to increase output and fill the supply gap left by a drought on the Argentine Pampas.

Paraguay produces around 3.0 percent of global supply. Any additional exports are likely to be snapped up in a market buffeted by tension over trade policy between top soy importer China, and the world’s second-largest soybean exporter, the United States.Argentina’s soy crushers have brought in cargoes from as far afield as the United States to compensate for a drought that cut soy output estimates at home to under 40 million tonnes from early forecasts in the 55 million tonne range. Argentina crushes almost all its soy rather than exporting raw beans.

Oil Tanker Scrappage To Hit Multi-Year High

The shipping industry will this year scrap the largest number of oil tankers in over half-a-decade, driven by weak earnings, firm prices for scrap steel and the need to prepare fleets for strict new environmental regulations.

The surge in scrapping underscores how the sector is grappling with one of its worst-ever crises, hit hard after rates for transporting oil plunged to multi-year lows in the wake of excess tanker supply and tepid demand as OPEC production cuts bite.

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