WORLDWIDE SHIPPING INDUSTRY
Baltic index down for 6th straight session on sliding Panamax rates
The Baltic Exchange’s main sea freight index, which tracks rates for ships carrying dry bulk commodities, posted its sixth consecutive fall on Wednesday, hurt by declining demand for the panamax vessel segment.
The Baltic index, which reflects rates for capesize, panamax and supramax vessels, fell marginally by 6 points, or 0.33percent, to 1,803, its lowest since mid-August. The panamax index dropped for a twelfth straight session, down 20 points, or 1.15 percent, at 1,725. The index is at its lowest since July 8. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, declined by $154 to $13,819. The capesize index was down 1 point at 3,231, its lowest since Aug. 9. The average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes such as iron ore and coal, rose by $109 to $24,430. The supramax index declined 14 points to 1,217.
Ships recycling market: hopes of a recovery
With freight rates in the dry bulk market now at a seven-week low, after the rally of the past few months, hopes are beginning to revive of a recovery in the ships’ recycling market, which has just exited from one of the quietest summers in recent years.
In its latest weekly report, shipbroker Clarkson Platou Hellas said that with the summer now coming to a close on what has been one of the quietest in recent memory, it is hoped that a return to normal market activity is just around the corner. We have started to see more enquiry from recyclers, as they start to ask questions for tonnage and generate the market once again which may finally result in suitable bids being tabled. This is an encouraging sign from the waterfront which we haven’t seen over the course of the summer, where breakers are now reportedly actively seeking tonnage, however it may be some time before prices react positively following the continued depressed local steel rates.
Marine fuel 0.5pc bunker premium hits record high
The premium which delivered Marine Fuel 0.5 percent bunker commands over the Mean of Platts Singapore marine fuel 0.5 percent FOB cargo assessment spiked to $119.68/mt at the Asian close on Tuesday, the highest to-date since Platts started assessing IMO-compliant Marine Fuel 0.5 percent bunker assessments at key global ports on July 1, 2019, S&P Global Platts data showed.
The delivered premium widened by $25.70/mt or 27.4 percent from Monday on the back of growing demand for the IMO-compliant bunker fuel as the industry speeds towards the January 1, 2020 start date to the changes in the IMO regulations. The premium was last highest at $93.98/mt on Monday and was first assessed at $40.78/mt on July 1, Platts data showed. Demand for low sulfur marine fuel is expected to further strengthen across key Asian ports starting this quarter as IMO 2020 nears, market sources said. During the Platts Market on Close assessment process on Tuesday, Japanese fuel oil and bunker trader Mitsui and Co. Petroleum had bid for 1,300-1,500 mt of Marine Fuel 0.5 percent for delivery over October 6-8 at $573/mt.
May bunker deliveries in port of Los Angeles down 13.7pc on year
US bunker deliveries in the Port of Los Angeles totaled 1.24 million barrels in May, down 13.74percent from the year-ago month, port data showed Tuesday.
The May total was the third highest for the year, but 47,906 barrels below the April volume. The average monthly marine fuel pricing trended lower throughout May, with the IFO 380 assessment falling $16.70/mt, compared to April. S&P Global Platts assessed IFO 380 at the port of Los Angeles at $418.50/mt delivered basis Monday, $42/mt lower from Friday in part due to a decline in the Mean of Platts Singapore and talk of lower price indications by participants. The lower assessment marked a third consecutive fall, with the assessment shedding $67/mt since September 26.
Oil shipping rates from US to Asia hit 3-year high
Freight rates for US crude tankers bound for Asia were bid up to a more than three-year peak this week as US sanctions on a Chinese transport giant cut vessel availability, traders and shipbrokers said.
The United States last week imposed sanctions on two units of China’s COSCO for alleged involvement in ferrying crude out of Iran. That action prompted U.S. Gulf Coast exporters to hold back chartering COSCO-linked vessels, traders and shipbrokers said. One of the units – COSCO Shipping Tanker (Dalian) – owns and manages at least 36 tankers for crude and refined products, including 18 very large crude carriers (VLCCs), according to shipping sources and Refinitiv data. This week, suggested rates for VLCCs from the US Gulf Coast to China vaulted to $9.8 million, up from $6.2 million in early September, according to ship broker McQuilling Services. VLCCs carry around 2 million barrels each. To attract a ship into the Atlantic market, it’s going to cost about $10 million for US Gulf Coast shipments bound for China or South Korea, said another U.S. shipbroker who brokers about 20 vessels per month.