WORLDWIDE SHIPPING INDUSTRY
Baltic index hits one-week trough on sluggish demand
The Baltic Exchange’s main sea freight index, which tracks rates for ships ferrying dry bulk commodities, fell to a one-week low on Wednesday, on weaker demand for all vessel segments.
The Baltic index, which reflects rates for capesize, panamax and supramax vessels, was down 1 point at 1,897, extending losses to a fourth session. The capesize index fell 10 points, or 0.3 percent, to 3,194. The average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes such as iron ore and coal, rose $174 to $25,838. China’s top steelmaking city of Tangshan, in Hebei province, has issued a second-level smog alert on Tuesday that requires steel mills to limit certain operations. The panamax index declined 30 points, or 1.6 percent, to 1,888, recordings its worst day this month. Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonne to 70,000 tonne, dropped $244 to $15,132. The supramax index nudged lower by a point to 1,226.
Panamax market switches to LR1s on higher dirty tanker rates
Clean tanker owners have moved multiple Long Range 1 ships over to the Panamax market in recent weeks in response to the highest rates since February in the dirty tanker market, taking advantage of high returns, and prompting a tightening of LR1 availability on the US Gulf Coast.
Last week the BW Tagus, a ship typically working in the clean LR1 spot market, was placed on subjects by Shell for a USGC-Singapore run at lump sum $3.3 million, lifting a cargo of dirty condensate October 29 and sailing around the Cape of Good Hope. Later, market participants heard the Altesse was on subjects for a dirty product, although no further details could be uncovered. On a dollar per metric ton basis, a USGC-Singapore run for a Panamax at lump sum $3.3 million would equate to $66/mt. By comparison, the BW Tagus, an LR1, was placed on subjects for a USGC-South Korea run at lump sum $2.25 million, earning $37.50/mt for the longer voyage.
Soaring oil trading in US Gulf dries up as tanker rates skyrocket
Soaring oil-tanker costs are drying up activity in the US export market as sellers are slow to lower offers and buyers are skittish, according to market participants. Some sellers have held back from offering cargoes, while others have yet to reduce their offers enough to accommodate the rising cost of shipping oil, according to 10 market participants.
Buyers are holding out for deeper discounts after sanctions on units of China’s COSCO Shipping Corp. took away tankers from the global shipping pool, they said. As a result, hardly any deals have been booked over the past few days, compared to six or seven seen in a typical day. Benchmark rates surged to about $300,000 a day last week for shipments from the Persian Gulf to the Far East, while one supertanker was booked to carry oil from the US Gulf to Asia for more than $15 million. Indian Oil Corp. said the rising costs are forcing it to cut spot purchases.
Rio Tinto’s iron ore shipments on the rise
Mining heavyweight Rio Tinto’s shipments of the steelmaking raw material iron ore have risen 5 percent in three months, despite concerns of the US-China trade war dampening demand from Chinese steel mills. The Anglo-Australian miner reported on Wednesday it had shipped 86.1 million tonnes of iron ore – Australia’s most valuable export commodity – in the July-September quarter, up from 81.9 million tonnes a year earlier.
Rio on Wednesday lowered its forecasts for bauxite and alumina production forecast due to bad weather and maintenance issues. Iron ore prices surged nearly 60 percent earlier this year after a fatal dam disaster at a Brazilian iron ore mine sparked production outages and prompted a worldwide supply shortage, with the benchmark price hitting about $US120 a tonne in June and delivering a windfall for iron ore miners. The price has since dipped back below $US100 as supply begins to stabilise and the US-China trade war weighs on the economy of China, which makes about half of the world’s steel output.
Commonwealth Bank analyst Gareth Aird quoted as saying iron ore prices were forecast to ease from $US92 a tonne to average $US85 a tonne in the December quarter.
European port coal stocks decline from record highs
Slowing vessel arrivals and some export activity have seen coal inventories at northwest European dry bulk terminals decline 5 percent from last week’s multi-year high of more than 7.3 mt.
Stocks at four key Amsterdam, Rotterdam and Antwerp dry bulk terminals were pegged this week at 6.96 mt, the lowest since mid-September but still more than 20 percent higher on the year.
A source at one terminal quoted as saying vessel arrivals had slowed, but reloadings from stock onto barges – for shipment to inland plants – were also relatively low. Amsterdam’s OBA terminal had 2.64 mt and Ovet’s Vlissingen terminal, near Antwerp, had 300,000 tonnes. High port stocks have played a prominent role in pressuring regional coal prices in recent months, with the Global Coal Des ARA index pegged last at below USD 60/t, compared with more than USD 85/t at the start of the year.