LPG shipping stocks – what lies ahead?
The year 2021 has been volatile for the LPG shipping industry. VLGC rates hit a peak at USD 110,000pd in January but soon nosedived by more than 90 percent in February, with charter rates on the key AG-Japan route touching USD 6,000pd. The wild swings after subsiding in March-April resumed again in May. Similarly, LPG stocks also remained unstable/volatile, creating new highs and lows. The upswings in the wild rally and macro-economic factors such as the availability of refinancing options allowed operators to book strong results, which fuelled stock prices. Meanwhile, Asian demand weakened along with narrowing US-Asia arbitrage and easing of the Panama Canal waiting period. This dampened the spirits of charterers and stockholders alike. All the three LPG shipping stocks under our coverage recently recorded/touched 52-week highs, but it was short-lived, and stock prices retreated. On 18 May 2021, BW LPG reported its 1Q21 results, following which, the stock rallied almost 12 percent to a 52-week high of NOK 71.45 on 20 May 2021, before it came crashing down to NOK 58.05 on 27 May.
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Reduction of ghg emissions from shipping measures adopted
The MEPC adopted amendments to the International Convention for the Prevention of Pollution from Ships (MARPOL) Annex VI that will require ships to reduce their greenhouse gas emissions. These amendments combine technical and operational approaches to improve the energy efficiency of ships, in line with the targets established in the 2018 Initial IMO Strategy for Reducing GHG Emissions from Ships and also provide important building blocks for future GHG reduction measures. The new measures will require all ships to calculate their Energy Efficiency Existing Ship Index (EEXI) following technical means to improve their energy efficiency and to establish their annual operational carbon intensity indicator (CII) and CII rating. Carbon intensity links the GHG emissions to the transport work of ships.
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Tankers: what will they carry from 2040 onwards?
Aglobal push towards renewable energy and away from fossil fuels is already accelerating, as the world is edging towards a Net Zero Emissions Future. How close is this future and more specifically, if it is achieved, will tankers become obsolete in a few years’ time, or is there still a generation’s worth of trading? In its latest weekly report, shipbroker said that last month the International Energy Agency (IEA) released its Net Zero 2050 report, outlining the actions that are needed to achieve net zero emissions globally by 2050. To reach this, the IEA calls for no new oil and gas developments from this year onwards. In the Net Zero Emissions Case (NZE), world oil demand never returns to pre-pandemic levels, declining from around 90 million b/d in 2020 to just 24 million b/d by 2050. Net zero targets rely on further rapid deployment of available technologies as well as the development of new technologies. In 2050, almost half of emission reductions come from technologies that currently are at the demonstration or prototype stage.
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Capesize market rebounds strongly over past week
The Capesize market continued the trend from last week, seeing solid improvements throughout the week on all routes – but lost ground in the very last day of the week. The timecharter average was up to the highest of the bulker sectors in midweek, closing at $33,415. The booming C3 Brazil to China and C5 west Australia to China routes continued unabated in the first half of the week, driving the timecharter routes C14 and C10 up accordingly to new highs. A C5 fixture was reportedly done at $11.60 early of the week – followed by talks of $12.40 and $12.50 being paid – but slipped to the initial level when the week ended. Period activity included a 180,000-dwt 2012-built delivery in the Far East in August fixing for 12 to 18 months at $32,500. A scrubber-fitted 172,000-dwt 2007-built was fixed for one-year trade at $35,000 delivery Luoyu 22/27 June.
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Dry bulk market could be headed back to 2008
The dry bulk market is slated for a renewed rally during the summer months, one which could see rates return to records not seen since 2008. In its latest weekly report, shipbroker said that last week’s (7-11 June) stellar performance in the dry bulk market could well be a good sign of W-O-W change things to come. With the rapid rise in freight rates noted over the past few days coupled by the strong resurgence being noted in commodities market prices almost seems like a precursor of what is about to unfold. The massive gains noted across all market fundamentals since the start of the year across by these most recent positive signs leave for a feel that this year’s summer months could well be sit “ablaze” in terms of freight rates, leaving us with a possibility of seeing levels not seen since before the great recession of 2008.
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Record-breaking world food trade forecast
Global food trade looks set for a resilient year ahead despite supply and demand uncertainties, according to a report from the Food and Agriculture Organization of the United Nations (FAO). Trade flows for agricultural, and particularly less-perishable, foods have reached record highs during the Covid-19 pandemic, leading the FAO to predict that the world food import bill in 2021 will be $1.72 trillion, 12 percent up on the previous high of $1.53 trillion in 2020. But the optimism comes with some caveats: rising food prices are leading to concerns that “higher outlays may still mask deteriorating quantitative and qualitative dietary trends in vulnerable countries”, said the FAO. In its forecast, the UN agency expects world output of the major food commodities to increase in the year ahead, with the exception of sugar, which is forecast to decline for the third consecutive year and fall short of global consumption.