Shipping ton-mile demand increasing
The current situation in the shipping markets has been favorable of increased ton-mile demand. However, the long-term implications of the Ukraine war are difficult to quantify at this stage. In its latest weekly report, shipbroker said that “for those looking for the historical reference to what’s going on in the markets right now, it looks as though we are now getting echoes of the 1970’2 oil shock. The connection may well be light and with several of the drivers being different, yet the essence seems to have unwittingly familiar effects. The 1973 oil shock drove the world through escalating commodity prices (mainly within the energy space) into a decade of high inflation and endless financial stress. Just as back then, the current shocks on commodity markets have further driven inflationary pressures on a global economy that was already under considerable stress.
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Tankers: will oil supply become an issue moving forward?
With the war in Ukraine raging for nearly one month now, it’s becoming apparent that oil stocks could become a major issue moving forward. In its latest weekly report, shipbroker said that “each week, we monitor developments in refined product and crude oil inventories. Even before the invasion of Ukraine and subsequent sanctions on Russia, stocks were low in every major trading hub, leaving the world exposed to a major supply shock. Although each region has its own supply/demand dynamics and that for now, Russian exports continue flowing, the world now finds itself in a very precarious situation just as seasonal demand would ordinarily be expected to increase”. According to Gibson, “in the US, diesel stocks are the lowest for this time of year since 2014 owing to record oil demand, mostly driven by freight and industry. Following spring maintenance, which is now largely completed, inventories are expected to build again ahead of winter. However, refiners will be pressured to maximise gasoline output which could leave distillate stocks at historic lows.
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Capesize market cools down after recent surge
The surge in Capesize rates abruptly flattened off this week as global markets continue to be highly volatile. The Capesize 5TC lowered -591 from last week to settle at $21,604, yet the market remains primed for movement. Underlying reductions in bunker prices can take a lot of responsibility for taking the wind out of the sails of many markets, yet they are still far from settled. Rumours are being heard that prices are building again due to ongoing geopolitical tensions. The Transpacific C10 switched to paying a premium over the Transatlantic C8 this week, with both routes closing at $24,133 and $20,175 respectively. Fixtures heard out of Brazil with options to load West Africa, discharging Fareast, helped to push up the Tubarao to Qingdao C3 towards the end of the week with it now marking at $28.14. The Backhaul C16 has descended from levels posted early in the week, with a few shorter sharper fixtures, but still remains at a healthy $10,250. The Capesize market will soon be coming out of the first quarter of the year when, historically, it has been known to lift a notch or two in value. With recent strong fixture activity, global tensions and economies continuing to re-open from the pandemic, the market is sure to be pulled in numerous directions and unlikely to stay flat for long.
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Bio-content in marine fuel helps reduce emissions
To help meet environmental regulations and reduce the environmental impact of the shipping sector, increasing percentages of bio-components are being added to marine fuels. But what difference does this make to fuel husbandry and are there any risks to the marine operators? There are certainly some areas for concern and fuel management procedures may need to be adapted to avoid unnecessary maintenance costs or damage to engine systems. To help meet environmental regulations and reduce the environmental impact of the shipping sector, increasing percentages of bio-components are being added to marine fuels.
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Tanker market at stalemate during February
The dirty tanker market remained at muted levels for much of February, although volatility accelerated at the end of the month as geopolitical developments intervened, OPEC said in its latest monthly report. Rates remained elevated into March, although coming down somewhat after the first few days. In monthly terms, average rates for February primarily reflect the amply supplied tanker market, rather than the jump seen toward the end of the month. VLCCs continued to be anchored at historically weak levels, as has been the case since mid-2020. Suezmax and Aframax rates performed better and were slightly higher than in the previous year, registering an improvement m-o-m. Clean rates were flat to the east but picked up in the Atlantic Basin, with rates in the Med picking up earlier in the month.
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Tanker market plagued with uncertainty
The tanker market seems to be plagued with yet another prolonged period of uncertainty, after the latest developments in Ukraine. In its latest weekly report, shipbroker said that “the last 20 days the tanker market is taking another hit of uncertainty prior fully recovering from the pandemic. When uncertainty hits the market various opportunities are being created for the tanker Owners, that have already been under a lot of pressure for quite some time now. Vessels that were stranded waiting to load/discharge or had orders to load or discharge in Ukraine/Russian ports have amassed delays, creating shorter tonnage lists and therefore a more bullish sentiment along with bunkers that simultaneously were going off the roof. At the same time, owners who are willing to call Black Sea / Russian ports still get a premium”.