The Baltic Exchange’s main sea freight index fell to a nearly two-week low on Tuesday as rates across its vessel segments declined.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, shed 53 points, or 2.5%, to 2,061 points, the lowest since July 14.
The capesize index fell for the second straight session, losing 141 points, or 5.4%, to 2,455 points, a near two-week low.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $1,167 at $20,359.
“The biggest headache moving forward will likely come from the faltering iron ore trade, with China’s latest move in establishing a giant mineral resource group to give it larger control over global iron ore pricing,” said George Lazaridis, head of research and valuations for Allied Shipping Research, about capesize rates in a weekly note.
The creation of the China Mineral Resources Group, Lazaridis added, “is poised to create a further loss in bargaining power for global traders as well as those operating within those supply chains.”
The panamax index was down 12 points, or 0.57%, at 2,088 points, snapping a five-session winning streak.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, decreased by $110 to $18,790.
Meanwhile, the first shipments of Ukrainian grain could leave Black Sea ports within days under a U.N.-brokered deal to tackle a global food crisis that has worsened since Russia invaded its neighbor, the United Nations and Ukraine said on Monday.
The supramax index fell by 8 points to 2,071 points, its lowest in nearly a week.
Source: Reuters (Reporting by Deep Vakil in Bengaluru; Editing by Shinjini Ganguli)
The Council of the EU said today that, in an effort to increase EU security of energy supply, member states have reached a political agreement on a voluntary reduction of natural gas demand by 15% this winter. The Council regulation also foresees the possibility to trigger a “Union alert” on security of supply, in which case the gas demand reduction would become mandatory.
“The purpose of the gas demand reduction is to make savings ahead of winter in order to prepare for possible disruptions of gas supplies from Russia that is continuously using energy supplies as a weapon,” says the Council.
As the EU seeks to wean itself from dependency on Russian natural gas, U.S. LNG exporters have been major beneficiaries. Even if the EU succeeds in meeting the goal of a 15% reduction in demand, that is not likely to change.
The U.S. Energy Information Administration (EIA) says that United States became the world’s largest liquefied natural gas (LNG) exporter during the first half of 2022. Most U.S. LNG exports went to the EU and the U.K. during the first five months of this year, accounting for 71%, or 8.2 billion cubic feet per day (Bcf/d), of the total U.S. LNG exports. The U.S. provided 47% of the 14.8 Bcf/d of Europe’s total LNG imports, followed by Qatar at 15%, Russia at 14%, and four African countries combined at 17%.
That 14% figure for Russia is more significant than it might appear, because Russia accounts for some 40% of German natural gas consumption. Germany’s ability to substitute LNG imports for that Russian gas is hampered by the fact that that it currently has no LNG import terminals. As we reported earlier, since Russia’s invasion of Ukraine, Germany has been ramping up its plans to deploy floating LNG import terminals (FSRUs). Now, reports S&P Global, four are planned along with two permanent onshore sites, with the FSRUs able to be deployed much more quickly than the onshore facilities. Germany’s economy ministry is hopeful it can begin operations at two FSRUs — one at Wilhelmshaven and one at Brunsbuttel — before the end of 2022
Will U.S. LNG supply be available to meet the demands of those new terminals?
Compared with the second half of 2021, reports EIA, U.S. LNG exports increased by 12% in the first half of 2022, averaging 11.2 billion cubic feet per day (Bcf/d). According to EIA estimates, installed U.S. LNG export capacity has expanded by 1.9 Bcf/d nominal (2.1 Bcf/d peak) since November 2021. The capacity additions included a sixth train at the Sabine Pass LNG, 18 new mid-scale liquefaction trains at the Calcasieu Pass LNG, and increased LNG production capacity at Sabine Pass and Corpus Christi LNG facilities. As of July 2022, EIA estimates that U.S. LNG liquefaction capacity averaged 11.4 Bcf/d, with a shorter-term peak capacity of 13.9 Bcf/d.
Source: EIA
International natural gas and LNG prices hit record highs in the last quarter of 2021 and first half of 2022. Prices at the Title Transfer Facility (TTF) in the Netherlands have been trading at record highs since October 2021. TTF averaged $30.94 per million British thermal units (MMBtu) during the first half of 2022. LNG spot prices in Asia have also been high, averaging $29.50/MMBtu during the same period.
In June, the United States exported 11% less LNG than the 11.4 Bcf/d average exports during the first five months of 2022, mainly as a result of an unplanned outage at the Freeport LNG export facility. Freeport LNG is expected to resume partial liquefaction operations in early October 2022.
Utilization of the peak capacity at the seven U.S. LNG export facilities averaged 87% during the first half of 2022, mainly before the Freeport LNG outage, which is similar to the utilization on average during 2021.
A merchant vessel was towed to safety after losing power in heavy seas off the coast of Somalia.
On July 19, the EU’s counter-piracy forces EU NAVFOR ATALANTA received a request for assistance from the Somali Ministry for Foreign Affairs and International Cooperation after the Tanzania-registered merchant ship Anatolian suffered a complete propulsion and power plant failure, and was without food or fresh water. At the same time, ATALANTA assets were granted permission to enter Somali territorial waters.
For about a week, the Anatolian was dead in water in heavy seas in the Gulf of Aden, north of Puntland coast. Earlier, a commercial tugboat refused to assist due to adverse weather conditions and the heavy sea state. Attempts by the crew and a navy ship to repair the engine and electricity system failed and in the meantime, ATALANTA unit ESPS Numancia and another international naval unit provided food and drinking water to the Anatolian crew.
On July 21, once sea conditions improved, the Spanish frigate Numancia started to tow the stricken ro-ro-ship to the Somali port of Bosasso, maintaining permanent communication with the Federal and local Somali authorities.
The Numancia and Anatolian arrived to Bosasso on the morning of July 22, and the ATALANTA ship made a smooth transfer of responsibilities to the local port authorities.
Ukraine hoped the UN-brokered contract would ease global food shortage as the war-torn nation planned to restart shipping grains from the Black Sea ports this week.
Moscow brushed aside the rising concerns that the deal could again be derailed owing to a Russian missile strike that hit Ukraine’s Odesa port on Saturday, mentioning that it targeted only the military infrastructure. Volodymyr Zelenskyy, the Ukrainian President, denounced the latest attack as “barbarism,” which reflects how Moscow can’t be trusted.
A worldwide wheat shortage and rising energy prices in Europe are some of the most far-reaching impacts of Russia’s war against Ukraine, threatening millions in the poorer countries with hunger and resulting in fears of overheating supplies in the coming winter.
Officials from Ukraine, the UN, Russia, and Turkey agreed on Friday there would be no attacks on any ship sailing via the Black Sea to Bosphorus Strait in Turkey and on to markets. They are preparing for a joint monitoring center.
Image for representation purpose only
A senior government official from Ukraine reported that he was hoping that the first grain shipment from Ukraine, a supplier major, would be possible this week, with the shipments from other ports spoken of in the deal in about two weeks.
In the next 24 hours, we’ll be prepared to resume exports from Ukraine’s ports. The port of Chornomorsk, then there will be Odesa, and then the port of Pivdeny, the deputy infrastructure minister Yuriy Vaskov reported at a news conference.
As the war lasted six months, Ukraine’s military was informed about the Russian shelling in the eastern Ukrainian region overnight. It said that Moscow continued to prepare to launch an assault on Bakhmut in Donbas, which Russia targets on seizing on behalf of its separatist proxies.
Ukraine said its forces had used U.S-supplied HIMARS rocket systems to destroy 50 ammunition depots in Russia from when they received the weapons around last month. Russia did not immediately comment, but its Defense Ministry said its forces had destroyed an ammunition depot for HIMARS systems.
Grain Export
Russia’s Black Sea fleet has prevented grain exports from Ukraine since Moscow’s February 24 invasion. A UN official referred to Friday’s deal as a “de facto ceasefire” for facilities and ships covered in the agreement.
Moscow denies responsibility for the food crisis, blaming the sanctions for hampering the food and fertilizer business and Ukraine for mining approaches to its ports.
Ukraine’s military mentioned that two Kalibr missiles fired from Russia’s warships on Saturday hit a pumping station at Ukraine’s Odesa port as well, as the country’s air defense forces shot down two others. They did not hit the grain storage area or result in significant damages.
Russia said the strikes hit a weapons store based in Odesa and a Ukrainian warship. They were fired with precision missiles.
They are unrelated to the infrastructure used for grain export. And it should not – and will not severely impact – the beginning of shipments, Dmitry Peskov – a Kremlin spokesman, mentioned on Monday.
Peskov signaled that Russia’s European natural gas exports restarted at reduced volumes last week. However, the volume could also soon increase.
Diplomats from the EU that have joined the US in imposing sanctions on Russia but continued to purchase its gas were prepared to discuss targets on Monday for member states to cut down on gas use. Russia has cut down its supplies to Europe and has blamed the sanctions.
Global wheat prices increased sharply on Monday owing to uncertainties regarding the grain agreement, clearing most of the falls observed on Friday when traders were anticipating a relaxation of supply shortages.
Referendums
As well as Ukraine’s eastern Donbas region, Russian forces have set sights on southern Ukraine, where they have already occupied two areas north of the Black Sea peninsula dubbed Crimea, which it annexed from Ukraine back in 2014.
Russia’s news agency RIA reported that the two regions, Kherson and Zaporizhzhia, may also conduct referendums in September 2022 on joining Russia, mentioning Vladimir Rogov. He is a member of the Russian-appointed Zaporizhzhia’s provincial government.
The Ukrainian military updated regarding progress in what is referred to as a counter-offensive in Kherson, mentioning that its forces moved within the firing range of Russia’s targets. Reuters could not verify the reports independently.
Britain informed that the Russian commanders keep facing a dilemma – whether to bolster defenses at Kherson and areas close by or resource offensive toward the east.
Moscow charged about 92 members of the armed forces of Ukraine with crimes against humanity. It also proposed an international tribunal to tackle the examination, Alexander Bastrykin, who leads Russia’s investigative committee, reported.
The declaration comes after the US and more than 40 other countries agreed on July 14 to coordinate examinations into the suspected war crimes in Ukraine, especially concerning alleged actions by forces of Russia and its proxies.
Putin refers to the war as a special military operation aimed at demilitarizing Ukraine. Kyiv and the West refer to the war as a baseless pretext for land grab.
The UK Hydrographic Office (UKHO) has taken a major step on the path to digitalization in the shipping industry: the end of Admiralty paper charts.
Durable, tangible, and with no batteries required for use, the paper chart has been a mainstay of maritime navigation for centuries. Generations of mariners have relied on paper charts for voyage planning and positioning. But the times have changed, and automatically-updating electronic charts have become the default option – especially after the SOLAS mandate for the transition to ECDIS took effect.
On Tuesday, the UKHO announced that it will also phase out global paper chart production by late 2026. Its Admiralty charts are the most widely used paper charts globally, and the decision will affect stakeholders in many regions; however, UKHO says, most mariners have already made the switch to digital.
The agency is winding down paper chart production because its customers are “primarily using digital products and services for navigation” and it has seen a “rapid decline in demand for paper charts.” The decision will allow it to focus on its 18,000-plus electronic charts and other digital products.
“The decision to commence the process of withdrawing from paper chart production will allow us to increase our focus on advanced digital services that meet the needs of today’s seafarers,” said Peter Sparkes, UKHO’s chief executive. “Shipping is moving quickly towards a future underpinned by digital innovations, enhanced satellite connectivity at sea and optimized data solutions, supporting the next generation of navigation. The UKHO aims to be at the vanguard of this digital transition.”
UKHO says that it will work with the UK Maritime and Coastguard Agency, commercial distributors, and other stakeholders to help remaining paper chart customers transition to electronic products by the deadline. “We understand the significance of this announcement, given the distinguished history of the UKHO’s paper chart production and the trust that mariners have placed in Admiralty charts over the generations,” said Sparkes.
UKHO is following in the footsteps of its American colleagues. In 2019, NOAA announced plans to phase out phase out paper nautical chart production by January 2025. The decision marked a sea change for the agency, which has produced America’s paper charts (and charts for much of the rest of the world) for decades. Like UKHO, NOAA is redirecting its resources to focus on the quality of its electronic chart products and to provide larger scale co
It is not quite the end of the paper chart in the United States, however: American seafarers will still be able to order custom-printed charts based on electronic data.
The Baltic Exchange’s main sea freight index slipped on Monday over declining rates in the capesize vessel segment.
The overall index, which factors in rates for capesize, panamax and supramax shipping vessels, was down 32 points, or 1.5%, at 2,114 points.
The capesize index lost 100 points, or 3.7%, to 2,596 points, its lowest since July 11.
Average daily earnings for capesizes, which typically transport 150,000-tonne cargoes such as iron ore and coal, were down $836 at $21,526.
Meanwhile, iron ore futures soared, extending a rally spurred by hopes of an economic rebound for top steel producer and consumer China in the third quarter, and support for the country’s troubled property sector.
The panamax index was up for the fifth straight session, gaining 7 points, or 0.33%, at a two-week high of 2,100 points.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 to 70,000 tonnes, increased by $62 to $18,900.
Top exporter Ukraine’s grain shipments in the first 24 days of July, the first month of the 2022/23 season, were down 39.5% year on year at 1.08 million tonnes, the agriculture ministry said.
However, Ukraine said it hoped a U.N.-brokered deal aimed at easing global food shortages by resuming grain exports from the Black Sea region would start being implemented this week.
The supramax index fell by 1 point to 2,079 points, snapping four sessions of gains.
Source: Reuters (Reporting by Deep Vakil in Bengaluru; Editing by Shailesh Kuber)
The dry bulk market could be entering a more bearish period in the coming weeks. In its latest weekly report, shipbroker Allied Shipbroking said that “it is without question that the dry bulk sector has been on a gloomy path these past few months or so, with the main benchmark freight figures being under pressure and losing considerable ground. On the other hand, even during a booming market regime, it is still normal to expect to see time intervals in which the market corrects. The important question to answer is as to when a periodical correction means more than the very word “periodical” denotes”.
According to Mr. Thomas Chasapis, Allied’s Quantitative Analyst, “when the market is feeling considerable pressure, downside risk is automatically on the rise as well. The graph below tries to give an indication of this with the use of the technical indicator Ulcer Index (UI). UI captures the depth and the duration in the correction of a price from previous highs. The heftier a correction is and the longer it takes to recover, the higher this metric is sustained. It is considered “superior” to other volatility metrics, given that it accounts only for negative volatility and increases in value through price depreciation”.
Chasapis added that “other classic statistical metrics like standard deviation can appear more confusing from time to time when trying to capture a rising risk environment (higher volatility), when the market can actually be quite bullish. Getting back to the graph, we calculate the UI for all benchmark dry bulk indices, and we extended the analysis from the start of the previous year. It is not the first time that this indicator prevails inflated for all separate size segments, but at this point, we have relatively stronger signs of downward resistance, with the market seemingly unable to recover, while constantly lagging well behind its moving 14-day highest value”.
Source: Allied Shipbroking
“The above technical analysis does not suffice to argue any bearish momentum within the dry bulk market. It is more of an indication to understand the fact that we may well be entering into a riskier market regime in the near term. At the same time, it is worth mentioning that what is shown by this graph is that this won’t be a privilege unique to the bigger sizes. Moreover, as the cost of borrowing is already in a transitional period towards higher levels, does it not automatically mean that the market’s risk has become more ‘expensive’ as well? “, Allied’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
Ten trade organisations, representing the owners and forwarders of cargo, port terminal operators and other parts of the supply chain dependent on container shipping, are demanding an immediate start to the review of European Union’s Consortia Block Exemption Regulation for the container shipping industry.
The Regulation exempts container shipping lines from many of the checks and balances of EU competition law and permits them to exchange commercially-sensitive information to manage the number and size of ships deployed and the frequency and timing of sailings on trade routes around the world.
European businesses and other parties in the supply chain have suffered huge disruption to the movement of goods by container shipping since the Regulation was last renewed in April 2020, with many sailings being cancelled or diverted to other ports, and ports being bypassed (‘skipped’) at short notice. At the same time shipping rates have more than quadrupled on many routes and continue to remain 3 to 4 times higher than in 2019 before the pandemic.
The effects of lockdowns on the production of goods and the shifts in demand due to the effects of the Covid pandemic were certainly significant. But the ability of the shipping industry to collectively manage these impacts, and at the same generate profits totalling over $186 billion in 2021, at the expense of the rest of the supply chain, and ultimately Europe’s consumers, demonstrate that something is wrong. The benefits of the exemptions from general competition law enjoyed by the shipping lines are not being shared fairly between the lines and the rest of the economy, and this in itself constitutes a compelling reason why the Block Exemption should be reviewed urgently.
In their letter to the Commission the signatories point to the revelations and recommendations of investigations conducted in the United States by the Federal Maritime Commission, resulting in May in the passing of a new Ocean Shipping Reform Act, addressing many of the grievances of users and services suppliers to the container shipping lines.
The Regulation’s review will allow all interested parties to submit evidence and arguments as to how the Commission should act to ensure the deep-sea container shipping market operates in a way that is fair and transparent to all parties in the maritime supply chain. This should include consideration of new measures and mechanisms and should allow sufficient time for these to be considered and implemented before the expiry of the current regulation in April 2024.
Source: Global Shippers Forum
Germany’s SAL Heavy Lift has placed an order at Wuhu Shipyard in China for four firm plus two options of 14,600 dwt heavylift multipurpose (MPP) vessels.
The 149.9 m long ships are each set to have two 800 tonne cranes fitted, with delivery due from the second quarter of 2024 onwards, according to Clarksons Research.
Hamburg-based SAL Heavy Lift, a member of the German shipping and logistics group Harren & Partner Group and the Jumbo-SAL-Alliance, is one of the leading carriers specialised in breakbulk and project cargo, operating a fleet of 30 heavylift vessels.
Financial details surrounding the latest order have not been disclosed.
Norway’s Kanfer Shipping, Egypt’s Leth Suez Transit and Egyptian Natural Gas Holding Company (Egas) are looking to join forces with commodity traders in order to establish a strategic and competitive liquefied natural gas (LNG) bunkering hub in the Suez Canal by 2025.
Egas has initiated the establishment of a joint venture that will charter the bunkering vessel, take care of the administration, including daily operation, and also purchase its LNG or from other sources to trade it to shipowners and the shipping industry.
Leth Agencies and Kanfer said they are now primarily seeking experienced joint venture partners within bunkering and commodity trading who can take an active part in creating a business model for this “high potential and attractive” project in Egypt.
Egypt’s natural gas resources and liquefaction facilities are said to be one of the key advantages for LNG bunkering, which puts the country in a competitive position against the key LNG bunkering hubs of the world. Egypt has LNG sources in Damietta, IDKU terminal and the FSRU stationed in Ain Sokhna that give flexibility and more opportunities for LNG bunkering in both Port Said and Suez.
“The key LNG hubs of the world must import the LNG to their terminals, which adds considerable cost to the end-users. We are confident that the JV can provide competitive prices to the key ports and hubs such as Singapore and ARA. We believe that this will attract shipowners and influence their decision-making on where they will replenish LNG,” said managing partner in Kanfer, Stig Hagen.
Egas said it is able to allocate a substantial volume of LNG to this growing segment in order to make the shipping industry, Suez Canal and Egypt greener. “This will be an important step for Egypt and attract more business to the Suez Canal,” added Admiral Osama Mounier Mohamed Rabie chairman and managing director of the Suez Canal Authority.
Kanfer noted that as more than 20,000 ships are transiting the Suez Canal annually and all ships have waiting time before the daily convoy commences, they can use the time efficiently to replenish bunkers in Port Said, Suez, or other important ports along the Egyptian Mediterranean coast.
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