Freeport Indonesia reopens mine access after shooting
The Indonesian unit of Freeport-McMoRan Inc has reopened the main supply route to its huge copper mine in Papua, the company said on Monday, after the road was closed on Sunday following a shooting incident in the area. No one was reported injured when shots were fired at an escort vehicle travelling from the lowlands, but Freeport cancelled all convoys along the road on Sunday afternoon while the security situation was assessed. (Reuters)
Black Sea wheat shipments to India threatened by import tax hike
India’s decision to raise its wheat and peas import tax will reduce the flow of wheat shipments from the main Black Sea producers Ukraine and Russia and has already hit the Russian market for peas, traders and analysts said. India has doubled its import tax on wheat to 20 percent on Wednesday, as the world’s second biggest producer tries to rein in imports to support local prices. (Reuters)
Finnish nickel producer, Trafigura tap electric vehicle boom
Finland’s Terrafame nickel mine is planning to start producing material for electric vehicle batteries by 2020, the company said on Friday, after securing $200 million more in funding from commodities trader Trafigura Group. Trafigura, which will also increase its nickel and cobalt sulphides offtake agreement with Terraframe, is providing the funds with Galena Asset Management and Nordic fund Sampo Plc. (Reuters)
COFCO to nearly double soy sourcing in Brazil’s Mato Grosso state
Chinese commodities trader COFCO International plans to nearly double the volume of soybeans it sources in top Brazilian grains state of Mato Grosso during the next five years, state authorities said on Friday. Mato Grosso Governor Pedro Taques, on a trip to China in recent days, has met with Chinese companies with Brazilian investments, including COFCO and Pengxin Group, which recently bought mid-size commodities trader Fiagril. (Reuters)
South Africa coal miners to strike from November 19
South Africa’s National Union of Mine Workers will strike November 19, and continue the protest “indefinitely” until employers “respond positively” to its pay demands, a union spokesman said Friday.
The decision followed a meeting of NUM members Thursday, where the union said it would issue employers’ body the Chamber of Mines with a 48-hour strike notice on Thursday November 16, beginning the strike on November 19.
A Northwest Europe-based broker was yet to see much change to bid/offer prices for South Africa-origin coal, while a Mediterranean-based trader of the product said prices could push up next week due to market uncertainty.
The trader added that current stock levels at Richards Bay coal terminal were quite high, offsetting the tightness somewhat.
S&P Global Platts FOB Richards Bay 5,500kcal/kg NAR prices have been in decline since November 1, and were down to $76.75/mt FOB November 9.
Negotiations have been ongoing between employers and the union since June, when the Chamber declared wage talks would be centralised. (Platts)
China steel prices to fall on inadequate winter output cuts: Wood Mac
China’s pollution cuts will cause steel demand to be cut by 9.6 million mt in the fourth quarter, depressing steel prices, Wood Mackenzie said Friday.
Wood Mac expects the cut in steel demand will not be adequately offset by pollution-related curbs on steel production in two major and 26 lesser cities in China’s northeast, Senior Consulting Manager Ming He said in a note.
“This will put downward pressures on the steel price during the winter,” Wood Mac said. “We estimate steel demand will be hit even harder than steel supply. This is because construction has been stopped in Beijing, Tianjin and Hebei province. Some downstream sectors will be also severely restricted.” A strong steel price and forward mill margin indications have been supportive for raw materials prices. A fall in Chinese steel markets may remove a layer of price support for iron ore, global supply of which has expanded over the past few years, with further expansion expected in 2018, based on company plans.
Beijing’s policy may cause pig iron supply to be cut by 14.2 million mt in Q4 2017, and 20.2 million mt in Q1 2018, Wood Mac said.
More use of scrap to cut pig iron ratios in crude steel, and rising hot metal and steel production outside the northeast region to meet the shortfall, may help offset winter adjustments in pig iron output at affected blast furnaces, Wood Mac said.
“The loss will be partly offset by production hikes from capacity outside the 2+26 region — two thirds of hot metal capacity sits outside the restricted region.”
“To make up for the loss in hot metal, steel companies can feed more scrap or ramp up electric-arc furnaces, which will further offset the loss on the steel supply. The actual steel curtailment will be about 4 million mt in Q4 2017.”
Wood Mac said stricter measures on pollution-related cuts are being implemented at a more local level, and some areas will implement tougher or longer-lasting restrictions than outlined by the 2+26 policy.
China may reduce steel production by about 33 million mt between mid-November and the end of March 2018, based on S&P Global Platts estimates published October 27.
Falling imported iron ore prices into China had principally aided steel margins in China since a peak in HRC margins marked in September, based on Platts China steel and iron ore, coking coal import price assessments.
Greater divergence between higher steel prices — aided by stocking in advance of the Chinese pollution cuts and supportive pricing and balances in many regional markets outside China — with lower raw materials prices on an expansion, or recovery in supply rates, has developed, largely in Australia. (Platts)
Last Index Published Date: 13 NOVEMBER 2017
Baltic Exchange Dry Index 1445 -19
Baltic Exchange Capesize Index 3351 -9
Baltic Exchange Panamax Index 1387 -31
Baltic Exchange Supramax Index 888 -24
Baltic Exchange Handysize Index 642 -2
‘Pacific Explorer’ 2006 177456 dwt dely Ijmuiden 17/19 Nov trip via Nouadhibou redel Singapore-Japan $34,000 daily – SwissMarine
‘Yiannis N G ‘ 2014 81043 dwt dely Santos 28 Nov trip Singapore-Japan $15,500 daily plus $550,000 bb – Oldendorff
‘Four Coal’ 2014 76822 dwt dely Shanwei prompt trip via Samarinda redel Tanjing Bin $8,000 daily – World Wide Bulk
‘Tiger West’ 2013 76000 dwt dely CJK 12/13 Nov trip via NoPac redel Singapore-Japan $8,750 daily – Louis Dreyfus
‘Lemessos Lion’ 2012 74933 dwt dely Sepetiba 18 Nov trip Singapore-Japan approximately $15,250 daily plus $525,000 bb – Ausca Shipping
‘Pacific Pamela’ 1997 49061 dwt dely Zhangzhou 15/18 Nov 2-3 laden legs redel worldwide $7,500 daily – CRC
‘Obrovac’ 2010 34444 dwt dely Machong prompt trip via Indonesia redel China $8,000 daily – Xiang Sheng Shipping
‘Annou Max’ 2011 176364 dwt dely Tianjin 12/14 Nov 3/5 months trading redel worldwide $18,000 daily – Classic Maritime
‘Geneva Queen’ 2012 81361 dwt dely Zhoushan mid November 4/7 months redel worldwide $11,000 daily – Glencore
‘Yangtze Brilliance’ 2011 32323 dwt dely Italy prompt about 3/5 months trading redel Atlantic $10,250 daily – Clipper – <fixed last week>
Oil trading was cautious amid ongoing tensions in the Middle East and after a rising rig count in the United States suggested producers there are preparing to increase output. Gold prices were little changed, but held near the previous session’s low, pressured by a firmer dollar and expectations of a series of interest rate hikes by the U.S. Federal Reserve this year and in 2018. London copper inched away from one-month lows hit last week, buoyed by steady demand and as the dollar hovered below recent peaks. Chicago wheat futures lost ground, falling after two days of gains as abundant global supplies and a stronger dollar weighed on the market. (Reuters)
As Saudi Arabia limits U.S. crude shipments, Iraq steps in
Saudi Arabia’s efforts to reduce a worldwide crude supply glut by cutting shipments to the United States means others are now filling in, most notably Iraq, in a trend that is set to accelerate in coming months. Over the summer, normally one of the busiest periods for crude shipments, U.S. imports of crude from Iraq rose by 41 percent from a year ago, while similar shipments from Saudi Arabia have dropped by 22 percent. (Reuters)
Aramco CEO: IPO preparations ongoing, no decision on venue abroad
Preparations to float shares of Saudi Aramco next year are proceeding, but no decision has been taken yet on the venue for the international listing, the chief executive of the state oil company told Al Arabiya Television channel. “Preparations are proceeding to the fullest extent for listing in 2018,” Amin Nasser told the channel in an interview aired on Sunday. (Reuters)
Iraq raises December Basra Light crude prices to Asia, Europe
Iraq has raised the December official selling prices (OSPs) for its crude oil sales to Asia and Europe, but trimmed the Basra Light crude price for the United States after demand slowed. The December Basra Light OSP to the North and South American markets was set at the Argus Sour Crude Index (ASCI) plus 20 cents a barrel, down 15 cents from the previous month, the State Oil Marketing Organization (SOMO) said on Sunday. (Reuters)
Indian HPCL’s Jul-Sep refining margin rises 136% on year to $7.61/b
India’s state-run Hindustan Petroleum Corporation Limited’s gross refining margin rose 136% year on year to $7.61/b in July-September from $3.23/b a year earlier on higher returns from refined product cracks, company officials said Thursday.
HPCL’s refineries in Mumbai and Visakhapatnam processed 4.64 million mt crude over July-September, up 15% over the fiscal second quarter of last year.
The refiner sold 8.37 million mt of refined products over July-September, up 4.4% year on year.
Sales of diesel over July-September rose 4.4% year on year, while gasoline rose 7.1%, LPG rose 10.4%, jet fuel rose 2.5%, lubes rose 23.2% and bitumen was 1.6% up, reflecting firm domestic demand for oil products.
For the quarter ended September 30, HPCL reported a 13% year-on-year rise in revenue to Rupee 541.53 billion ($8.34 billion) and a net profit of Rupee 17.35 billion, up 148%.
The increase in profit was due to higher domestic market sales and inventory gain compared with the corresponding period of last year, HPCL Managing Director M.K. Surana said announcing the company’s results.
For the April-September period, HPCL’s gross refining margin rose 32% year on year to $6.75/b from a year earlier, mainly due improvements in distillate yield and product cracks.
Both of HPCL’s refineries processed 9.13 million mt crude over April-September, up 7.2% over the same quarter last year.
The refiner sold 17.57 million mt of refined products during the first half of fiscal year 2017-18, up 4% year on year.
Sales of diesel over April-September rose 3.4% year on year, while gasoline rose 8%, LPG rose 10.6%, jet fuel rose 13.8% and bitumen was up 5%, reflecting higher domestic demand for oil products during the first half of the current fiscal year.
For the half year ended September 30, HPCL reported a 15% year-on-year rise in revenue to Rupee 1140.44 billion ($17.55 billion) and a net profit of Rupee 26.59 billion, down 5%.
The drop in the half-yearly profit was mainly due to inventory loss during the first quarter on account of declining crude prices, company officials said. (Platts)
Brazil turns to Europe for second LSFO cargo for power generation
Brazilian oil company Petrobras has turned to Europe to a buy a second low sulfur fuel oil cargo as power generation feedstock as it struggles to import LNG and with low rainfall affecting hydropower output, traders said.
A cargo with 40,000-45,000 mt of 1% LSFO is expected to load in the west Mediterranean in the middle of November, taking the total volume of LSFO drawn from Europe to Brazil to around 90,000 mt. The previous cargo arrived on the Stena President, dwt 65,000 mt, into the Brazilian port of Suape on October 28, according to cFlow, Platts trade flow software.
The vessel for second cargo has yet to be named and the seller was unavailable for comment.
An ongoing drought and low rainfall has combined with maintenance at a key LNG import facility to necessitate oil imports for power generation, as hydropower is critical for electricity generation in Brazil.
When the first LSFO cargo was drawn in early October the European LSFO complex was particularly tight due to refinery maintenance. However, the Mediterranean complex is now more balanced and inquiries have been few and far between this week, a source said Thursday.
“This [fixture] has kept the market slightly balanced because it’s decent volumes especially with 1% Med/North coming off,” a trader said.
The fixture of an import cargo to Brazil comes as a shock as Petrobras offered a 50,000 mt LSFO export cargo with options to discharge into Europe for a November 14 laycan at the end of October.
Trans-Atlantic fixtures of oil products such as gasoline and vacuum gasoil are common, but are rare in the LSFO market and particularly so to Brazil, historically a net exporter of LSFO capable of delivering up to 120,000 mt/month. (Platts)
Drewry: More ULCVs to Hurt Chances of Supply, Demand Balance
Following a recent spate of ultra large container vessel (ULCV) orders, the addition of any further boxship giants to the orderbook would damage carriers’ chance of reaching a supply and demand balance, shipping consultancy Drewry said.
The current containership orderbook is very top-heavy with ships of 18,000 TEU and above, with almost 50% of all ships scheduled to be delivered by the end of 2020. Based on the current demand outlook that is arguably already more than what is required in the short and medium term.
CMA CGM and Mediterranean Shipping Company (MSC) ordered ULCVs of over 18,000 TEU earlier this year. In its container market outlook webinar last month, Drewry informed that it was unlikely, but not impossible, that other carriers will follow CMA CGM and MSC’s ordering spree.
Since then, China’s Cosco Shipping Holdings announced plans to raise a huge USD 1.9 billion war chest through the issuance of new shares to part fund the purchase of 20 new ships. Under the plan, unveiled in late October 2017, the purchase would include 11 units of over 20,000 TEU and nine in the more modest 13,800-14,500 TEU range.
Furthermore, Korean line Hyundai Merchant Marine (HMM) has denied various reports that it is planning to splurge on as many as 14 vessels of up to 22,000 TEU.
Drewry said that adding the Cosco and possible HMM orders into the current orderbook mix “will only damage carriers’ chance of attaining supply and demand equilibrium.”
Due to the uneven distribution of 18,000 TEU ships by operators and alliance, CMA CGM’s order “made some sense because it helped them play catch up with its nearest rivals,” Drewry said, adding that the any future ULCV orders were expected to come from an operator within an alliance with the fewest of them.
The obvious candidate using those parameters was THE Alliance, comprising of Hapag-Lloyd, Yang Ming and the three Japanese lines (NYK, MOL, and K Line) that will next year merge container operations into the Ocean Network Express (ONE) brand. However, ULCV orders from this group are unlikely because of more limited financial resources, and because nothing in their public utterances suggested any of them would make the splash, Drewry said.
Outside of the Top 20, two carriers to watch out for as potential ULCV buyers because of past expansionist rhetoric are IRISL of Iran and newcomer SM Line from South Korea.
“Companies with the most logical reasons to order ULCVs probably won’t, whereas companies that already have plenty are the most interested in adding to their fleets. The supposed prestige of being the biggest carrier appears to be outweighing economic sense at the moment,” the shipping consultancy concluded. (World Maritime News)
Houthis to Target Ships Off Yemen If Ports Don’t Reopen?
The closure of Yemeni ports by the Saudi-led coalition is heating up tensions in the region as Houthi movement threatens to target commercial ships in the region as a sign of retaliation.
“The battleships and oil tankers of the aggression and their movements will not be safe from the fire of Yemeni naval forces if they are directed by the senior leadership (to attack),” the Houthis’ official media outlet Al Masirah is quoted as saying on its website by Reuters, citing a military commander.
However, according to Mohammed Alli Al-Houthi, international navigation will be safe if the ports are reopened, however, should the blockade continue “ the people would not stand idly by“, as written on his Facebook page.
He also added that only those “who attack our country” are likely to be targeted, meaning Saudi Arabian oil installations or oil tankers, as hinted by Reuters.
Last week, Saudi Arabia-led coalition decided to temporarily close all sea, air and land ports in the country, after a rebel-fired ballistic missile, which targeted Riyadh, was intercepted on November 4 by Saudi Arabian military forces.
Specifically, the closure applies to ports under the control of Houthi rebels, namely the Red Sea ports of Hodeidah and Saleef.
The Port of Aden has been excluded from the temporary closure since the port falls under the direct management of the Yemeni government and direct control of the Saudi-led coalition.
The United Nations has warned that Yemen will be gripped by famine, “one the likes of which the world has not seen in years” if the blockade on basic supplies into the country imposed by the Saudi Arabia-led coalition is not lifted immediately.
“It will be the largest famine the world has seen for many decades,” Mark Lowcock, the UN Emergency Relief Coordinator, said.
As informed by the UN, three years into a brutal conflict, Yemen depends on imports – amounting to up to 90 percent of its daily needs – and millions in the country are being kept alive by humanitarian aid.
The fighting has also all but collapsed the country’s health, and water and sanitation systems.
“Combined with the lack of food, millions of lives – including those of children – will be lost as their bodies will simply not have the strength to fight off disease,” the UN said.
Furthermore, all vessels that have passed inspection by the UN Verification and Inspection Mechanism should not be subjected to interference, delays to or blockages so that they can proceed to port as rapidly as possible, he added.
“This is really important because humanitarian access through the ports was inadequate even before the measures that were announced on 6 November,” said the senior UN official.
He also called for an immediate agreement to the prepositioning of the World Food Programme (WFP) vessel in the waters off Aden, assurances that there will be no further disruption to the functions the vessel supports, as well as resumption of humanitarian and commercial access to all the seaports of Yemen.
The three-year conflict has claimed the lives of well over 5,000 civilians, based on UN’s data. (World Maritime News)
DBS ditches troubled Noble Group
Embattled Hong Kong commodities trading house Noble Group has lost the support of
another key bank, Bloomberg is reporting today.
Singapore’s DBS has sold its $60m stake in Noble’s $1.1bn revolving credit facility due in May next year, and also closed some other financing to the company, a source told Bloomberg.
“The withdrawal by a core bank is the latest blow to Noble as it moves towards an all-but inevitable debt restructuring, battered by losses of more than $3 billion so far this year,” Bloomberg reported.
Noble slumped 8% on the Singapore Exchange to close on 23 Singapore cents today. Its share price has fallen 86% this year. (Splash247)
Euroseas Delivers Loss as Revenues Rise
The Greek ship owner and operator Euroseas remained in red, despite an improvement in the drybulk and container vessels market witnessed in the third quarter of the year.
The company reported net loss for the period of USD 4.8 million, as compared to a net loss of USD 4.6 million for the third quarter of 2016. The results for the third quarter of 2017 include a USD 4.6 million loss on write-down on two vessels classified as held for sale.
For the third quarter of 2017 ended September 30, the company’s total net revenues were at USD 11.1 million, up by 53.2% over total net revenues of USD 7.2 million seen in the same period a year earlier.
On average, 14 vessels were owned and operated during the third quarter of 2017 earning an average time charter equivalent rate of USD 8,529 per day compared to 11 vessels in the same period of 2016 earning on average USD 7,500 per day.
“The results of the third quarter of 2017 reflect the improvement of the market of drybulk and container vessels as compared to the same period of 2016. Our vessels earned on average daily rates that were approximately 10% higher than the daily rates earned during the same periods of 2016. As charter contracts are renewed or replaced with ones reflecting the higher market levels, we expect the average daily rates our vessels are earning to increase,” Tasos Aslidis, Chief Financial Officer of Euroseas, said.
For the nine-month period ended September 30, the company said that its net loss reached USD 8 million, as compared to net loss of USD 26.6 million seen in the first nine months of 2016.
Euroseas’ total net revenues for the period were at USD 29.4 million, up by 39.1% over total net revenues of USD 21.1 million reported during the first nine months of 2016.
On average, 13.5 vessels were owned and operated during the nine-month period, earning an average time charter equivalent rate of USD 7,978 per day compared to 11.3 vessels in the same period of 2016 earning on average USD 7,085 per day. (World Maritme News)
Containers weekly roundup: Contract negotiations in the spotlight
November has turned out to be a tug of war contest for the global front haul routes as the annual contract negotiations take the spotlight. The carriers are attempting to keep rates higher than this time last year, whereas the BCOs are pulling rates lower to a more realistic level, when taking into account this extra vessel capacity entering the market.
North Asia to UK and North Continent route fell $100 to $1,200/FEU this week. North Asia to Mediterranean route also decreased $100 to $1,000/FEU compared to last Friday.
The transpacific front-haul route dropped $200 this week to $1,300/FEU whilst the North Asia to East Coast North America only dropped $150 to $1,850/FEU this week as majority of cargo allocations percentages were in the 90s.
Some carriers and forwarders believe this week’s rates still could see rate increases for these front-haul routes. However this increase might be based on sentiment not market fundamentals and the majority of the market do not believe it will happen. This was demonstrated by the validity periods being extended from November 14 to November 30 this week.
The back-haul routes have all remained unchanged this week apart from the East Coast North America to UK Continent route which increased by $25 to $525/FEU this week. One carrier source said “they saw some quotes as high as $650/FEU”, this was for a specific requirement and not representative, the majority of quotes were between $500-550/FEU.
The UK Continent to East Coast North America fell $50 to $1,200/FEU this week. The S&P Global Platts Container Index fell $45.89 to $931.33 compared to last Friday. (Platts)
d’Amico Delivers Loss, Awaits Healthier Spot Market
Due to a challenging product tanker market witnessed so far this year, Italy-based shipping firm d’Amico International ended the first nine months of 2017 in loss.
The company reported a net loss of USD 13.6 million for the period, against a net profit of USD 6 million seen in the first nine months of 2016.
Time charter equivalent (TCE) earnings decreased to USD 194.1 million from USD 202.9 million reported in the nine-month period in 2016. The year-to-date variance is due to the weaker spot market experienced in the first half of 2017 relative, partially mitigated by a better result achieved in third quarter of 2017 compared to the third quarter of 2016.
The company delivered a net loss of USD 7.4 million in the third quarter of 2017, against a net loss of USD 7.5 million seen in the same quarter of the previous year.
d’Amico said that its TCE earnings for the third quarter stood at USD 65.5 million, compared to USD 58.5 million reported a year earlier.
“The product tanker market rebound that most of the industry analysts have been predicting, has not yet materialized as at the end of the third quarter of 2017,” Marco Fiori, Chief Executive Officer of d’Amico International Shipping, said.
The company witnessed some initial signs of improvement during the quarter as DIS achieved a daily spot average TCE of almost USD 12,000, which is more than 18% above the level achieved in the same quarter of 2016.
“We believe we will see a much healthier spot market in the following months and this is the reason why we are not taking additional time charter coverage at the moment, as we want to maximise our returns in a growing product tanker market,” Fiori said, adding that there are clear signs of market improvement driven by both supply and demand.
Product tanker earnings remained generally subdued throughout July and most of August. The disruption to US Gulf refining capacity caused by Hurricane Harvey led to a spike in earnings for vessels fixed from Europe to the US or Latin America and also from the Far East on Transpacific voyages.
The spike in earnings in the Atlantic proved to be short-lived. However, earnings in Far Eastern product tanker markets continued to increase throughout September with a number of vessels fixed away from the region on long-haul voyages as a result of the hurricane disruption.
d’Amico said that the full impact of the recent hurricanes on products tanker markets remains to be seen, as US Gulf refinery throughputs continued to be impacted throughout September.
Apart from that, the fleet overcapacity, combined with high inventory levels and only modest growth in global refinery throughputs, has contributed to a depressed freight market.
As markets failed to show any substantial signs of improvement in the third quarter, this rate remained flat at USD 13,500 per day. (World Maritime News)
Scorpio Bulkers snaps up three ultramaxes from Greathorse
Emanuele Lauro’s Scorpio Bulkers continues to expand its ultramax fleet with the acquisition of three bulkers from China’s Greathorse International Ship Management.
According to a report by Clarksons, Scorpio Bulkers has acquired the 2014-built Tiger Anhui, 2014-built Tiger Shanghai and 2015-built Tiger Tianjin for a total price of $64.5m.
The deal follows Scorpio Bulkers’s acquisition of six ultramax bulkers from Golden Ocean in September.
Greathorse has been downsizing its ultramax fleet, having also offloaded four ultramax bulkers to Singapore’s Olam Group in August.
Scorpio Bulkers currently operates a young fleet of 46 bulkers, all built after 2015. (Splash247)