DRY
ThyssenKrupp lifted by record orders as shifts from steel
Demand for next-generation lifts and car components enabled Thyssenkrupp to report its highest annual order intake in five years as the German firm slowly exits steelmaking. Thyssenkrupp is in the middle of a major shift under Chief Executive Heinrich Hiesinger towards technology and away from the more volatile steel industry, its traditional mainstay. (Reuters)
Vale says Brazil iron royalty hike could hurt high-cost mines
Brazil’s Vale SA, the world’s largest iron ore producer, said on Thursday that a hike in the country’s royalty rates for the mineral could compromise its ability to maintain high-cost mines and would hurt its ability to compete. Congress passed the higher royalties in votes on Wednesday with the bill now moving to President Michel Temer for signature. Vale said in a statement that it hoped Temer would veto some of the changes to the proposal made by Congress. (Reuters)
IGC raises forecast for 2017/18 global corn crop
The International Grains Council (IGC) on Thursday raised its forecast for global corn (maize) production in 2017/18 by 6 million tonnes to 1.04 billion tonnes, in part reflecting an upward revision for the U.S. crop. The U.S. Department of Agriculture raised its forecast of the U.S. corn crop earlier this month as harvest yields came in at record levels. (Reuters)
Glencore Oaky No. 1 mine shuts, cutting mid-vol HCC output
Miner Glencore has stopped production at one of two coking coal mines at its Oaky Creek complex in Queensland for geological reasons, according to multiple sources.
The Oaky No. 1 mine at the Bowen Basin site, which is producing two brands of premium mid-vol hard coking coal, has been shut down, sources, including customers and traders said.
Two sources said the reason for the closure was Oaky No. 1’s mineable resources were being exhausted.
Glencore would not comment on the matter when contacted Wednesday. Oaky Creek is owned by Glencore (55%), Sumisho Coal Australia (25%), Itochu Coal Resources Australia (10%) and ICRA OC (10%).
The reported mine closure comes as a slowdown in some mining areas of the Bowen Basin feeding the multi-user DBCT coal terminal may be contributing to long queues of ships waiting to load coal.
Premium HCC cargoes this week traded higher in the spot market, at either side of $200/mt FOB market for January loading clips. Platts Premium Low Vol HCC assessment rose to $201/mt FOB Australia on Wednesday, up 12% from $179/mt FOB at the start of the month.
The Switzerland-based mining group had previously reported suffering production losses at its Australia-based coking coal operations, due to geological problems at the Oaky Creek complex.
The impact of Oaky No. 1 mine will reduce output of the Oaky North HCC brand by around 1.5 million mt, said one source advised by the company.
The Oaky North product, which had been around 23% volatile matter with 69% CSR, was said to have reduced in volatile matter as a result of Oaky No. 1 being shut. No impact on the higher VM and higher fluidity Oaky Creek specification was mentioned by sources.
The two coals trade mainly into India and northeast Asia, largely on contract basis with negotiated pricing, according to market sources.
Glencore said 5.9 million mt of saleable coal was produced at the Oaky Creek complex in 2016, according to its website.
November’s premium coking coal index values form the last leg of the three month period used to average spot price assessments, which then determine some benchmark quarterly contracts for fourth quarter 2017 loadings. Steel mills are keenly aware of mine and shipment disruption experienced in Queensland this month feeding into spot price indices looks to support eventual Q4 contract pricing.
Indices used for Q3, 2017 pricing came in at around $170/mt FOB. The average for September through to November 22 is over $190/mt FOB. (Platts)
BALTIC INDEX
Last Index Published Date: 24 NOVEMBER 2017
Baltic Exchange Dry Index 1458 +13
Baltic Exchange Capesize Index 3453 +33
Baltic Exchange Panamax Index 1295 +11
Baltic Exchange Supramax Index 914 +15
Baltic Exchange Handysize Index 620 -2
TIMECHARTER
‘KSL San Francisco’ SwissMarine relet 2014 181066 dwt dely Fos 26/28 Nov trip via Ponta Da Madeira redel Skaw-Cape Passero $27,250 daily – K-Line
‘Iolcos Vision’ 2010 87375 dwt dely Cape Passero 22 Nov trip via USEC redel Skaw-Gibraltar $10,500 daily – Uniper (E.ON)
‘Star Angelina’ 2006 82962 dwt dely Subic Bay 27/28 Nov for 2 laden legs redel Singapore-Japan $12,000 daily – Cobelfret
‘RGL First’ 2017 82215 dwt dely Tianjin 27/30 Nov trip via East Australia redel China $11,000 daily – cnr
‘Patroklos’ 2017 81148 dwt dely Busan 23 Nov trip via Australia redel India $11,000 daily – Oldendorff
‘Nilos’ 2006 75880 dwt dely CJK 22/23 Nov trip via NoPac redel Singapore-Japan $8,500 daily – Panocean
‘Orpheus’ 2017 75600 dwt dely Cape Passero spot trip via USEC (option Amazon) to Mediterranean redel Cape Passeo $11,500 daily – Amaggi
‘Africa Graeca’ 2002 74133 dwt dely US Gulf 10/15 Dec trip via Panama redel China $14,750 daily plus $475,000 bb – ADMI
‘Navios Felicity’ 1997 73867 dwt dely Lianyungang 22/22 Nov trip via CIS redel China $9,500 daily – cnr
‘Santa Helena’ 2012 58215 dwt dely Vung Tau, Vietnam 26/27 Nov trip via Indonesia redel Thailand $9,500 daily – Cargill
‘ER Maden’ 2012 56522 dwt dely Nacala 02/06 Dec trip redel U.A.E. $11,000 daily + $125,000 bb – Victory Shipping
‘Bridgegate ‘ 2010 53477 dwt dely Jose prompt trip redel N Brazil $22,000 daily – cnr
‘Multan’ 2002 50244 dwt dely Surabaya 01/05 Dec trip via Indonesia redel CJK $11,750 daily – cnr
‘African Magnolia’ 2016 28345 dwt dely Yuzhnyy 24/27 Nov trip redel Gibraltar-Ushant $10,250 daily – Langlois
‘Amyntor’ 2009 28326 dwt dely Canakkale prompt trip via Black Sea redel Damietta intention steel $10,000 daily – cnr
PERIOD
‘Ionic Patris’ 2017 84850 dwt dely Sakaide 30 Nov/01 Dec about 1 year in direct continuation redel worldwide 120% average 4TC’s – Cobelfret
COMMODITY NEWS
U.S. crude oil hit fresh two-year highs, as the shutdown of a major crude pipeline from Canada to the United States tightened North American markets. Gold prices inched up as the dollar remained under pressure after minutes of the U.S. Federal Reserve’s meeting revealed that some policymakers were concerned about lower inflation. Copper traded in a tight range, stymied by the U.S. Thanksgiving Day holiday and a stagnant greenback. (Reuters)
TANKERS
Traders mop up fuel cargoes before refinery repair crunch
Traders are chasing gasoline and diesel cargoes and drawing volumes away from Europe to prepare for a particularly heavy round of refinery works around the world. The buying spree has soaked up fuel even as many refineries have been running flat out, while the surge in demand has sent tankers on unusually erratic routes. (Reuters)
OPEC chatroom dead as Qatar crisis hurts Gulf oil cooperation
OPEC’s most powerful internal alliance, bringing together the oil producer group’s Gulf members, is disintegrating fast. As a six-month-old spat between Saudi Arabia and Qatar deepens, the organisation’s Gulf ministers will have to scrap their tradition of meeting behind closed doors to agree policy before OPEC holds its twice-yearly talks, OPEC sources say. (Reuters)
China data: State-owned refiners raise run rates to 80% in Nov from 79% in Oct
State-owned refiners Sinopec, PetroChina and China National Offshore Oil Corporation plan to operate at an average rate of 80% of nameplate capacity in November, up one percentage point from 79% in October, according to a monthly survey by S&P Global Platts.
The November run rate is still one percentage point lower from a year earlier when it was 81% of total capacity, but the actual throughput is expected to be higher month on month and year on year as PetroChina’s new Yunan refinery and CNOOC Huizhou’s phase two project came on stream in the last two months.
Sinopec restarted its 100,411 b/d Qingdao Petrochemical facility after maintenance in November and also ramped up the operating rates at some of its refineries amid high margins, which was responsible for pushing up the totale run rate.
The Platts November survey covered 32 refineries, one less than in October: 17 under Sinopec, 14 under PetroChina, and CNOOC’s Huizhou refinery. The 32 refineries have a combined nameplate capacity of 7.09 million b/d and plan to process a total of 5.69 million b/d of crude in November.
In October, 33 refineries, with a combined nameplate capacity of 7.29 million b/d had planned to process 5.78 million b/d of crude.
CNOOC’s 22 million mt/year refinery plans to process 1.55 million mt of crude in November, operating at 86% of its nameplate capacity, which remains unchanged from October but lower than its normal run rate of 103% before the startup of its phase two project which started commercial operations in early October.
Sinopec’s 17 surveyed refineries plan to process 3.25 million b/d of crude in November, running at around 86% of their total nameplate capacity, up from 3.36 million b/d or 85% in October. These refineries have a combined nameplate capacity of around 3.77 million b/d, accounting for about 64% of the company’s total domestic refining capacity of 5.89 million b/d.
PetroChina’s 14 refineries plan to process a total of 2.06 million b/d of crude in November, operating at around 71% of their combined nameplate capacity, unchanged from October. They have a combined nameplate capacity of 2.88 million b/d, accounting for around 84% of PetroChina’s domestic refining capacity of 3.43 million b/d.
Major refineries under maintenance in October to December:
* Sinopec’s 100,411 b/d Qingdao Petrochemical refinery was shut for full maintenance from September 15-November 4.
* Sinopec’s 184,000 b/d Hainan Petrochemical refinery postponed its two-month maintenance to November 18 from November 8.
* Sinopec’s 320,000 b/d Shanghai Petrochemical restarted the 3.9 million mt/year residual oil hydrotreater in early November after maintenance.
* Sinopec’s 160,658 b/d Luoyang refinery has restarted its 8 million mt/year CDU from around November 17 after shutting it on October 29.
* Sinochem’s 240,986 b/d Quanzhou refinery has delayed its scheduled maintenance from November 1 to December 3. (Platts)
SHIPPING
France Turning to LNG as Marine Fuel, Boosting Port Competitiveness
The French State will modify its regulations to facilitate the uptake of liquefied natural gas (LNG) as a marine fuel, the country’s Prime Minister Edouard Philippe said while addressing the present at a maritime conference in the port town of Le Havre.
Phillippe said that the government would encourage the country’s ports to develop the necessary infrastructure to allow ships to bunker LNG. A revision of fiscal rules on amortizing investments in new ships or engine technology is also being considered.
The intention was revealed on the back of French container carrier CMA CGM’s announcement on powering its nine 22,000 TEU boxhips with LNG, thus becoming a pioneer in the industry.
The Prime Minister added that the ports would be encouraged as well to install shore power systems for ships as part of the transition to an environmentally-friendly power supply.
As part of its efforts to curb pollution, France plans to ask the International Maritime Organization (IMO) to set up a low sulfur cap zone in the Mediterranean.
Furthermore, as indicated by the Prime Minister, the French ports lag behind their European counterparts, and there is a need for a more ambitious port strategy to boost their performance and competitiveness.
Among the measured being proposed to achieve that are cutting of the red tape to attract investors and improvement of ports’ connectivity via rail, river transport. (World Maritime News)
2020 fuel regulations weigh heavily on the minds of liner executives
The liner shipping industry is finally seeing recovery signs with pickup in demand, following a series of consolidations in the sector. Nevertheless, speakers at yesterday’s liner shipping session during the Asia Logistics and Maritime Conference in Hong Kong warned there are still multiple challenges ahead.
“What’s clear is that consolidation is helping the industry and the current demand is much better than we thought it would be, however we still have to manage the supply side,” said Jeremy Nixon, global CEO of Ocean Network Express (ONE), the merged container company of Japan’s MOL, K Line and NYK.
Nixon reckoned the upcoming regulations on heavy fuel oil in 2020 are bringing uncertainties for carriers.
“Obviously scrubbers wouldn’t work for carriers who have a large fleet, while low-sulfur fuel price is at a high level, and using LNG as fuel is still not mature,” Nixon said.
Nissim Yochai, vice president for transpacific trades at Israeli line ZIM, said the company currently doesn’t have any new ships on order, but when the company looks to order, the 2020 regulation will weigh heavily on what the company will select.
“The current situation presents more questions than the answers,” Yochai said.
Alan Murphy, CEO at SeaIntel Maritime Analysis, predicted that the container shipping market could possibly reach a supply/demand balance in 2019-2020, but some assumptions must be met to see it happen.
“The market has to have a complete freeze on new mega vessel orders and see continued high scrapping levels, while we also need to see head haul demand growth of 4-5% year-on-year, which will balance capacity by late 2019-2020,” Murphy said.
Following a series of consolidations, the liner shipping sector has created a number of mega container shipping alliances. Murphy expressed concern about a potential rate war between the alliances, which could jeopardize the recovery process in the sector. He added that ambitious market entrants or major oil price increases could also disrupt the recovery of the sector.
“The main risks is carriers with large orderbooks relative to their charter ratio. If their fleet grows faster than the return of charter tonnage, they will have to grow market share to retain utilization,” Murphy said.
Murphy said big carriers like Cosco and Evergreen will be challenged, unless they can sub-charter to their alliance partners.
“New market entrants may want to take advantage of the discounted newbuilding prices and attempt to grow market share through a price war,” Murphy said, citing South Korea’s SM Line as the latest entrant to the transpacific trade. (Splash247)
Tanker owners need to be cautious on the supply side: Maritime CEO Forum
Caution was the most palpable theme emanating from the tanker session at this week’s Maritime CEO Forum in Hong Kong. While demand was seen to be picking up, panellists stressed their concern on the supply side.
Frans Van de Bospoort, managing director of ship finance in the eastern hemisphere for DVB Bank, maintained that despite the ongoing spectre of oversupply the crude sector was on the road to recovery.
“2018 will be dull, and 2019 will be brighter,” said Van de Bospoort.
Peter Sand, chief shipping analyst at BIMCO, agreed with Van de Bospoort’s view, adding that China has been greatly supporting crude shipping demand.
“In 2017, we have seen a supply growth of 6-7% set off against a demand growth of 2-3%. When we look at 2018, we certainly have seen strong support for crude tankers. The supply side will be pretty fixed and we will see a continuous level of demolition,” Sand said.
According to Sand, China itself has provided employment of 44 VLCCs in the first eight months of this year and in the same period the country imported 60% more crude oil in comparison with the year before.
“China’s move to acquire a large amount of crude oil transport capacity might worry some international shipowners. But the fact is that China remains the major demand generator of crude oil and the situation will last,” Sand said, suggesting there was room for international owners to share this growth.
In the near term, however, Sand believes the challenges for crude tankers will continue.
“By 2018, about 4.4% of the tanker fleet will be over 20 years old, which will force a new round of scrapping,” said Henrik Hartzell, managing director of Heidmar (Far East).
Hartzell reckons the tanker market will start to pick up from 2019 with 2020 viewed as a very solid year for earnings and suezmax with the best growth potential.
Jack Hsu, managing director of Oak Maritime, was not so sure with the suezmax prediction, favouring prospects for VLCCs instead.
“To some extent, lots of suezmax transactions have been taken over by the VLCCs, there is a dynamic between the two because they are competing with each other. But fundamentally the VLCC market we see with being China-centric, is more favourably than suezmaxes.”
The Maritime CEO Forum took place in the Foreign Correspondents’ Club in Central, Hong Kong with sessions on tankers, bulkers and crewing. It is set to return to Singapore’s Fullerton Hotel on March 13 next year. (Splash247)
Sri Lanka’s bunker fuel sales to drop 30-35%, after effect of India’s GST cut
Seven weeks after its competitor, India, slashed its goods and services tax on bunker fuel, marine fuel sales at Sri Lanka’s ports are expected to fall 30-35% to usual traded levels, bunker suppliers said this week.
Sales of marine fuel at Colombo and Trincomalee had soared to 72,000 mt in August and 85,000 mt in September compared to usual levels of 53,000-55,000 mt/month before India implemented an 18% GST on bunker fuel on July 1, Sri Lankan bunker suppliers said.
Trade sources estimate October sales to be around 62,000-65,000 mt, but going forward, do not think this level can be sustained.
“Some volume has gone back to Indian ports, and Sri Lanka’s bunker sales will go back to pre-Indian GST levels,” said a source who supplies marine fuel at Sri Lankan and Indian ports.
India cut its GST on bunker fuel to 5% from 18% on October 6.
S&P Global Platts assessed Colombo 380 CST delivered bunker fuel at $413/mt Thursday, down $4/mt from Wednesday, and Mumbai 380 CST delivered bunker fuel at $405/mt Thursday, unchanged on the day.
Mumbai 380 CST prices have, on average, been $8.60/mt cheaper than Colombo’s for the past seven trading days, Platts data showed.
After the 18% GST was imposed on July 1, Mumbai prices moved from a $15/mt discount to Colombo in June to $20.30/mt in July, and $23.64/mt in August.
The Mumbai-Colombo 380 CST bunker fuel spread hit a high of $29/mt in September, before plunging to $4.35/mt in October. The spread is now just 70 cents/mt for November, the data showed.
But one Colombo-based supplier was optimistic Sri Lanka could maintain sales of 62,000 mt/month.
“India’s GST of 5% [on bunker fuel] is still high. Kochi, Mumbai bunker prices are not very competitive,” the supplier said.
Under the previous value-added tax regime that preceded the GST, bunker sales to foreign-bound vessels in India were deemed as exports. Only a few states taxed bunker sales to export vessels, even so, at levels well below 5%.
For these reasons, bunkering at Indian ports will still be costlier compared to the previous tax-regime, the Colombo-based supplier said.
But the jury is still out.
While Sri Lanka’s marine fuel sales have increased from 30,000-35,000 mt/month in the past two years to around 55,000 mt/month this year, partly due to healthy bunker demand at Trincomalee on the country’s east coast, most trade sources said they do not expect Sri Lanka’s marine fuel sales to hit the giddy heights of the past four months. (Platts)
Thermal coal handled at India’s state-owned ports Apr-Oct falls 13% on year
India’s 12 major state-owned ports handled about 49.06 million mt of thermal coal during April-October, down 13% year on year, Indian Ports Association data released Friday showed.
Coking coal shipments received at the 12 ports in the first seven months of fiscal 2017-2018 stood at 29 million mt, up 1.8% on the year, the data showed.
Paradip port on the east coast handled the highest volume of thermal coal shipments during the period at 14.09 million mt, down 11% on the year.
It also received the highest volume of coking coal, 7.15 million mt, up 14% from April-October last year.
The 12 ports are Kolkata, Paradip, Visakhapatnam, Ennore, Chennai, VO Chidambaranar (Tuticorin), Cochin, New Mangalore, Mormugao, Mumbai, Jawaharlal Nehru Port Trust, and Kandla.
Chennai and JNPT did not receive any coal over April-October. (Platts)
Canada Sends Its First LNG to China in Container
Canada has sent its first shipment of liquefied natural gas (LNG) to China by a containership as part of a pilot project to determine long-term feasibility.
LNG was supplied by FortisBC’s Tilbury facility in Delta, logistics and equipment were provided by True North Energy Corporation and CIMC ENRIC Holdings Limited, and the cargo was shipped from Vancouver.
Transporting LNG as a containerized cargo means that there is no need for investment in export and import LNG terminals, according to CIMC ENRIC. In this way, LNG can be transported by sea and by land.
“This pilot is a small, but significant step for B.C.’s LNG export industry,” Douglas Stout, vice-president of Market Development and External Relations, FortisBC, pointed out.
As informed, FortisBC has invested in expanding its Tilbury LNG storage facility and in innovative solutions to transport natural gas. In addition, True North has been exploring creative ways to bring Canadian natural gas to Asia. By teaming up, these solutions will provide China with more access to LNG, a clean and low-cost fossil fuel displacement for coal and diesel.
“Our Government is pleased to see this pilot project launch its first shipment of LNG to China,” Michelle Mungall, BC Minister of Energy, Mines and Petroleum Resources, said.
By next year, China is projected to become the world’s second-largest LNG importer. The Chinese government is stepping up its efforts in combatting air pollution and LNG imports have more than tripled in the last six years.
With limited reserves on its own, the country is turning to producers with abundant resources, including B.C., to deliver natural gas, which is the cleanest-burning of all fossil fuels. (World Maritime News)
S&P
DHT Holding Disposes of Oldest VLCC Trio
Crude oil tanker company DHT Holdings has joined its counterparts in the shedding of outdated tonnage as part of its fleet renewal strategy.
The company said that it has inked a deal with an undisclosed single buyer to sell its three oldest very large crude carriers; DHT Utah and DHT Utik, both built 2001, and DHT Eagle built in 2002, for a total price of USD 66.5 million.
DHT plans to use about USD 33.5 million from the proceeds to repay bank debt.
The company expects to deliver the DHT Utah and DHT Eagle to its new owner before the end of 2017 and the DHT Utik in January 2018.
The tanker owner anticipates to record a book loss of about USD 3.5 million in the fourth quarter of 2017 in connection with the sale. The loss is primarily related to the DHT Eagle.
Subsequent to the sale, the average age of DHT’s fleet of VLCCs is 6.1 years.
Following the sale, DHT has a fleet of 27 VLCCs, 24 in the water and four under construction scheduled for delivery in 2018, as well as two Aframaxes. (World Maritime News)
Euronav Sells Its Oldest VLCC
Antwerp-based tanker owner and operator Euronav has disposed of Artois, the oldest very large crude carrier (VLCC) in its fleet.
The 298,330 dwt tanker has been sold for USD 22 million to an undisclosed party.
Euronav expects to record a capital gain of approximately USD 7.7 million on the sale which will be recorded in the current quarter.
The vessel is scheduled to be delivered to its new owner in early December, according to Euronav.
As explained, the sale is part of Euronav’s ongoing fleet renewal program and, together with other initiatives, reduces further the average age of the company’s fleet.
Built at Hitachi shipyard in Japan in 2001, the ship has currently a market value of USD 19.4 million, VesselsValue’s data shows.
Following the recent sale, Euronav’s fleet currently comprises 55 vessels, according to the company’s website. (World Maritime News)