China to buy another 12 million tonnes of U.S. soybeans in 2017/18 in $5 billion deals
The United States soybean industry has signed two letters of intent with Chinese importers covering a $5 billion purchase of an additional 12 million tonnes of soybeans in the 2017/18 marketing year. The non-binding agreements, disclosed by the U.S. Soybean Export Council (USSEC) in a statement, are among a series of trade deals announced during the visit of U.S. President Donald Trump to Beijing. China is the world’s top soybean buyer, and the United States is its second supplier after Brazil. (Reuters)
India doubles wheat import tax to 20 percent
India has doubled its import tax on wheat to 20 percent, according to a government order made on Wednesday, as the world’s second biggest producer tries to rein in imports to support local prices. In the last two years India has been importing wheat after local production fell due to successive droughts. Indian farmers have started sowing new season wheat that will be ready for harvesting from March. (Reuters)
EU antitrust regulators to investigate ArcelorMittal-Ilva deal
EU antitrust regulators will investigate whether ArcelorMittal’s proposed purchase of Italian steel plant Ilva will lead to price hikes, a move likely to force the steelmaker to offer more concessions to address competition concerns. ArcelorMittal, the world’s largest steelmaker, reached a 1.8-billion-euro ($2.1 billion) deal to acquire Europe’s biggest capacity steel plant in June. The loss-making plant in Taranto in Italy’s south is grappling with a serious pollution issue. (Reuters)
US petcoke exports drop 30.8% on year in Sep due to Hurricane Harvey
US calcined and non-calcined petcoke exports for September totaled 2.54 million mt, down 25.5% from August and down 30.8% from the year-ago month, Census Bureau data showed.
The impact of Hurricane Harvey on Texas refineries during the month dropped US petcoke exports to their lowest levels since November 2016, when they totaled 2.4 million mt.
On a year-to-date basis, petcoke exports have totaled 29 million mt through September, or 2% ahead of the same nine-month period in 2016.
Japan received the highest volume of US petcoke exports during the month, totaling 522,916 mt in September, up 76.8% from August and up 7% from the year-ago month, according to the data.
Mexico had the second largest volume of US exports at 326,733 mt in September, down 7.8% from August and down 30% from the year-ago month. India received 304,602 mt of US petcoke exports during the month, down 45.4% from August and down 59% from the year-ago month.
On the origination side, New Orleans had the highest volume of petcoke exports at 816,453 mt in September, down 22.4% from August and down 8.7% from the year-ago month.
Petcoke exports from the ports of Long Beach, California, totaled 468,793 mt in September, up 1.6% from August and up 25.5% from the year-ago month. Houston and Galveston, Texas, exports totaled 434,267 mt September, down 41.5% from August and down 49.4% from the year-ago month.
Port Arthur, Texas, totaled only 272,368 mt during the month, down 57.3% from the prior month and down 50.7% from the year-ago month. (Platts)
Last Index Published Date: 9 NOVEMBER 2017
Baltic Exchange Dry Index 1481 -5
Baltic Exchange Capesize Index 3349 +90
Baltic Exchange Panamax Index 1468 -47
Baltic Exchange Supramax Index 936 -25
Baltic Exchange Handysize Index 648 -6
‘Seaduty’ 2008 82449 dwt dely US Gulf 20/30 Nov trip redel Gibraltar-Skaw $12,600 daily plus $260,000 bb – ADMI
‘Ecopride G.O.’ 2013 81963 dwt dely Fazendinha 20/30 Nov trip redel Spain with grains $13,000 daily plus $200,000 bb – Cofco Agri
‘Bora’ 2013 81682 dwt dely US Gulf 27/28 Nov trip via Cape of Good Hope redel Singapore-Japan approximately $15,500 daily plus $550,000 bb – MOL
‘Transatlantic’ 2012 81250 dwt dely Tianjin 10 Nov trip via NoPac redel Singapore-Japan $10,000 daily – Glencore
‘Odysseus N’ 2011 79642 dwt dely Cai Lan prompt trip via Australia redel EC India $11,500 daily – Bostomar
‘Lord Byron’ 2005 76838 dwt dely Laizhou 12/16 Nov trip with fertilizers redel India $11,500 daily – Bainbridge
‘Ocean Wind’ 2005 76619 dwt dely New Orleans 22/25 Nov trip Singapore-Japan $15,000 daily plus $500,000 bb – Wilmar
‘Berlin’ 2009 76600 dwt dely Chiwan spot trip via Australia redel EC India $11,700 daily – Bostomar
‘Diamond Wind’ 2010 76536 dwt dely Onahama 09 Nov trip via NoPac with coal redel Singapore-Japan $12,000 daily – Cobelfret
‘Star Emily’ 2004 76417 dwt dely retro Haldia 02 Nov trip via East coast South America redel Singapore-Japan $12,500 daily – Glencore
‘CF Crystal’ 2011 75725 dwt dely Yosu 18 Nov trip via NoPac redel Singapore-Japan $10,500 daily – Korean Charterer
‘SBI Bravo’ 2015 61587 dwt dely N Brazil prompt trip redel Skaw – Gibraltar $14,750 daily – Cofco
‘Olympic Gemini’ 2006 82992 dwt dely Nansha 13/14 Nov about 1 year redel worldwide Index Linked average 4TC’s approximately 108% – Solebay
Oil prices held steady after falling late in the previous session, supported by ongoing supply cuts led by OPEC and Russia. Gold prices edged higher, after marking a near three-week high in the previous session, as the dollar eased while palladium remained close to a more than 16-year peak touched on Wednesday. London nickel fell by more than two percent to its weakest since October as hype over potential electric vehicle demand that drove last week’s rally died down. Chicago corn futures lost ground, falling for four out of five sessions with pressure on the market ahead of a key U.S. government report that is expected to boost production estimate. (Reuters)
Gold demand slides to eight-year low in Q3 2017
Gold demand slid to its lowest in eight years in the last quarter as jewellery buying fell and inflows into bullion-backed exchange traded funds dried up, data from the World Gold Council showed on Thursday. Overall demand fell 9 percent to 915 tonnes, its weakest since the third quarter of 2009, the WGC said. (Reuters)
U.S. crude stocks build unexpectedly as imports jump, output climbs
U.S. crude oil stockpiles rose unexpectedly last week as imports jumped, exports tumbled and production inched up to its highest since at least 1983, the Energy Information Administration said on Wednesday. Gasoline and distillate inventories fell to multi-year lows, even as refining rates rose, the statistical arm of the U.S. Department of Energy said. (Reuters)
Large oil traders escape EU’s MIFID II trading rules, for now
Less than two months before strict European Union rules on derivatives come into force, most large oil traders have persuaded regulators to exempt them for now from limits on the positions they can hold, arguing they are not speculators. The EU’s revamped Markets in Financial Instruments Directive (MIFID), known as MIFID II, aims to curb speculative trading and make markets more resilient. It comes into force in January and includes position limits on the volume of commodity derivatives a trader can hold, such as Brent oil futures. (Reuters)
Venezuela’s PDVSA misses debt payments, used Russian bank to pay ONGC
Venezuelan state oil-firm PDVSA has not made debt payments to India’s top oil producer ONGC for six months, and has previously used a Russian state-owned bank and another Indian energy company as intermediaries to make payments, two sources familiar with the transactions said on Wednesday. ONGC Videsh, the overseas investment arm of ONGC, confirmed that PDVSA had fallen behind on the payments, but declined to give details on the delays. (Reuters)
Total buys Engie’s upstream LNG business for $1.49 billion
Total has bought Engie’s portfolio of upstream LNG assets for $1.49 billion, the French oil and gas major said Wednesday.
The deal would boost Total’s volumes to around 40 million mt/year of LNG by 2020, “making Total the second-largest global player among the majors with a worldwide market share of 10%,” said Patrick Pouyanne, the company’s chairman and CEO.
Engie assets acquired include participating interests in the Cameron liquefaction project in the US, long-term LNG sales and purchase agreements, an LNG tanker fleet as well as access to regasification capacities in Europe.
Additional payments of up to $550 million could be payable by Total in case of an improvement in the oil markets in the coming years, it said.
The deal accelerated Total’s strategy to integrate along the full gas value chain “in an LNG market growing at 5% to 6% per year,” it said.
A stake in the Cameron project would make Total an integrated player in the US LNG market, where the group was already a gas producer, Pouyanne said.
The deal, still subject to various approvals, is expected to close by mid-2018 but has an effective date of January 1, 2018. Engie’s LNG operation has around 180 employees. The transaction involves:
— 2.5 million mt/year of liquefaction capacity, bringing Total’s portfolio to 23 million mt/year by 2020;
— a 16.6% equity stake in the Cameron LNG liquefaction plant with three trains under construction in Louisiana, and the potential for two further trains; — a 5% equity stake in the first train of the Idku LNG project in Egypt; — a portfolio of long-term LNG purchase and sale contracts, increasing Total’s portfolio to 28 million mt/yr by 2020, with diversified supply from Algeria, Nigeria, Norway, Russia, Qatar and the US, and outlets balanced between Europe and Asia;
— access to regasification capacities of 14 million mt/year in Europe, adding to Total’s 4 million mt/year, and;
— a fleet of 10 LNG tankers which will be consolidated with the 3 LNG carriers of Total. Separately, Total and Engie are to cooperate in the use of biogas and renewable hydrogen, with Engie becoming Total’s primary supplier in this field, Total said. (Platts)
Naphtha cargo in rare voyage from US Gulf Coast to Montreal
A cargo of naphtha is in a rarely seen voyage from the US Gulf Coast to Montreal to meet refinery demand there for reformer feedstock, a market source familiar with the deal said Wednesday and Platts trade flow software cFlow shows.
The Nave Jupiter, an MR vessel, was sent by Vitol to carry reformer-grade naphtha to Montreal amid a shortage of the feedstock, the USGC market source said. Naphtha makes that journey only a few times each year, the source said.
Platts cFlow showed the Nave Jupiter to be sailing through the Caribbean Wednesday morning. The tanker is expected to dock in Montreal on November 16, the software showed.
“They’re short on naphtha and there is no Jones Act restrictions, so it works from time to time from the USGC,” a second US market source said. Suncor’s 137,000 b/d Montreal refinery was shut October 24 due to a power outage. The refinery was heard to be restarting a few days later. An email to a Suncor media representative was not returned.
“You’ve got some refinery runs issues up there, so it makes sense that there is not enough reformer feed,” a third US market source said.
Naphtha can be run through a reformer to produce reformate, a gasoline octane-booster.
S&P Global Platts assessed standard and heavy naphtha differentials in the US Gulf Coast Wednesday at barge gasoline minus 19 cents/gal and barge gasoline minus 18.25 cents/gal, respectively.
Market sources have described the narrow spread between standard and heavy naphtha as representative of a strong export market.
“Considering how tight New York Harbor [gasoline] is, the more octane you can make to blend RBOB spec and hit New York Harbor the better,” the third source said. “So you’re going to want to run reformers as hard as possible.”
Gasoline in the New York Harbor has been well-supported since mid-October on a lack of European imports, forcing traders to dip into their own inventories.
Cash physical RBOB in New York Harbor was assessed November 3 at NYMEX December RBOB plus 7.95 cents/gal, its highest price since mid-September, when the impact of Hurricane Harvey was still present. But the benchmark differential has fallen steadily since then, being assessed Wednesday at futures plus 5.25 cents/gal. (Platts)
Safe Bulkers Picks Erma First BWTS for Its Fleet
Monaco-based dry bulk shipping company Safe Bulkers has agreed with Erma First, a Greece based company, to install a Ballast Water Treatment System (BWTS) across its fleet of 38 vessels.
The first installation of Erma First BWTS is expected to take place during the company’s next dry-docking scheduled for the first quarter of 2018. The installation of the system on all Safe Bulkers’ vessels and related capital expenditure is expected to be expanded over a period of five years, according to the shipping company’s dry-docking schedule.
“We decided to install in all our vessels Erma First BWTS, which is designed and produced in Greece, starting at an early stage which provides us with certain commercial and financial advantages, including availability of equipment, minimization of downtime, unrestricted worldwide trading in the following years and the financial benefits of a block order,” Loukas Barmparis, President of the company, said.
The shipping company added that it has worked intensively with Erma First over the previous months to optimize and adapt the system to the company’s vessels.
Erma First BWTS received the United States Coast Guard (the USCG) type-approval certificate in October 2017.
The Ballast Water Management (BWM) Convention entered into force on September 8, 2017. The United States Environmental Protection Agency (EPA) had adopted a similar regulation for ballast water treatment which became effective on January 1, 2016.
Under the rules of the IMO convention, all ships engaged in international trade are required to manage their ballast water so as to avoid the introduction of alien species into coastal areas, including exchanging their ballast water or treating it using an approved ballast water management system.
Initially, there will be two different standards, corresponding to these two options.
The D-1 standard requires ships to exchange their ballast water in open seas, away from coastal waters.
D-2 is a performance standard which specifies the maximum amount of viable organisms allowed to be discharged, including specified indicator microbes harmful to human health.
New ships must meet the D-2 standard from September 8 while existing ships must initially meet the D-1 standard.
Vessels built before September 8, 2017, are to comply with the D-2 standard at the first MARPOL IOPP renewal survey is completed. (World Maritime News)
Yemen’s Port of Aden Exempt from Port Closure
The Port of Aden has been excluded from the temporary closure of all sea, air and land ports in Yemen imposed earlier this week by the Saudi Arabia-led coalition.
The decision was attributed to the fact that the port falls under the direct management of the Yemeni government and direct control of the Saudi-led Coalition.
On the other hand, the closure applies to ports under the control of Houthi rebels, namely the Red Sea ports of Hodeidah and Saleef.
The ports were closed as a precaution measure after a rebel-fired ballistic missile, which targeted Riyadh, was intercepted on November 4 by Saudi Arabian military forces.
The ongoing military conflict is hampering Port of Aden’s struggle to implement its modernization plans. At the end of October, the port received 12 Kalmar trailers intended for the Aden Container Terminal which followed the arrival of reach stackers with a maximum load of up to 50 tons.
More equipment is expected to arrive at the port at the beginning of next year, including a generator for the electric power station at the container terminal as well as a gantry crane. (World Maritime News)
Teekay Tankers Sells Aframax Duo, Posts Net Loss in Q3
Teekay Tankers has disposed of two 1999-built Aframax tankers since August 2017 collecting aggregate proceeds of approximately USD 12.7 million.
One Aframax tanker was delivered in September 2017 and the other is scheduled to be delivered in the second half of November 2017 to an undisclosed owner, the company said announcing its results for the third quarter.
The tanker owner further said that it has secured a time charter-out contract on an Aframax tanker for a firm period of 12 months at a daily rate of USD 15,000, plus a 12-month extension option at a higher rate, which commenced in October 2017.
The company recorded GAAP net loss of USD 22.4 million and adjusted net loss for the third quarter of 2017 of USD 14 million amid lower average spot tanker rates and a decrease in the company’s fleet size. The loss is much wider when compared to last year’s equivalent of USD 5.2 million.
GAAP net loss was also impacted by higher losses on vessel sales.
“Seasonal weakness combined with global inventory drawdowns as crude oil pricing moved into backwardation contributed to weak spot tanker rates in the third quarter of 2017. Our fixed charter coverage and our growing lightering business helped to mitigate some of this tanker market weakness during the quarter,” Kevin Mackay, Teekay Tankers’ President and Chief Executive Officer, said.
“Since that time, we have seen a significant uptick in crude tanker rates into the fourth quarter, supported by refineries returning from seasonal maintenance and an increase in long-haul movements from the Atlantic to the Pacific, which is increasing tanker ton-mile demand. Looking ahead to 2018, we expect that a significant slowdown in tanker fleet growth coupled with better oil market fundamentals will lead to a recovery in tanker rates.”
Overall, the company expects tanker rates to recover during the fourth quarter of 2017, in line with seasonal norms.
Teekay Tankers currently owns a fleet of 35 double-hull tankers, including 16 Suezmax tankers, 12 Aframax tankers, and seven LR 2 product tankers, and has four capital leased Suezmax tankers and one contracted time charter-in vessel. The company also owns a VLCC through a 50 percent-owned joint venture. (World Maritime News)
Odfjell Deeper in Loss
As the challenging market for chemical tankers persisted, Norwegian shipping and tank terminal company Odfjell widened its net loss to USD 11 million in the third quarter of this year from a loss of USD 5 million seen a quarter earlier.
The results were also impacted by the market for terminals which was under pressure from falling forward prices of oil/products.
EBITDA for the period was USD 37 million, compared to USD 41 million reported in the previous quarter of 2017.
During the quarter, Odfjell sold its 50% ownership share in Singapore terminal for USD 150 million. The sale, which is likely to close in the fourth quarter of 2017, is in line with the company’s strategy to focus on the terminals where Odfjell has managerial control over the assets and further invest in growth opportunities in its core markets.
“3Q was a challenging quarter for our tanker and terminal divisions. Our balance sheet remains robust and our competitiveness continues to increase, so we are positioned to benefit once our markets recover. The sale of our Singapore terminal in line with our strategy will result in a significant gain,” Kristian Mørch, CEO of Odfjell SE, commented.
Odfjell Terminals’ EBITDA dropped to USD 9 million in the third quarter of 2017 from USD 10 million recorded in the second quarter of this year.
In addition, Chemical Tankers’ EBITDA was USD 28 million in Q3, compared with USD 31 million posted in the previous quarter.
Odfjell said it continues to pursue an exit from the gas sector, where the two existing LPG carriers are assets held for sale. In Q2, Odfjell Gas reached a cancellation deal for the last two of the 22,000 cbm vessels and all installments have now been refunded.
As informed, Odfjell has completed its basic fleet renewal program. The first three owned vessels, Bow Neon, Bow Palladium and Bow Compass, were delivered to the company’s fleet in late Q2 and during Q3.
The newbuilding portfolio comprises six vessels from Hudong shipyard in China and five vessels from AVIC Dingheng shipyard in China, of which two were delivered in Q3.
With respect to prospects, Odfjell said: “We are in the middle of peak delivery of new vessel supply, which impacts the market short term. We continue to believe that chemical tanker markets will gradually improve through 2018 as tonne-mile demand is expected to outgrow net fleet growth.”
“We expect Q4 2017 results to be in line with Q3 2017,” the company added. (World Maritime News)
Gener8 Maritime’s Loss Almost Doubled in Q3
New York-based shipping company Gener8 Maritime increased its net loss to USD 67.5 million in the third quarter of this year from USD 37.4 million posted in the corresponding period a year earlier.
Operating loss for the quarter stood at USD 47.7 million, against an operating loss of USD 25.2 million reported in Q3 2016.
Net voyage revenues dropped to USD 47.9 million in the quarter ended September 30, 2017, from USD 69.1 million seen in the same period of 2016. The decrease was due to a drop in the company’s average TCE rate by USD 6,130.
On October 9, 2017, the company took delivery of Gener8 Nestor, a 2017-built VLCC newbuilding which entered the VL8 Pool. In the third quarter of this year, Gener8 Maritime entered into an agreement to lower the final installment payment for the ship by USD 19.3 million.
During the quarter, Gener8 Maritime into a series of transactions that are expected to increase cash on the balance sheet by approximately USD 99.2 million and reduce total indebtedness by approximately USD 187.7 million.
The company sold the 2002-built Aframax Gener8 Elektra, two 1999-built Suezmax tankers, Gener8 Horn and Gener8 Phoenix, and two 2016-built VLCCs, Gener8 Noble and Gener8 Theseus, generating net cash proceeds of USD 65.9 million.
Subsequent to the end of the quarter, the company sold or entered into agreements to sell the 2003-built Aframax Gener8 Pericles, the 2000-built Suezmax Gener8 Argus, the 2002-built VLCC Gener8 Poseidon, and the 2010-built VLCC Gener8 Zeus for expected net cash proceeds of USD 33.2 million.
“We have taken a series of steps this year to enhance our fleet profile, increase liquidity, and improve our balance sheet,” Peter Georgiopoulos, Chairman and Chief Executive Officer of Gener8 Maritime, explained.
“By the end of this year, we expect that over 75% of our fleet will be comprised of ECO VLCCs on a DWT basis… Combined with reduced breakeven costs resulting from our unscheduled debt repayments, we believe that we have positioned Gener8 to stay competitive in the current weak rate environment and outperform the market when it recovers,” he added.
“Almost all of the vessels we have sold this year were financed under the company’s more expensive debt facility; this was done strategically to strengthen our balance sheet. In 2017 through the end of the third quarter, Gener8 has made unscheduled debt repayments of over USD 163 million, and we expect to pre-pay approximately USD 64 million of additional outstanding debt following vessel sales that have closed or are expected to close subsequent to the end of the third quarter,” Leo Vrondissis, Chief Financial Officer of Gener8 Maritime, commented.
As of November 9, 2017, Gener8 Maritime has a fleet of 31 wholly-owned vessels comprised of 22 VLCCs, 6 Suezmaxes, one Aframax, and two Panamax tankers with a total carrying capacity of approximately 7.8 million DWT and an average age of approximately 3.2 years on a DWT basis. (World Maritime News)
Drewry: Chemical Tankers Expect Recovery from Late 2018
Chemical shipping market is heading toward a recovery phase, which would be supported by subdued ordering and a narrowing in the tonnage supply-demand gap from late 2018, shipping consultancy Drewry informed.
Tonne-mile demand of chemical commodities is set to grow at 3.8% on a year-on-year basis in 2017, of which the organic trade is likely to grow only at 1.5%. By contrast, inorganic and vegoil tonne-miles are expected to increase by 6.3% and 6.5%.
The global chemical trade is expected to grow at 3.3% in 2017, according to Drewry, owing to the strong vegetable oil trade from Southeast Asia to South Asia. The recent reduction in US exports, as a result of Hurricane Harvey, which had a negative impact on the chemical shipping trade, is expected to prove only temporary. Trade will return to normal patterns when North American plants resume production.
Chinese demand for methanol has been improving during the second half of the year as methanol-to-olefins (MTO) plants either plan to ramp up or resume production. Ten new MTO plants are coming on stream in the second half of 2017, and two new plants will begin operations early in 2018. One methanol plant in Iran and two plants in the US will come online by the end of 2017. Drewry thus expects moderate growth in the global methanol seaborne trade, especially in long-haul and domestic trade routes in China.
Time charter rates picked up in the third quarter of 2017, supported by strong demand for clean petroleum products (CPP) and palm oil. Robust demand, high fuel production and declining fuel inventories will strengthen the clean product tankers market from the fourth quarter to 2018.
“The chemical tanker fleet is oversupplied, and increased demand in the CPP market will attract more swing tankers to move to the CPP trade. Overall, we expect earnings to improve over the medium term,” Hu Qing, Drewry’s lead analyst for chemical shipping, said. (World Maritime News)