Shipping Market Monitor
Top Headlines of Recent Days
Japan is pushing ahead with its largest ever overseas port development, which files in the face of neighbour China’s One Belt, One Road Initiative.
Trading house Toyota Tsusho and state-run Japan Bank for International Cooperation are joining forces to raise funds for a huge port in Southern Angola that cost up to 70bn yen ($643M). The port will be a multipurpose facility, handling oil, iron ore and container ports. Japanese state-backed port investments have mainly focused on Asia to date.
Panama Canal to restrict draft to 49 feet as of Feb 11
Platts reported that due to an unusually low amount of rain in December, the Panama Canal Authority (ACP) announced that the maximum draft for a ship transiting the Neopanamax locks will be restricted to 49 feet, or 14.94 meters, as of February 11. The new restriction will decrease the maximum allowed draft in the Gatun Lake by 1 foot, or by 0.3 meter from the last maximum restriction, which was implemented June 26, 2018m at 50 feet, or 15.24 meters.
A total of 11 prefecture-level cities in China’s coal hub Shanxi Province have established no-coal zones in its urban districts to tackle air pollution, local authorities said.
The storage, sales and use of coal are all banned in the no-coal zones, according to the Shanxi Provincial Department of Ecology and Environment. The exceptions are made for coal-fired electricity generators, large-scale heat providers and industries that use coal as a raw material.
The authorities said the area covered by the no-coal zones will be gradually expanded. Meanwhile, the sale or burning of low-grade coal among residents has been banned in the whole province. Shanxi is under big pressure to curb air pollution. In the first three quarters of last year, 7 out of 20 cities with the worst air quality were in Shanxi.
With a quarter of China’s proven coal reserves, Shanxi shut down 36 coal mines in 2018, cutting 23.3 million tonnes of production capacity. According to a plan regarding the reduction and reconstruction of the coal mining industry in the province, coal mines with an annual output below 600,000 tonnes will be closed by 2020.
China – US Trade War
Dire prediction for China’s 2019 economic growth if trade war deteriorates to worst-case scenario
The outcome of the ongoing US-China trade war will be critical to how China’s economy and those of other Asian nations perform this year, the Asian Development Bank’s president said.
US tariffs that have already been imposed could crimp China’s economic growth rate by 0.5 percentage point in 2019, worsening to a full percentage point if all bilateral trade were to be taxed at a higher tariff rate, said the former Japanese vice finance minister. The worst-case scenario could slow China’s economic growth to 5.3 per cent, making it the slowest annual increment since quarterly data began to be reported in 1992.
In contrast, Chinese tariffs are likely to cut US growth by just 0.1 percentage point this year. Barring any escalation of the US-China trade war, most Asian economies should come through 2019 relatively unscathed despite the challenges posed by trade tariffs, stock and currency market volatility and fluctuating global capital flows. (Source: South China Morning Post)
Chinese and Middle Eastern outfits to step up for Shell’s Project solar vessels
Shell has selected two companies to order product and chemical tanker tonnage against charter contracts originally floated under the name Project Solar.
Newbuilding sources revealed that Chinese financier ICBC Leasing is in talks with New Times Shipbuilding in China over a series of more than 10 MR IMO type 2 tankers for the Anglo-Dutch energy major. Separately, Eships, the shipping arm of the Dubai-based Tristar Group, is believed to be contracting six 25,000-dwt, IMO type 2 product tankers at Hyundai Mipo Dockyard in South Korea.
Tristar has worked with Shell previously on the energy major’s so-called Project Silver business in 2012, when it contracted six 52,000-dwt vessels against bareboat charters. That was part of a 50-vessel newbuilding haul.
South Korean owner Sinokor Merchant Marine, which had previously been a key supporter of the oil and gas giant by ordering 30 Project Silver ships, has also been mentioned by sources as a company which had been looking at the business. (Source: Tradewinds)
China has banned the use of open-loop scrubbers effective 1 January 2019 in the country’s emission control areas (ECAs) covering inland waters and most of its coastline.
China’s ECAs came into force this year, making it mandatory for ships to burn marine fuels with maximum sulphur content of 0.5% in the designated zones. The use of scrubbers allows ships to continue using 3.5% sulphur fuel as the exhaust gas cleaning system can bring down the sulphur content to 0.5%, but only closed-loop systems are now allowed in China.
Ships fitted with open-loop scrubbers, which discharge wastewater, are now required to burn low-sulphur fuel while operating in China’s ECAs. The ban on the use of open-loop scrubbers for China’s entire coastal ECAs will be announced in due course.
This move by China follows Singapore’s decision to prohibit open-loop scrubbers from 1 January 2020. Open-loop scrubbers are also banned from use in Belgium, California, Massachusetts and along Germany’s Rhine river.
Sources familiar with the matter have however told BIMCO that according to the updated regulation, the banned areas for discharging wastewater from scrubbers remain within inland ECAs, port waters under coastal DECA and the Bohai Bay waters only.
A full ban on open-loop scrubbers could however be adopted soon, sources familiar with the matter also told BIMCO.
Polaris Shipping will install open-loop scrubbers on seven of its ships, using Langh Tech systems and retrofitting at South Korea’s STX Offshore & Shipbuilding. The seven ships include four 180,000-dwt bulkers and three 300,000-dwt VLOCs.
The scrubber installations will be done as turnkey deliveries by STX O&S, with component deliveries starting in mid-2019 and installations to follow soon after. On each of the vessels the main engine and the three auxiliaries will be connected to the scrubber, which is the multi-inlet type.
The decision to fit open-loop scrubbers on VLOCs would seem a curious one given the likelihood of a full ban on such exhaust gas cleaning systems by China, a primarimry destination for such vessels.
Commodities Round – Up News
Morgan Stanley cuts 2019 oil price view on high supplies, slowing China imports
Morgan Stanley has cut its 2019 oil price forecasts by more than 10 percent, with plentiful supply in the early part of the year and slowing imports into China weighing on prices, the bank said in a note. It now expects benchmark Brent crude prices to average $61 a barrel this year, down from a previous estimate of $69 a barrel, and U.S. West Texas Intermediate (WTI) to average around $54 per barrel, against a prior forecast of $60. (Source: Thomson Reuters)
Goldman warns iron-ore’s jump into $70s ‘is not sustainable’
Iron-ore’s rally over the past month, with benchmark material pushing back into the $70s, is at risk as banks including Goldman Sachs Group and Morgan Stanley warn that prices are poised to drop back. While industry fundamentals have improved, current prices won’t last as more supply is on the way, Goldman analysts including Hui Shan said in a note received on Wednesday. The bank expects a decline to $60 in six months. (Source: Miningweekly.com)
Australia’s Port Hedland iron ore shipments to China jump 14 pct in Dec
Iron ore shipments to China from Australia’s Port Hedland terminal rose 14 percent in December from a month earlier, port data released on Thursday showed. Iron ore shipments to China from the world’s biggest iron ore port totalled 37.4 million tonnes in December, compared with November’s 32.9 million tonnes, the Pilbara Ports Authority said. (Source: Thomson Reuters)
Brazil 2018/19 soybean crop forecast cut by 5.2 mln T – Agroconsult
Brazilian agricultural consultancy Agroconsult slashed its forecast for Brazil’s 2018/2019 soybean crop by 5.2 million tonnes on Thursday, citing a dry spell that has hurt soy fields. During a press conference ahead of a crop tour that starts next week, André Pessoa, a partner at Agroconsult, said Brazilian soy farmers are now expected to produce 117.6 million tonnes of the oilseeds this season, down from 122.8 million in a prior forecast. (Source: Thomson Reuters)
Ukraine’s grain exports rise to 24.1 mln T – ministry
Ukraine’s grain exports have risen to 24.1 million tonnes so far in the 2018/19 season, as of Jan. 9, from 21.2 million tonnes at the same time in the previous season, the agriculture ministry said on Wednesday. Ukraine has said it harvested a record 70.1 million tonnes of grain last year versus 61.3 million in 2017. The ministry said exports could rise to 47.2 million tonnes in the July 2018 to June 2019 season from 39.4 million the season before. (Source: Thomson Reuters)
Maria Bertzeletou, Shipping Research Analyst (prepared for the exclusive use of Hellenic Shipping News Worldwide, www.hellenicshippingnews.com)