Shipping Market Monitor
Australia expects to overtake Qatar
The value of Australian LNG exports are forecast to hit A$50.4 billion ($35.7 billion) in 2018-2019 as export volumes rise along with the prices.
According to a report from the Australian government’s Office of the Chief Economist, the value will jump almost A$20 billion compared to the financial year 2017-18 when it reached A$31 billion.
The value is expected to remain at the A$50 billion mark for the FY2019-20.
Australia expects to overtake Qatar as the world’s largest explorer during the FY2019-20 when exports are forecast to hit 78.3 million tons, up from 61.7 million tones in 2017-2018.
Minsheng to sell portfolio of financial leasing vessels
Minsheng Financial Leasing (MSFL) is flogging more than $1.1bn-worth of its ship finance portfolio to build equity for its transition from financier to operating shipowner.
The Beijing-based company is understood to be circulating a list of tonnage ranging from ultra large container carriers to small bitumen tankers, all on long-term bareboat charter to premium owners including Maersk Line, Mediterranean Shipping Co (MSC), Navig8, Sinokor Merchant Marine and Trafigura. Sources close to
MSFL downplayed the sales drive, saying it is normal for an owner to consider offers for its assets. They described talk of imminent deals as being broker-driven.
Offers for packages of ships with bareboat charters attached have been received from time to time, they said, but MSFL and prospective European buyers have always been too far apart on price.
But other financial and commercial sources, who believe a big “creative” deal with a European owner is imminent, said it is unusual for leasing houses to try to interest traditional owners in the narrow-margin business a lessor has to offer, although they often distribute pieces of their portfolio to fellow Chinese leasing houses.
Shipowners and brokers who have seen the offers believe prices would have to be very attractive to offset the returns implied in MSFL’s long-term bareboat rates.
Dubai Navigation aims to enter tankers as part of growth plan
Dubai Navigation, Tahir Lakhani’s shipowning outfit established last year, is planning to enter the tanker sector and to expand its bulker fleet in a low-risk, profitable manner.
The Marshall Islands-registered company will look to buy two middle-aged panamax bulkers and two aframax or suezmax tankers that fit its risk profile, chief executive Lars Juul Jorgensen says. (Source: Tradewinds)
The tanker-sector debut is timed to take advantage of the asset-price cycle, Juul Jorgensen adds.
Looking head, many analysts are expecting tanker prices to rise, as the outlook for freight earnings brightens on trades expected to emerge due to the incoming IMO 2020 sulphur cap.
The expansion plans are based on Dubai Navigation’s current operation, which has fewer than 10 employees who deal with commercial management and operations. With the current corporate scale, Jorgensen suggests it would be best to avoid the more volatile capesize and VLCC markets.
“We are not taking any major risks … We are [only] aggressive in the segments where we can see value,” he says.
Dubai Navigation was founded by Lakhani as a counterbalance to his family’s volatile demolition business, so naturally the company is avoiding vessels approaching scrapping age.
But it also does not feel ready to splash on modern tonnage and newbuildings. Dubai Navigation is mainly looking for vessels aged between 10 and 13 years — a category Juul Jorgensen describes as “a sweet spot” in asset markets.
The UAE is introducing a new classification requirement for vessels from 25 flag states calling or anchoring in its waters from 1 January 2019.
A circular from the Federal Transport Authority (FTA) of the UAE said that vessels from 25 flag states calling at UAE ports or anchoring in its waters up to its EEZ would be required to either be classed with an IACS classification society or the UAE classification society Tasneef. The new regulation impacts owners mainly flagged with smaller, open registries and comes into force from 1 January.
The London P&I Club said in a circular, “It is reported that the aim of the new regulation is to try to ensure that all tonnage trading in UAE waters is compliant with accepted safety and quality standards.”
The 25 flag states affected are: Albania, Belize, Cook Islands, North Korea, Sao Tome and Principe, Tonga, Congo, Cambodia, Georgia, Sierra Leone, Equatorial Guinea, Vanuatu, Maldives, Mauritius, Republic of Moldova, Palau, Honduras, Costa Rica, Ghana, Saint Vincent and Grenadines, Saint Kitts and Nevis, Bolivia, Togo, Tanzania and Comoros.
Update on emissions to air regulations for ships operating in Chinese coastal waters
To improve the quality of shipping and promote the environmentally friendly development of water transport within China, the Chinese Ministry of Transport published new requirements on 6 December 2018 for air pollution in Chinese coastal waters:
0.5% sulphur limit from 1 January 2019
From 1 January 2019, all ships entering China’s coastal waters must use fuel with a maximum sulphur content of 0.5% m/m. A carriage ban for fuel oils containing more than 0.5% sulphur will be enforced for all ships without an exhaust gas cleaning system (EGCS, or scrubber) starting from 1 March 2020, thus being in line with global IMO sulphur regulations.
From 1 January 2020, even stricter requirements will apply to ships entering inland waterways, including the Yangtze River and Xijiang River (western part of Pearl River), where a maximum 0.1% sulphur content will be allowed. From 1 January 2022, the 0.1% limit will also apply to the domestic area of Hainan Island.
For ships undergoing a conversion, which includes the installation of EGCSs in Chinese dockyards, should communicate with the Chinese Maritime Safety Administration if fuel oils with a higher sulphur content can be used during the commissioning test of the EGCS.
China will further evaluate the situation of using 0.1% sulphur fuel and will determine whether to implement the 0.1% sulphur limit in all coastal waters (not only the rivers) from 1 January 2025.
It is now confirmed by the Chinese Ministry of Transport that all diesel engines installed on board an imported ship, which is engaged in domestic trade, need to comply with the IMO Tier II emission limits, i.e. main and auxiliary engines. The new NOx regulations are applicable for diesel engines installed on either:
Imported vessels (acquired second-hand from international owners) or Chinese-flagged vessels which are only involved in Chinese domestic transport (either coastal or inland).
These vessels are required to comply with the IMO Tier II emission limits. This limitation applies to vessels imported after 1 September 2018 and to vessels converted to be engaged in domestic trade only after 1 September 2018. The NOx emission regulations cover vessels operating within domestic waters (see figure 1 in PDF version of article).
The only means of acceptance criteria for this requirement are valid Engine International Air Pollution Prevention (EIAPP) certificates. Other (voluntary) statements of compliance will not be accepted.
There are basically three ways to comply:
Engine already fulfils Tier II level, but EIAPP currently only shows certification according to Tier I:
In this case, a new Tier II engine group can be established based on paperwork. The responsible engine manufacturer should be contacted.
Engine does not fulfil Tier II, but by changing some settings such as injection or valve timing, it can be incorporated into an already approved Tier II group:
New settings to be fit by the engine manufacturer; new NOx Technical file needs to be prepared with the new settings, including a final parameter check by DNV GL on board the ship; issuance of EIAPP (Tier II).
Engine does not fulfil Tier II and parts need to be changed: On-board emission test according to test bed requirements of NOx Technical Code. After successful emission testing of an emission group, the NOx Technical File and EIAPP need to be prepared. This option might not be feasible, as in most cases it is cumbersome to fulfil the strict requirements of test bed conditions at an on-board emission test.
All ships operating in Chinese coastal waters are recommended to strictly follow the early implementation of the 0.5% sulphur content limit in fuel oils starting from January 2019.
NOx requirement for import vessels
If it is intended to sell a ship to a Chinese domestic owner and the vessel was keel laid before 1 January 2010, it might be a challenge to convert some diesel engines to the Tier II emission limits, without a conversion.
Commodities Round – Up News
OPEC to release country quotas for oil output cut
Oil producer group OPEC plans to release a table detailing output cut quotas for its members and allies such as Russia in an effort to shore up the price of crude, OPEC’s secretary-general said in a letter seen by Reuters on Thursday. Mohammad Barkindo said to reach the proposed cut of 1.2 million barrels per day, the effective reduction for member countries was 3.02 percent. (Source: Thomson Reuters)
India’s November crude imports mark biggest decline in nearly 4 years
India’s monthly crude oil imports in November marked their biggest year-on-year decline in nearly four years, data from the Petroleum Planning and Analysis Cell (PPAC) of the oil ministry showed on Thursday. The country’s November crude imports slid 11.4 percent to 17.01 million tonnes, registering their largest year-on-year percentage fall since Feb. 2015, when it tumbled 21.3 percent, the government data showed. (Source: Thomson Reuters)
Global coal demand to edge higher to 2023 – IEA
Global coal demand will edge higher until 2023 as growth in India and other Asian countries offsets a decline in Europe and the United States, the International Energy Agency (IEA) said on Tuesday. Consumption of the fuel is expected to rise by an average of 0.2 percent a year from 5,355 million tonnes of coal equivalent (Mtce) in 2017 to 5,418 Mtce in 2023, the Paris-based agency said.
World crude steel production for the 64 countries reporting to the World Steel Association (worldsteel) was 148.6 million tonnes (Mt) in November 2018, a 5.8% increase compared to November 2017.
China’s crude steel production for November 2018 was 77.6 Mt, an increase of 10.8% compared to November 2017. Japan produced 8.7 Mt of crude steel in November 2018, a decrease of 0.5% compared to November 2017. South Korea produced 5.9 Mt of crude steel this month, up 1.1% on November 2017. (Source: WSA)
EU becomes net grain importer for first time in more than 10 years
The European Union has become a net importer of grain for the first time in more than a decade following a drought-affected wheat harvest, strong competition in exports from Russia and a record pace of maize imports. As of Dec. 16, the EU has imported 13.15 million tonnes of grain so far in the 2018/19 season, compared with exports of 12.64 million tonnes, European Commission data showed on Monday. (Source: Thomson Reuters)
Ukraine grain exports rise to 21 mln T -ministry
Ukrainian grain exports have reached 21.09 million tonnes so far in the 2018/2019 season, compared with 19.25 million by the same point in the previous season, the agriculture ministry said on Wednesday. Ukraine has said it harvested a record 70.1 million tonnes of grain this year versus 61.3 million in 2017, while the ministry said exports could rise to 47.2 million tonnes in the July 2018 to June 2019 season from 39.4 million a season before. (Source: Thomson Reuters)
Maria Bertzeletou, Shipping Research Analyst (prepared for the exclusive use of Hellenic Shipping News Worldwide, www.hellenicshippingnews.com)