A Funny Thing Happened to This Tanker on the Way to New York…

In International Shipping News 09/02/2018

It had a good run, but New York Harbor’s no longer the hottest destination for incremental diesel surpluses around the globe. Case in point: An open arbitrage prompted this Chinese diesel cargo to head to New York Harbor via the Panama canal — but the ship is now redirecting to Mexico.

The change of heart for this tanker, which is said to be controlled by Royal Dutch Shell Plc, caps several weeks in which the U.S. trading hub for diesel futures brought in rare cargoes from the Middle East and Europe, boosting East Coast imports to a nearly eight-year high the last week of January.

The ship’s initial itinerary would have been very long haul, but not as long as the journey undertaken by another Chinese diesel cargo that traveled 19,000 miles — the long way — to reach New York in early December. The latest change of plans indicates that the unusual shipping opportunities, and open arbitrage, that made such strange voyages possible seems to be over for the winter.

Source: Bloomberg

Zero-Emission Vessels 2030. How do we get there?

In International Shipping News 09/02/2018

LR and University Maritime Advisory Services (UMAS) released ‘Zero-Emission Vessels 2030’ in December 2017, a study aiming to demonstrate the viability of zero-emission vessels (ZEVs) – identifying what needs to be in place to make them a competitive solution for decarbonisation.

The first milestone in the IMO greenhouse gas (GHG) Roadmap is approaching: MEPC 72 in April 2018. The world is watching to see if an ambitious reduction strategy in line with the Paris Agreement can be delivered. To achieve this ambition, ZEVs will need to be entering the fleet in 2030 and form a significant proportion of newbuilds from then on.

Although none of the ZEVs are estimated to be more competitive than conventional shipping by 2030, the technology options are evolving rapidly and it’s possible that over the next 10 years the gap could reduce even further than this study estimates. If this gap does not close then there may be a need for regulatory intervention in the near future, to drive the viability compared to conventional fossil fuels.

This new report assesses seven technology options for ZEVs, applied to five different case study ship types across three different regulatory and economic scenarios. These options consist of various combinations of battery, synthetic fuels and biofuel for the onboard storage of energy, coupled with either a fuel cell and motor, internal combustion engine; or a motor for the conversion of that energy store into the mechanical and electrical energy required for propulsion and auxiliary services.

The costs of some of the components considered: fuel cells, batteries and hydrogen storage could all reduce significantly, especially if they become important components of another sector’s decarbonisation, or if action taken during shipping’s transition assists with the technology’s development.

For those in shipping with niche access to a low-cost supply of zero-emission fuel or energy sources, or an ability to pass on a voyage cost premium to a supply chain that values zero-emission services, the gap may already be closed.

From preliminary conversations with shipowners, it was clear that the key considerations would be around wanting options that were viable at a moderate carbon price (e.g. $50/tonne CO2) and without too great an increase to the capital cost of the ship. It was also clear that the impact of the CO2 emissions must not just be moved upstream, to the electricity generation or fuel production process.

None of the zero-emission options in their current specifications completely satisfy the shipowner requirements, with the most significant gap identified being on voyage (fuel) costs.

Katharine Palmer, LR’s Global Sustainability Manager, said: “There is no doubt that decarbonisation is a huge challenge for our sector and that we all have a clear responsibility to ensure actions are taken to drive our operational emissions to zero at a pace matching actions taken across the rest of the world and other industry sectors. By assessing different decarbonisation options for different ship types, we identify the drivers that need to be in place to make them a competitive solution and we aim to show the opportunity for a successful and low-cost decarbonisation pathway for shipping.”

Tristan Smith, Reader at UCL, added: “This report demonstrates the potential solutions for shipping’s zero emissions transition. By sharing the findings, we hope it can provide inspiration and focus for shipping’s collective efforts to ensure zero emissions happen swiftly and with minimal cost and disruption to trade.”

Zero-Emission Vessels 2030 is the latest in LR’s series of reports looking at fuel and technology trends for the marine industry, aimed at developing new knowledge and tools that can contribute to policy debate. Previous reports include Global Marine Trends 2030, Global Marine Fuel Trends 2030 and Global Marine Technology Trends 2030 and Low Carbon Pathways 2050.

Source: Lloyd’s Register

Demolition Activity Stagnates, Trigerring Fears of a Slower Shipping Market Recovery

In Dry Bulk Market,Hellenic Shipping News 09/02/2018

With the fragility in the dry bulk market’s recovery already noted and the rebound in the tanker market both hinging in solid levels of ships’ scrapping, as well as newbuilding delivery delays and slippages, the demolition activity so far in 2018 doesn’t seem to bode well for the future. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with yet again another stagnate week in the recycling market, at least we had the Indian budget to wait for, although the usual anticipation and hype usually seen appeared to have drifted this year with most Buyers waiting to see what was announced without any annual pre-speculating. Not surprising, the announcement was made and there has been no change in relation to the ship recycling sector with all duties/taxes etc. remaining untouched. Again we have experienced a large volume of ship names being pushed into the market but as there remains a distinct lack of workable tonnage entering the scene, and whilst buying interest from the waterfront is evident, it would appear that it is difficult for buyers to operate at the over inflated prices witnessed in recent weeks in addition to Owners current ‘optimistic’ price ideas”.

In a separate weekly note, Allied Shipbroking said that “these past few days, things in the ship recycling market seemed to be slowly easing, putting a stop to the increased level of speculative buying that had taken place during the past month. This slow down in activity, could well be primarily driven by a slack in candidates coming to market, something that seems to have coincided with a point were buyers are lacking strong interest for intense competition. In the Indian Sub-Continent, after a couple of weeks of increased activity and a sharp rise in prices, things seem to have settled down, with appetite seemingly covered in its most part for the time being and a general easing in price levels now looming as a possibility given the recent gap that has emerged between cash buyers and end buyers. On the other hand given that after the 6% hike in local steel prices by major steel mills, the expectation is for further price increases to be noted during the current month, this may well leave room for cash buyers to continue to offer relatively high levels and keep their offers buoyant”, the shipbroker concluded.

Meanwhile, GMS, the world’s leading cash buyer of ships said that “this past week, the markets appeared to apply the necessary brakes as there appeared to be no further weakening in sub-continent prices and sentiment, despite some worries last week given the volatility in local steel plate prices in India and Bangladesh and a halt to high rise construction projects in Pakistan on the back of an order from the Supreme Court. Additionally, the Indian budget came and went this week, without any real fanfare or even any pre-budget paranoia of post-budget price reductions that have historically affected local demand. On the contrary, there was no direct impact to the domestic ship-recycling sector and as supply of meaningful tonnage dwindled for another week, demand for vessels appears to be creeping up in India as Cash Buyers scramble to secure any available tonnage at continually puzzling prices.

On the sales front, news that another VLCC has reportedly been committed at increasingly buoyant numbers came forth this week. If true, that would make it 5 units being sold for 2018 and several that still remain unsold in various Cash Buyer inventories. As such, it will certainly be interesting to see where each unit eventually ends up and whether the concerned Cash Buyers are in fact speculating on the much talked about Pakistan re-opening for tankers. Bearing in mind the recent (loss-making) Capesize bulker sale into Pakistan and the gulf in prices between decent LDT tankers and dry units (almost USD 50/LDT!), it is surprising that even more pressure has not been placed on the PSBA and Pakistani authorities to finally permit the import of wet units into Gadani once again. At this time, there are only a select few recyclers in Bangladesh who have the appetite and financial ability to open LCs large enough for a VLCC, as Indian Buyers tend to prefer comparatively smaller lightweight vessels where they can import, quickly cut and move onto the next ship, given India’s generally volatile local fundamentals (steel prices and currency)”, GMS concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Value of Australia’s coal exports hit record high $44.21 bil in 2017: industry

In Dry Bulk Market,Freight News 09/02/2018

The value of Australia’s coal exports hit a record high A$56.5 billion ($44.21 billion) in 2017, topping the previous record set in 2011 of A$46.7 billion, the Minerals Council of Australia said.

“Historically coal has been Australia’s biggest export earner and these trade numbers confirm its ongoing strength and significant contribution to the economy,” MCA said in a statement.

The exports from the neighboring eastern states of New South Wales and Queensland comprised thermal and metallurgical coal and were up 35% year on year, it said.

Thermal coal exports in 2017 totaled 200 million mt, worth A$20.8 billion, while metallurgical coal exports totaled 172 million mt, worth A$35.7 billion, it said.

Most of the coal was exported to Asia, from established markets in North Asia to the fast growing economies of Southeast Asia and India, it said.

“Southeast Asia is emerging as a significant new market for Australian coal due to its recent investments in high efficiency, low emission coal-fired power plants significantly reducing greenhouse gas emissions. Exports to this market were worth approximately A$2 billion in 2017,” it said.

MCA pointed to high productivity within the Australian coal mining industry, proximity to major markets and strong regional economic and population growth as factors that “will continue to underpin coal exports in the long term.”

Source: Platts

Dry Bulk FFA: Capesize Market Pushing for Higher Ground

In Dry Bulk Market,International Shipping News 09/02/2018

Capesize FFA Commentary: Capes continued to push higher yesterday with Feb trading up to $13900 and March $16900 before finding selling resistance. Q2 forward remained very thin offer side and thus trades concluded were minimal. Cal 20 traded 16000 and Cal 21 15200. Apr v Q2 push into positive territory which seemed to attract interest from various. Q2 v Q3 tightened up closer to -1200 levels where many spread sellers had been previously keen to sell.

Panamax FFA Commentary: It was a similar trend yesterday on Panamax paper with the curve under pressure in early trading before seeing some buying return post index. By the close we were left marginally lower on the day on Feb and Mar (lows $10350 and $11800 respectively) while Q2 recovered from $12750 low to print $13000 and some better buying on the deferred’s saw Cal20 pushing up to print $10500.

Supramax FFA Commentary:
Supramax paper weakened yesterday on the front of the curve as March was sold $10500-$10450 range. The Q2 also opened softer trading as low as $11,175, however after index we did see a slight reaction with some bids creeping back in. The back end of curve remained rather static with minimal activity. Have a good evening.

Handysize FFA Commentary: Another quiet day was seen on the handysize paper with little interest throughout. We remain static at current rates with no reported trades.
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Source: Freight Investor Services (FIS)