Tuesday, May 19, 2020

Shipping: "Carriers are winning the freight rate battle" (but what about dry bulk?)

Turn half the tanker fleet into floating storage to maintain upward pressure on rates for the other half; do the same with container ships by slowing transit times e.g. the long way round Africa vs the canal.*
Dry bulk? Pray that China's recovery is real and inbound traffic is not just restocking at lower prices.**
From Splash 24/7:
Hapag-Lloyd impressed analysts last week by keeping its full-year financial guidance despite the deleterious effects caused by Covid-19.

Part of the reason for this upbeat forecast was in the carriers’ collective ability to keep rates high in recent weeks, something analysed in the latest report from Danish container shipping consultants, Sea-Intelligence.

“Carriers have been very good at maintaining freight rates – and net of fuel, spot rates are actually 25-40% up in some trades compared to last year,” Sea-Intelligence noted, highlighting the “rapid and hard tactical capacity cuts” – the blank sailings – which have done so well in preserving the bottom line of most of the global carriers this year....MORE
*gCaptain:
Suez Canal Set to Lose $10 Million from Ships Taking the Long Route

**From Reuters India, May 18: 
China targets Australian barley, but what matters is coal, LNG, iron ore
If China was looking to send a political message to Australia by effectively banning the import of a commodity, then barley fits the bill almost perfectly.

China on Monday imposed what it termed anti-dumping and anti-subsidy duties totalling 80.5% on Australian barley imports from May 19, a move likely to end trade that has been worth between $980 million and $1.3 billion in recent years.

Australia’s official reaction has so far been muted, with Agriculture Minister David Littleproud saying the government will consider approaching the World Trade Organization for a ruling on China’s action.

The official reason for the tariffs is that Australia is dumping barley and damaging China’s domestic industry. Finding anyone who believes this is the sole motive behind the duties would be a challenge.
Rather, the move is seen as Beijing’s ongoing expression of displeasure over Canberra’s role in pushing for an international investigation into the origins of the novel coronavirus, and China’s initial handling of the outbreak that has turned into a pandemic, slamming economies around the world.
Beijing has already suspended imports from four of Australia’s largest meat processors, affecting about 20% of the country’s beef exports to China, while its ambassador to Canberra has hinted at wider actions.

The action on barley fits a pattern of Chinese diplomacy, whereby countries that offend Beijing are punished as a lesson, and hopefully brow-beaten into submission.

Now that Australia’s call for an international probe of the coronavirus has been taken up by numerous other countries, Beijing may feel it has done enough, for now.
While Australia’s barley farmers will undoubtedly be impacted by the tariffs, and may not easily find alternative markets, it’s probably more important what China hasn’t done.

Barely represents a miniscule part of Australia’s overall trade with China, and is a commodity that Beijing can easily source from other suppliers.

Australia’s total exports to China were worth A$194.6 billion ($126.5 billion) in the 2017/18 fiscal year, according to official data, meaning barley is around 0.5% of the total.

If China was determined to send a stronger message to Canberra it would no doubt target exports that were of more value, but that it could still source competitively from other suppliers.

IRON ORE ELEPHANT
Top of mind is liquefied natural gas (LNG), of which Australia is the world’s top producer, accounting for 9.7 million tonnes of China’s imports of 19.8 million tonnes in the first four months of the year, according to Refinitiv ship-tracking data....
....MUCH MORE

And via Hellenic Shipping News, May 13: 
Weekly Dry Time Charter Estimates, May 13 2020
Another negative week for the capesize period market, few fresh fixtures have emerged as, unusually for this time of year, the market continues to move lower with little hope of improvement in the near future....MORE
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