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Another outbreak has reached China’s mainland and once more, severe measures are being imposed in line with the country’s zero-Covid strategy to combat the COVID-19 pandemic. In fact, the city of Dalian, one of China’s major ports, is the most recent example of the implementation of heavy measures as the city is forced into lockdown since last week. The largest shipping exhibition, Marintec China, scheduled for December is now postponed till June 2022. The government’s eyes are now on the 2022 Beijing Winter Olympics as China readies to host thousands of athletes and personnel while battling flare-ups of COVID-19. Remains to be seen how this latest Covid outbreaks are going to affect shipping, amid the correction during the last weeks of the dry bulk market and under the strong anticipation of a better tanker market in 2022.

On another note, Chinese industrial output grew by 3.5% year-on-year in October, a slightly faster pace than the 3.1% y-o-y increase seen in September. It’s growth trend continues but on a slower pace in comparison to the summer data where y-on-y growth in July-August averaging about 5.9%. This slight improvement in production is most likely result of the easing in power shortages which had recently caused disruption to Chinese manufacturing activity a month ago. Furthermore, China tried to establish a dialogue with the USA to ease tensions and allow the two countries to return to a more constructive & stable relationship.

Worth noting that on November 15th, President Xi had a virtual summit with President Biden, in which the two leaders discussed the complex nature of relations between the two countries and the importance of managing competition responsibly. The meeting yielded little concrete results, but it was an important step in stabilizing U.S.-China relations. The U.S. remains China’s largest trading partner on a single-country basis. As per China customs data, imports from the U.S. slowed sharply to about 4.6% y-on-y in October, while exports to the U.S. maintained a high growth pace of nearly 22.7%.

China imported nearly twice as much coal last month compared to a year ago, as coal imports reached 26.9 million tons in October, up 96.2% from last year as per latest customs data. Australia, is noticeably absent from the list of nations shipping coal to China. Australia was a prolific exporter of coal to China, but in the last 18 months, China has imposed restrictions on a long list of Australian exports as political relations between the two countries have hit their lowest point in a generation. The value of Australia’s exports to China has jumped 24% from a year ago, to reach over USD 135 billion. Record-high iron ore prices and strong demand for steel-making inputs in China accounts for much of this strength. Coal exports from Australia to India (which is facing its own coal shortage), Japan and South Korea have soared.

The USA’s economy is regaining momentum, following a calm period over the summer when a wave of COVID-19 infections driven by the Delta variant battered the nation. As per latest report by OECD, preliminary GDP readings for Q3 2021 show the US as the only G7 nation to surpass its pre-pandemic levels. But despite positive readings, the US economic growth is slowing. The economy expanded by 2% in Q3 2021 but this was below market forecasts of 2.7% and it is slowing sharply from 6.7% back in Q2 2021. A new surge in Covid-19 cases and global supply constraints are compressing consumption as well as production.

Oil prices backed by rising demand, had rallied during the previous weeks, hitting a 7-year high, strongly attributing to the global inflation wave. However, WTI closed the week at USD 76.1 per barrel, now at a 7-week low, as the U.S. already released some reserves and has asked countries including China, Japan, India & S. Korea to consider a coordinated release of oil reserves to help bring prices down.

BDI closed the week down by 9.08% w-on-w, at 2,552 points, amidst inflationary pressures & uncertainty about the economy’s recovery caused by new COVID-19 outbreaks. The BCI closed the week at 3,610 points, down by 5.89%, the BPI at 2,282 points, down by 22.12%, the BSI ended the week at 2,237 points, down by 0.71% while the BHSI at 1,561 points, down by 3.22%. Furthermore, on the Tanker indices w-on-w, the BDTI decreased by 5% at 780 points while the BCTI decreased by 3.6% at 596 points mark.

Sale and Purchase:

On the dry S&P activity, the Post-Panamax “Hamda” - 91K/2003 Imabari sold for USD 15.3mills to Indonesian buyers. On the Supramax Sector, the “Bulk Orion” - 56K/2011 Mitsui Chiba found new owners for xs USD 19mills. Clients of Fortius Shipmanagement purchased the “Royal Justice” - 37K/2012 Saiki for rgn USD 18.5mills.

On the tanker segments, on the Suezmax Sector, the “Astro Perseus” - 159K/2004 HHI fetched rgn USD 18.5mills to Middle Eastern buyers, while clients of Advantage Tankers have committed on subjects, the Aframax “Antonis”- 114K/2017 Daehan for USD 44.5mills. Finally, 2x MR2 The “PTI Rhine” - 51K/2007 STX & The “PTI Amazon” - 51K/2007 STX sold enbloc for mid/high USD 9mills each. Pyxis Tankers, acquired from an affiliated company, the eco-efficient MR2 “Pyxis Lamda”, 50K/2017 SPP, for $32 million.