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Oil prices eased for a second consecutive week

Oil prices eased for a second consecutive week with WTI standing at around USD 97/ barrel & brent at USD 101/ barrel. Following the US’ decision to release 1 million barrel/ day oil for the next 6 months, but also IEA’s announcement to release 60 million barrels, S. Korea & Japan decided to release oil from their reserves with the aim of taming rising oil prices and slowing inflation. The South Korean government has announced the release of 7.23 million barrels of strategic petroleum reserves, the country's biggest release ever. The Japanese government plans to tap 9 million barrels of oil from its reserves. Additionally, 15 million barrels will be released from privately held oil reserves, making 120 million barrels the largest ever stock release by the IEA. The release of oil reserves has pushed the product market as there is an increased need for transportation of the released oil reserves towards refineries and storages. The BDTI increased by 27% w-o-w to 1,677 points, a level not seen since mid-October 2019. However, the clean market, which doesn’t follow the same trend, closed the week at 898 points, down by around 2% w-o-w. Its worth noting though that the Russian invasion of Ukraine has pulled more US Gulf Coast ships to Europe to offset Russian diesel supply, having as a result a significant increase to TC2 (Rotterdam/New York) and TC14 (Houston/Amsterdam) routes. The Triangulation - TC2/TC14 has increased by 130% since middle March to USD 68k for Eco and USD 62k for Non-Eco.

The invasion of Ukraine has triggered a huge energy crunch that has force a brutal change to the energy map. The EU has proposed new sanctions against Moscow, including a ban on Russian coal and on Russian ships entering EU ports. As the new proposed restrictions come at a time when EU is trying to reduce dependency of Russian gas, many countries are turning to coal again, something that we had predicted to previous reports. European buyers are suddenly increasing shipments of coal from across the globe with coal imports in March 40.5% higher on a year to year basis and at the same levels as March 2019. At the other side of the world, Japan intends to phase out Russian coal imports in phases and search for alternative supply countries targeting mainly Australia and Indonesia. Japan imported 19.734 million mt of Russian coal in 2021, or 11% of the country's total imports of 182.629 million mt as Russia is Japan’s third-largest coal supplier after Australia and Indonesia. Mainly capsize rates and secondary panamax rates may take advantage of these energy strategy swifts and move to higher levels in the short-term. BDI index closed the week at 2,055 points while BCI saw a fall of 22.5% at 1,444 points. Panamax, Supramax and Handysizes indices all dropped around 9% on a weekly basis at 2,777 points, 2,502 and 1,544 points respectively.

As a result of the energy crunch and the covid era monetary policy of central banks, the global economy is facing a great danger down the road towards a post pandemic world, global inflation. From Singapore to Canada and from the EU to Brazil, inflation has moved to records levels since the dawn of 2022, with Turkey and Argentina seeing enormous numbers like 61% and 52%. Inflationary pressures on commodities and finished goods along with the energy crunch may prove a serious break for world growth. But why is this so important for shipping industry? Because as you can see on the charts below, world growth is directly correlated with seaborne trade and consequently the freight rates and the SnP prices.

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Sale and Purchase:

Although dry indices have decreased by around 20% during the past two weeks, the S&P activity remains firm. On the Capesize sector, the Japanese built BWTS fitted “Red Sage”- 182K/2015 JMU was sold for USD 48 mills to Greek buyers, while the 3-year older Chinese built BWTS fitted “Stella Anita” - 180K/2012 was sold for region USD 30 mills. Moving down the sizes, the BWTS fitted Panamax “Coral Crystal” - 78K/2012 Shin Kurushima changed hands for region USD 25 mills. Finally, the BWTS fitted Supramax ”New Able”- 56K/2014 Oshima (TIER II, Electronic m/e, OHBS) sold for USD 26.5mills, while the BWTS fitted “Union Victory” - 54K/2010 Chengxi was sold for low USD 17 mills.

The 49% increase of BDTI during the past 2 weeks has impacted positively the wet S&P activity. The BWTS fitted “SKS Skeena” - 159K/2006 Hyundai Samho sold for USD 23.5mills. On the Aframax/ Lr2 sector, clients of GNMTC acquired the “New York Star” - 115K/2022 Daehan for region USD 61mills, while the “STI Nautilus” - 110K/2016 Longxue sold for USD 45mills to clients of Torm. Finally, 3x MR2’s, the “Ardmore Sealifter” - 47K/2008 Onomichi, the “Ardmore Sealeader” - 47K/2008 Onomichi & the “Ardmore Sealancer” - 47K/2008 Onomichi were sold to Leonhardt & Blumberg for USD 40 mills enbloc basis 2-year TC back to sellers.

On the demolition sector, the LR1 “Hampstead”- 13,200 LT/ 2004 Samsung went for scrap at USD 9.43 mills (on the basis of USD 700/ldt).

Xclusiv Shipbrokers Inc.