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From planning to implementation

The pandemic was the main reason that many infrastructure projects were postponed all over the world but also the reason that certain weaknesses were revealed in various economies, driving them to plan additional infrastructure projects. Now that the world is moving away from lockdowns and trying to keep the economy running, despite fresh COVID-19 outbreaks, all these new and postponed infrastructure projects are moving from planning to implementation.

A few weeks ago, G7 leaders announced a global infrastructure initiative to stabilise and improve conditions in developing countries. They will raise USD 600 billion by 2027 for infrastructure investments in areas critical to sustainable development, health systems, digital connectivity, social equality, climate and energy security. A few weeks after that movement, China has made one step further into starting one of the biggest infrastructure programs ever. China’s Ministry of Finance is planning to allow local governments to sell 1.5 trillion Yuan ($220 billion) of special bonds in the second half of 2022 in order to accelerate the infrastructure funding. The debt would mostly be used to finance postponed and new infrastructure, an old playbook that will help the boost of the economy hit by COVID lockdowns and the housing slump. The funding would add to 1.1 trillion Yuan in new support for infrastructure announced over the past few weeks. President Xi Jinping’s government is trying to get the economy back on track toward achieving its annual growth target of around 5.5%. The news on Thursday drove the commodity markets to a small rally, with copper & iron ore ending the week 2.6% higher, aluminium & tin climbed around 1.7% while coal is up by 2.9%. The finalizing of the financing is a step closer to implementation of infrastructure projects, which means an increased demand for raw materials and commodities. The dry market in shipping is probably going to find a foothold on this and can expect some better days ahead.

On the wet side of the market, the war in Ukraine still creates lots of complications, but through the sanctions – as we have emphasized many times – new trading routes are created, and new ton-miles are added to the market. So apart from the large volumes of Russian crude cargoes that keep finding their way towards China and India, other major Asian crude importers who are committed to sanctions halting trade with Russia, are turning towards other oil producers. Despite the steep discounts on Russian crude, South Korea, Japan and Thailand are steadily reducing their dependence on Russian oil, replacing it with other sources.

Japan has decreased the supply of Russian oil by 85% on a yearly basis, from 141,324 b/d down to 20,993 b/d. Thailand did not purchase any Russian crude in May, and data showed that the imports from Russia during the first semester of 2022 were only 16,546b/d, almost 60% lower than the first semester of 2021. South Korea's crude imports from Russia in May plunged 84.2% from a year earlier to just 703,000 barrels, marking the smallest monthly shipments from the non-OPEC producer since February 2016. Asian countries who show no interest for Russian crude – despite the discounts – are securing oil supply mainly from the Middle East and the US. Japan is planning to rely on Middle Eastern producers for almost the 90% of its crude oil supply while Thailand is purchasing mainly from the UAE and the US. Finally South Korea is filling the gaps left from stopping Russian Crude with WTI crude oil imports from the US. The shift towards other suppliers creates additional demand for tankers and adds more ton miles to the oil trading that significantly support the wet sector.

This was a hard week for the dry indices, as all of them took a dip. The BDI closed the week at 2,067 points mark, down by 6.64% on a weekly basis. Meanwhile BCI closed the week at 2,270 points mark, down by 4.66%, BPI closed at 2,223 points mark, down by 10.25%, BSI closed at 2,163 points mark, down by 5.55% and BHSI closed at 1,185 points mark, down by 7.13%. On the wet indices, the BDTI closed the week with an increase of 8.91% at 1,333 points and is having a series of 4 positive closings but BCTI closed the week with a firm decrease of 9.35% at 1,406 points mark with 11 uninterrupted negative sessions.

Sale and Purchase:

In the dry S&P activity, on the Post-Panamax Sector, the BWTS fitted “Hui Xin 8” - 93K/2012 Cosco Dalian yard was sold for USD 22 mills, while the 2-year older BWTS fitted “Celine Oldendorff” - 93K/2010 Cosco Dalian found new owners for USD 20 mills. Moving down the sizes, Greek buyers acquired the Kamsarmax “Theresa Shandong” - 82K/2012 Jiangsu Eastern for USD 22 mills. On the Supramax sector, the “Neutrino” - 59K/2012 Kawasaki was sold for region USD 24 mills. Finally, 2x BWTS fitted Handysizes, the “Venture Team” - 39K/2015 Jiangmen Nanyang & “Venture Ocean” - 39K/2015 Jiangmen Nanyang were sold for USD 50 mills enbloc.

In the tanker S&P activity, on the VLCC Sector, the BWTS & Scrubber fitted “Elandra Everest” - 300K/2020 Hyundai Heavy was sold for USD 95 mills to clients of Tsakos, which we understand is an old sale. On the Aframax sector, the BWTS fitted Ice classed “Kronviken” - 115K/2006 Samsung was sold for USD 25 mills to Greek buyers, while the UAE buyers acquired the one-year older Ice Classed 1A “Matterhorn Spirit” - 115K/2005 Daewoo for USD 24.75 mills. Moreover, the Scrubber fitted LR2 “Elandra Angel”- 116K/2009 Samsung changed hands for USD 33 mills. The MR2 sector, the “Neutron Sonic” - 50K/2007 SPP was sold for USD 14 mills. Finally, on the Chemical sector, the “DH Admiral”- 9K/2018 Nantong Tongbao & the “DH Blossoming - 9K/2018 Nantong Tongbao were sold via auction for USD 18 mills each.

Xclusiv Shipbrokers Inc.