News in English

Oil markets were very busy during the previous week

Oil markets were very busy during the previous week. Oil prices have been rising to levels not seen since November due to expectations of tight supplies. WTI crude futures rebounded to over USD 87/barrel, when back on 24th August 2023, the price was about USD 78 and Brent crude futures are at USD 90.8/barrel, about 10% higher than 24th of August. Saudi Arabia announced it will extend its voluntary output cut of 1 million barrels per day through the end of December. Russia also extended its voluntary reduction in oil exports by 300,000 bpd until the end of the year.Russia's and Saudi Arabias' decision did not only trigger a boost of oil demand and price spikes, but it also triggered various actions around the market. Iran, Iraq and Nigeria have already increased their crude oil production, to offset the further production reductions that were announced by Russia and Saudi Arabia. In August 2023, OPEC+ crude oil output grew by 120,000 barrels/day with the help of the three foretold countries. According to markets data, Iranian production of 2.95 million b/d is the highest since November 2018, production in Iraq grew 110,000 barrels/day as internal consumption increased, while Nigerian output was up 60,000 barrels/day, as loading resumed at the Forcados terminal, after an underwater leak disrupted loading for a month.

Many economists however predict that 2023 will be the last year of crude oil demand recovery from COVID-19 for China and from 2024 onward the rate of oil demand growth will start to slow down. China, disturbed by oil production cuts, is trying to cover its back by making additional agreements to ensure sufficient quantities for its refineries. So, there is a new round of negotiations between the state-owned Saudi Aramco and its Chinese customers for 2024, which will help the world's largest exporter of oil to compete for China's "top crude supplier" against Russia. Rumours say that Saudi Arabia is set to increase crude supplies to China in 2024 for the new refineries, despite the decision to extend its production cut until end-2023. Also, the independent oil refineries in China also started to turn towards Iranian crude and most of them are now importing their feedstock requirements from sanctioned-hit Russia, Iran and Venezuela. The replacement of non-sanctioned crude oil with cargoes from sanctioned countries in most of China's independent refineries has played a vital role in freeing up non sanctioned volumes to the market and is helping keep a lid on world crude oil prices.

Although there is a significant increase in coal, lignite and iron ore imports during the first eight months of 2023 compared to the similar period of 2022, China's imports are limited compared to what was expected. The real estate crisis has enormously affected the dry bulk market during the current year and has limited the quantities of iron ore and coal imports. Although China has increased its coal and iron ore imports annually, she would have imported much more if its property sector hadn't faced so many problems, and her economy had returned to stronger GDP growth.

From January to August 2023, China's coal imports and iron ore imports increased on a yearly basis by 82% to 30.5 million tonnes and by 7% to 77.5 million tonnes respectively. Furthermore, higher imports have also been noted in a monthly basis, as during August 2023, China imported 4.4 million tonnes of coal and 10.6 million tonnes of iron ore, an increase of 13% and 14%, compared to July's 2023 numbers. China is strongly connected with dry market's rates. For instance, Capesize segment has gained momentum, with the BCI closing the week at 1,289 points, an increase of around 25% w-o-w. That increase was mainly driven by China's routes, with C10 (China- Japan transpacific round voyage) having increased by 42% since 24th August 2023.

During the past week, China has begun to gather pace to deliver the much-needed growth momentum and defuse the financing risk in the property sector at local level by reducing downpayment requirements and mortgage rate for buyers. Authorities and market sources hope that this movement can boost the real estate sector and have a positive effect in the midterm to the dry bulk market.

Sale and Purchase:

On the dry S&P activity, Atlantska Plovidba announced the sale of "AP Libertas" - 75K/2008 Hudong Zhonghua for USD 12.35 mills to Chinese buyers. Elsewhere, Greek buying appetite activity was very active this week, with acquiring the Panamax "Nenita" - 77K/2006 Sasebo for mid USD 12 mills. Furthermore, Greek buyers acquired 4x Ultramax, the "Giants Causeway" - 63K/2015 Yangzhou Dayang, the "Sadlers Wells" - 63K/2015 Yangzhou Dayang, the "Galileo" - 63K/2014 Yangzhou Dayang and the "Cape Cross" - 63K/2014 Yangzhou Dayang for USD 86 mills enbloc. The Supramax "Bulk Patagonia"- 59K/2012 Kawasaki found new owners for excess USD 19 mills.

On tanker S&P activity, the VLCC "Athenian Freedom"- 300K/2013 HHI was sold for region USD 78 mills to Far Eastern buyers. Moving down the sizes, Middle Eastern buyers acquired the Aframax "Anavatos II" - 115K/2009 Hanjin Heavy for USD 39 mills. Clients of PanOcean sold 2x MR2, the "Grand Ace8"- 46K/2008 STX and the "Grand Ace1"- 46K/2006 STX for USD high 23 mills and USD excess 19 mills respectively. Last but not least, Turkish buyers acquired the ICE Class 1A MR1 "Advantage Party" - 37K/2006 HMD for USD 17 mills, while on the same sector, the ICE Class 1A "Baltic Freedom" - 37K/2006 HMD was sold for low USD 18 mills basis forward delivery.

Xclusiv Shipbrokers Inc.