Sustainability
Japan’s three largest shipowners are joining forces with Kawasaki Heavy Industries and industrial gas firm Iwatani Corporation to develop hydrogen carriers together. Mitsui OSK Lines (MOL), Nippon Yusen Kaisha (NYK) and Kawasaki Kisen Kaisha (K Line) are each taking a 16.6% in new firm JSE Ocean, designed to quickly build up Japan’s maritime hydrogen supply chains. The country, via Kawasaki Heavy Industries, is already the pioneer of the seaborne hydrogen trades with the delivery of the Suiso Frontier, the world’s first liquefied hydrogen carrier. Now plans are afoot to supersize this first ship, and to get ships of up to 160,000 cu m on the water soon. Japan’s Basic Hydrogen Strategy, revised by the Japanese government in June this year, identifies hydrogen as the alternative to fossil fuels as it targets decarbonisation. In the strategy Japan commits to a target of 3m tons a year of hydrogen by 2030, 12m tons a year by 2040, and 20m tons a year by 2050.A first ship order from JSE Ocean is expected next year. Japanese shipbuilders were the pioneers for much of the liquefied gas carrier design breakthroughs of the 1970s and 1980s.
A Greek US-Listed company signed a letter of intent to order two Kamsarmax 81,200 dwt methanol dual fuel at a Japanese Affiliated yard. The vessels are expected to be delivered in the second half of 2027 and in the first half of 2028.
Shipping market analysis
Dry bulk
Buying appetite continues to be healthy especially for eco/modern units and quality vessels built 2010 onwards. Since the freight market improved, we understand some sellers are revising their ideas upwards. Chinese have been slow so far and with holidays due next week we expect things even quitter from their side. Five bulkers invited offers this week, three supramax/Ultramax, one Capesize and one Kamsarmax. On the Capesize (2011-Built in Namura-Japan), market sources suggest that the majority of the interested parties were Greeks and the vessel was committed for $23.6 million. The price is in line with the last done which was concluded last week. Appetite for Capesize bulkers remains strong as average rates reached a 4-month high at excess $21,000 per day during the week while the Baltic Dry Index reached an 11-month high. On the Ultramax, a 2012 Japanese built which invited offers on Tuesday was committed for $20.5 million a firm price compared to a one-year younger similar vessels which was sold earlier this month.
Greeks have been top Kamsarmax/Panamax buyers, having purchased 50% of the Kamsarmax/Panamax sold since August.
Last done on Japanese 15-year-old Kamsarmax is a 2009 Oshima built which was committed for $15.75 million. One out of three Handysize bulkers sold since August have gone to Greek interests.
Owners have been busy ordering ultramax bulkers. Almost 40% of the total Dry Bulk orders in 2023 were for ultramax bulkers.
The Japanese Yards are now talking delivery in 2027 while the Chinese are well into 2026. New Build prices are holding strong and there are no signs of price dropping values at leas in the very short term. The Gap on Price and Delivery time is making many owners to opt for Chinese Yards. A Kamsarmax in Japan would cost today close to 40million with delivery in 2027 while a Chinese one will cost around/region $35 million with delivery in 2026. On the Ultramax, Japanese Yards are quoting $37 million with delivery in 2027, while the Chinese Peers are having available slots in 2026 and price around/region $33 million.
According to Reuters, China and India lead Asia’s biggest hydropower crunch in decades. Hydropower generation in Asia has plunged at the fastest rate in decades amid sharp declines in China and India, data shows, forcing power regulators battling volatile electricity demand and erratic weather to rely more on fossil fuels. Higher use of polluting fuels such as coal to meet electricity demand spikes and supply shortages underscore the challenges of lowering emissions. Asia’s hydropower output fell 17.9% during the seven months through July, data from energy think tank Ember showed, while fossil fuel-fired power rose 4.5%.
According to the same source, United States thermal coal exports hit their highest levels since 2018 during the first eight months of 2023, climbing 20% from the same period in 2022 thanks to strong demand from key consumers including China, India and South Korea. Total U.S. exports of coal used for power generation hit 22.5 million tonnes through August, up from 18.3 million in the same period in 2022, according to ship tracking data from Kpler There is a growing interest from the Japanese for Sale & Lease-back deals. Japanese owners have been busy selling (number-1 sellers on the Dry sector) as a result the have accumulated plenty of cash which they are now looking to reinvest. With Shipyards fully booked and high newbuild prices, Japanese owners are becoming more active on the Sale & Lease-back market as US dollar-denominated bareboat charter hires provide a good source of income given the weak yen against the dollar.
Tankers
The SnP market remains quiet with only the MR sector showing some signs of activity.
Approximately, 50 Suezmaxes have been ordered so far in 2023. The highest number of orders placed since 2015. The Suezmax order book is currently at 9% of the fleet. The Suezmax orderbook as a percentage of the fleet was at 2% at the start of 2023. In 2009 the ratio was 45% of the fleet. Around 160 or 27% of the fleet, will be 15 years or over by the end of2023, while a 63 Suezmaxes, or 9% of the fleet will be 20 years or older by the end of the year. According to Reuters, oil prices surged 3% on Wednesday, after U.S. crude stocks fell more than expected, adding to worries of tight global supplies. Brent crude futures breached $97 a barrel, while the U.S. West Texas Intermediate crude futures reached over $93 a barrel. The session high for both benchmarks was a 2023 peak U.S. crude stocks fell by 2.2 million barrels last week to 416.3 million barrels, government data showed, far exceeding the 320,000-barrel drop analysts expected in a Reuters poll. Crude stocks at the Cushing, Oklahoma, storage hub, delivery point for U.S. crude futures, fell by 943,000 barrels in the week to just under 22 million barrels, the lowest since July 2022, data showed. “The market is being led up by storage numbers as we are getting to the minimum operational inventories at Cushing and that’s driving markets higher,” said Andrew Lipow, president of Lipow Oil Associates.
According to CNN, despite falling gas prices, ExxonMobil and Chevron reported bumper profits last quarter. While they were lower than last year, they still beat Wall Street forecasts, as well as where they were ahead of the spike in energy prices that followed the invasion of Ukraine more than a year ago. ExxonMobil, America’s largest oil company, earned $11.6 billion, excluding special items, down 38% from the record quarterly profit of $18.7 billion it earned on that basis in the third quarter of last year. That’s still more than double the $5.5 billion it reported in the first quarter of 2022. It was also more than $1 billion better than the $10.5 billion forecast by analysts surveyed by Refinitiv. Chevron reported it earned $6.7 billion, excluding special items, down 40% from its record earnings of $11.4 billion in the second quarter last year, but just ahead of the $6.5 billion it earned on that basis a year ago. It also topped forecasts of $6.4 billion.
Containers
The SCFI dropped for a fourth consecutive week to 886 points, 3% down w-o-w.
The NCF index declined by 7% this week amid the upcoming holidays in China. The routes from Ningbo to Europe/Mediterranean and North America fell by 5.5% while the routes from Ningbo to Middle East and India/Pakistan experienced significant corrections of 24% and 19% respectively. Feeders have experienced the largest declines while the larger sizes have seen some enquiry for short-term employments.
Based on several reports, we noticed six new fixtures and five employment extensions, most of them in short-term period.
A 2007 Chinese-built Feedemax was fixed for one to two months at $15k/day while a 2007 Chinese-built Panamax secured employment at $18k/day for eleven to eighteen months. The vast majority of reported Feeders were fixed between four to nine months at a range between $10k to $14k/day.
Newbuidling orders are down 50% compared to 2022. South Korea-based Owners confirmed an order of two Feedermax (2,700 TEUs) at Wenchong shipyard in China. The cost is expected to exceed the $38m per unit with delivery in 2026.
Meantime a French Global Operator inked an order for eight methanol dual-fuel 9,200 TEUs at SWS shipyard.
In the recycling market, activity remains steady. Steel prices are firming up with a 1994-built Feeder reported sold for $612 per LDT.
Finance
Yen weakens further against the dollar as BOJ maintains super-low interest rates.According to Financial Times, Sterling fell to a six-month low against the dollar on Tuesday, amid fears high interest rates will tip the UK into recession. The pound has slipped 3.4 per cent against the dollar to $1.2168 so far this month and by 7.2 per cent since mid-July as concerns increase that interest rates, now at a 15-year high to tame inflation, will choke economic growth.
The US Federal Reserve left its benchmark interest rate unchanged this week at 5.25-5.5%, though signalled a more hawkish stance; the Fed now anticipates one more rate hike this year, with borrowing costs likely to stay ‘higher for longer.10-year Treasury note reached a 16 year high at 4.5%.
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