MFAME Editorial – Oil is so Cheap that Even Pirates are Not Stealing it, Nigerian Cadets Turn Out to be Pirates!



Hurrah! Readers.

We are excited to share a news that many readers appreciated the topics covered under “All You Need To Know About The Current Shipping Market”  which we published yesterday.  With the same excitement and commitment, here is one more from MFAME to square up the shipping market watch for this week.

The Baltic Dry Index (BDI) which was at 307 points (a fourth consecutive uptrend) yesterday has ended at 313 points to close this week.  We said that the BDI touched an all-time low of 290 points on 10th Feb. 2016, marking the lowest level since records began in 1985.

Have you wondered why this index has seen an increase in the past week?

Here is the reason worthy to know!

Out of all the four (Capesize, Panamax, Supramax and Handysize), the bigger ones (Capesize and Panamax) are still facing a profit deficit, while the smaller ones (Supramax and Handysize) are stealing the show with higher earnings.

Thus, the smaller vessels are the real reason that the Baltic Dry Index is on the rise.

Billionaire investor John Fredriksen’s dry bulk shipping firm Golden Ocean plans to raise $200 million in fresh equity as it continues to face weak markets for its vessels, the company said on Thursday.

“We all agree the market is oversupplied, utilisation is around 75 percent,” said Golden Ocean Group Ltd.  (Golden Ocean) CEO Herman Billung at the company’s latest earnings presentation.

In the face of vessel oversupply, Billung says that the company is “seriously considering” idling vessels that are 3 to 5 years of age, a practice that he says will likely become a more common activity within the dry bulk market.

“For older vessels I am confident you will see massive scrapping,” said Billung, adding that Golden Ocean has scrapped 25 vessels for the year.  In addition to scrapping and idling, Billung says that ship owners are cancelling or delaying newbuild orders and deliveries.

While the Baltic Dry Index witnesses rise and the company Golden Ocean plans to idle vessels between 3 to 5 years, here is an interesting update on the tanker market.

Dry Bulk players are busy with selling/scrapping their ships, whereas the Tanker players fortify their fleet!

The dry bulk players are busy with selling/scrapping their ships, whereas the tanker players fortify their fleet with more lucrative product tankers.

Norwegian ship-owner Ocean Yield ASA has taken delivery of the product tanker “Navig8 Symphony” from South Korea.  After being delivered from the shipyard today, the vessel commenced a 13 years “hell and high water” bareboat charter to Navig8 Product Tankers Inc.  This is the first vessel delivered in a series of total four product tankers that will be chartered to Navig8 Product Tankers Inc.

Oil is now so cheap even pirates aren’t stealing it any more!

While a decision was made that the four major oil producing nations will freeze the oil output at January 2016 levels, which is indeed very high – we have an interesting news for you.  The oil is now so cheap that even pirates aren’t stealing it anymore!

Over the past six months, the price of oil has plunged due to a global oversupply.  And for some pirates, it’s just not worth stealing it any more.  Stealing crude also means finding a buyer for it, or else getting involved in the messy and dangerous business of illegal refining.


“With oil at a low bottom price of below $30 per barrel, piracy is no longer such a profitable business as it was when prices hit $106 a barrel a few years ago,” said Florentina Adenike Ukonga, the executive secretary of the Gulf of Guinea Commission—a regional body that exists to promote cooperation between West African states, many of which export oil via tanker.

Did the Pirates forecast fall in oil prices?

The oil price has dropped by more than $100 since last July (2015) which could also substantiate the reason for drop in piracy.  In fact, piracy was falling before the price of oil tanked as per the reports.

Year Number of Attacks Successful Attacks
2013 100 56
2014 69 26

From the above table, it is evident that the number of attack or the successful attacks in 2013 are higher than that in 2014.  The majority of 2014 attacks were on ships carrying oil or its products, like diesel, even though that’s hard to do.

Here is one more surprising news for your delight.  Nigerian Shipowners have commented that the those cadets who pass out from the Maritime Academy of Nigeria turn out as pirates as they are left jobless.

Hope this content covered all the major maritime happenings and we will catch up with you next week.


Happy Reading! Have a great weekend.

Over to you.




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