The Maritime world has started to witness lots of market fluctuations and downtrends this New Year 2016. The Baltic Dry Index touched record low without any single spike this year. The scrapyards are excited with more business than the shipyards. The tanker market remains good with the product market pulling the profits for the ship owners.
Here is MFAME’s exclusive coverage on the market updates in order to keep you in pace with the maritime world happenings.
At Last, A Pause for the Baltic Dry Index!
The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk commodities, ended flat on Thursday after declining for 12 straight sessions as gloom over global demand continues to prevail.
The Baltic dry index is down about 98 percent from its peak of 11,793 points in May 2008, marking the lowest level since the records began in 1985. The overall index, which gauges the cost of shipping resources including iron ore, cement, grain, coal and fertiliser, remained flat at 290 points.
Oil Above $55 Is a Long-Term Inevitability, Maersk CEO!
After testing a 12-year low, the price of oil simply has to go up.
That’s according to the chief executive officer of shipping and oil giant A.P. Moeller-Maersk A/S, who says 2015’s average crude price of $54 a barrel is too low for the industry to produce enough oil to satisfy global demand.
“In order for the world to be supplied with oil, it’s not enough that Saudi Arabia produces,” Nils Smedegaard Andersen said in a phone interview on Wednesday. “The world will need oil from places where production costs are higher. And therefore we expect the price of oil must go up.”
“When the price was $110 a barrel we had a clear expectation that it would go down, but we certainly never imagined it at $30,” Andersen said. “Exactly where the right price is depends on how much cost can be taken out of production. But the price definitely needs to be higher than the average of 2015.”
Source: Bloomberg
China Has the Magic Wand to Cast a Spell on Dry Bulk Shipping!
The inevitable slowdown of the Chinese economy was expected to hurt dry bulk shipping, but few expected the blow to be this hard, especially given that the world’s second largest economy is still growing at a more than respectable pace.
According to Allied Shipbroking latest weekly report, “the Chinese economy has gone through a bumpy road these last 12 months, with the Dry Bulk market closely following in suit and suffering as a consequence. China has been the driving force behind much of the global growth noted during the 2000’s, with its fast paced infrastructure development and it’s ever increasing production lines, making it seem like a mammoth panda with a never ending appetite for commodities”.
The year of the Fire Monkey will be a year of transitions and it is to how successful these transitions will turn out to be that will dictate the next course of global trade. Till then wishing all our friends in the Far East, Gong Xi Fa Cai.
