Sustainability
Eastern Pacific Shipping signed MoUs on development of the world’s first ammonia. Ammonia dual-fuel engines will be fitted in a fleet of EPS-managed Newcastle Maxes and Very Large Ammonia Carriers slated for delivery from 2026 onwards. Eastern Pacific Shipping, MAN Energy Solutions, HD Hyundai Heavy Industries Co., Ltd., and yards from the China State Shipbuilding Corporation announced collaboration on the development of an ammonia burning engine that will be fitted to a new fleet of EPS-managed vessels. EPS CEO Cyril Ducau says, “We have been talking about energy transition and lowering emissions for years. Today, we are ready to talk about zero-emission solutions. The ammonia engines by MAN ES will be an inflection point for the maritime industry. In the next few years, we expect to operate vessels with significantly reduced emissions running on ammonia. Dual-fuel engines like LNG, LPG, and ethane will still play a significant role in various segments. However, with this engine, it will mean that this will be the first time that ocean going vessels will take a significant step towards zero carbon emissions. This is a an extremely exciting time for all of us.” MAN ES Senior Vice President and head of two-stroke Bjarne Foldager says, MAN ES is pleased to be developing these state-of-the-art engines for EPS. This is a significant milestone for MAN ES, EPS, and the maritime industry. Together, we will show that ammonia is a commercially viable option for ship owners and managers to become IMO compliant years ahead of schedule.
Shipping market analysis
Dry bulk
Activity remains healthy on the SnP front, with the majority of the fixtures reported this week being around the geared vessels amid an improvement on the freight market. Values for eco tonnage are holding steady as high newbuild prices, cash rich owners and strong buying appetite for such units provide support to the prices. Moreover, there are signs of improvement on the recycling market, despite the economic difficulties in the Sub Continent countries.The headline fixture of the week was the sale of four Chinese Ultramaxes built in 2014 and 2015. The prices is rumoured at $21 million for the 2014 built and $22 million for the 2015 built, with market sources suggesting the buyer might be from the USA. A Japanese controlled/built 2016 Supramax which called for offers on Monday has seen offers in the region $22 million.On another note, we have observed an increase in newbuilding orders in the largest sectors. Over the last month, six ammonia dual fuel Newcastlemax 210,000 dwt and two methanol ready VLOC 325,000 dwt at Qingdao Beihai were ordered. Moreover, Vale is under discussions with Far Eastern owners for its new Generation Guaiba Max bulk carriers. According to Tradewinds, Vale is said to be looking to employ 325k dwt ore carriers that will be able to run on both methanol and conventional marine fuel. The Brazilian firm will be taking the new vessels under long term contracts (coa). Rumoured to be 6 vessels plus 6 options in a Chinese yard. Shipbuilding sources said Yangzijiang Shipbuilding, Hengli Heavy Industry, state owned Shanghai Waigaoqiao International and Qingdao Beihai Shipbuilding Heavy Industry are competing for Vale’s project.
They said the Chinese shipbuilders are offering 2027 delivery slots for the 325,000-dwt ore carriers.Brazilian farmers will reap almost 323 million metric tons of grains in the 2022/23 season, Brazil’s food supply agency Conabs said on Wednesday, reflecting expected rises in the production of corn and soybeans this season. Brazil’s total corn production is projected to be a record 131.8 million tons, driven by an abundant second corn crop, which farmers have nearly finished harvesting, Conab said. The soybean production forecast was kept at 154.6 million tons, also a historic high. It is expected that around 15% or around 51 million tons of this corn production will exported, marking the second time where Brazilian corn exports surpass those of the United States. Kamsarmax/Panamax vessels are expected to be benefited by the increase in agricultural exports, as more than 80% of all shipments utilise this sector
Tankers
The tanker SnP market was busier this week. Market sources suggest that a Korean 2009 built Aframax was sold for $41.5 million which is in line with the last done. Also, a 2005 built and 2007 built Aframax were apparently committed at an undisclosed price. On the LR1 sector, a Japanese 15-year-old unit was committed for $24 million. Last but not least, a scrubber-fitted 10-year-old VLCC was sold for $78 million to Far Eastern buyers, a firm price if we compare it to the three 2011 built units which were sold for around $64 million each back in July. 40 VLCC tankers have been sold so far in 2023, 77 in 2022, 91 in 2021 and 68 in 2020. The inventory of modern VLCCs/Suezmaxes/Aframaxes for sale is almost non-existent while on the older side we do see a limited number of candidates. Greeks were sellers on the VLCC and Suezmax second market, having sold around 16 and 11 vessels respectively in 2023. Only a couple of second hand Suezmax have gone to Greek interest against zero VLCC.
Containers
This week, the SCF index fell by 3% to 999 points. Based on the NCFI report, the index remained stable with a minor fluctuation by -1%, on a w-o-w basis. We have seen a correction on route from Ningbo to Europe/Mediterranean about 4% due the oversupply in the area however the demand for transportation of goods from Ningbo to India/Pakistan route has been improved by 12%. The cargo volume on routes from Ningbo to North America and Middle East rose slightly by 7% and 5% respectively as the Operators are keeping the demand/supply dynamics in balance, whereas, at the same time, the freight rates have been improved in these areas.
The chartering activity remained strong for another week as more than ten fixtures were mentioned on several reports. At the at the same time, there is a healthy appetite for fresh tonnage with new requirements entering the market. It is worth mentioning that the vast majority of reported employments were extensions declared for several Feeder vessels on a short-term basis at lower rates.
Two Panamaxes reported fixed for two and eleven to fourteen months respectively at undisclosed rates. A Hyundai 2800 design Feedermax fixed for three to four month-period at $16k/day for an Intra-Asia trading. Seven Feeders were fixed between three to eight months at a range between $10.5k/day and $13.5k/day. Additionally, two small Feeders secured employment, a Zhejiang 950 design fixed at high $11k/day for four to seven months and a Sietas 168 design (around 680 TEUs) fixed at mid $10k/day for six to eight months.
The SnP activity remained quiet for another week. Two 2005 German-built sister Feeders, about 1,600 TEUs, reported sold at $12m on an en-bloc basis to undisclosed Buyers. In the recycling market, two Japanese vintage Feeders were reported sold to Cash Buyers. A 1990-built unit, about 1,400 TEUs sold at $525/LDT to Cash Buyers and a 1998-built unit, about 1,000 TEUs sold at $545/LDT to Indians. Both vessels will be delivered “as is” Singapore including bunkers remaining on board.
Finance
According to Financial times, business groups and economists have called on the German government to intervene to help the crisis-hit construction industry, as a wave of insolvencies claims a growing number of high-profile property developers.
Builders are facing a perfect storm of rising interest rates, more expensive construction materials, a dire shortage of skilled workers and slowing demand for new developments that has led to financing problems across the industry. “We are at the end of a 10–15-year property boom,” said Moritz Schularick, head of the Kiel Institute for the World Economy in Germany.
“The financial cycle is now such that every day another property developer is going bust . . . The old funding models are no longer sustainable.” A number of developers have filed for insolvency in the past few weeks, among them three Düsseldorfbased firms Gerch, Centrum Group and Development Partner, as well as Euroboden of Munich and Project Immobilien Gruppe of Nuremberg. Meanwhile, big landlords such as Vonovia and Aroundtown have announced big writedowns of their property portfolios. “With interest rates rising so quickly, a lot of projects are just not profitable anymore,” said Clemens Fuest, head of the Ifo institute in Munich, a think-tank. Demand in residential housing has just collapsed.
The world risks a “great fracture” of its economic and financial systems, U.N. Secretary-General António Guterres said at a summit according to Reuters. In a wide-ranging speech that touched on geopolitical tension, multilateral development finance and climate change, Guterres called on world leaders to find peaceful and inclusive solutions to the challenges facing the world. “There is a real risk of fragmentation – of a great fracture in world economic and financial systems; with diverging strategies on technology and artificial intelligence and conflicting security frameworks,” he said. He called for a mechanism to provide relief for debt-strapped developing economies, to include payment suspensions, longer lending terms and lower interest rates. At a Paris summit in June this year, world leaders backed a push for multilateral development banks like the World Bank to put more capital at risk to boost lending. World Bank president Ajay Banga outlined a “toolkit” at that summit, including offering a pause in debt repayments, giving countries flexibility to redirect funds for emergency response, providing new types of insurance to help development projects and helping governments build advance-emergency systems.
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