Understandably more and more market participants, whether shipowners or charterers, are asking for how long can this go on? Some of them got burned at either side of the fence during the real super cycle from 2006 to 2008. As Splash Extra seeks to untangle the supporting factors of the market, it has become clear that much of the current support should be seen as temporary. And while acknowledging that temporary support to a shipping market is always the most powerful driver – the nature of it means it will go away at some point in time. Still, it’s not just around the next corner.

Liberté

The dry bulk carriers are free to go wherever they like, but they seem to prefer going longer hauls as they did in 2020, where the average haul went up by 4.3% to 5,119 nautical miles across all dry bulk ship sizes. In the most recent months, that trend is reversed as congestion around many key importing ports has started to rise. Central to this development are the Chinese ports. The delta variant of Covid-19 is an annoying fly inside the windscreen for the Chinese authorities as they seemingly can’t control it.

Égalité

To China, it doesn’t matter where the cargoes come from, if they do not call at a Chinese port earlier than 14 days since the last port call – floating Covid-19 quarantine – and if business partners keep quiet about Chinese affairs. Splash Extra has earlier on pointed to the coal trades as one to watch out for on that account. To the coal producing miners digging in the Australian outback, it means that new buyers had to be found asap. While Japan, India, South Korea, Taiwan, and Vietnam are all more important buyers – in terms of larger volumes, China has taken only 182,220 tons of coal from Australia in the whole of 2021, down 99.6% in the first six months of 2021. That’s it. All suppliers are equal, but some are more equal than others.

During the first half of 2021, Indonesia has grown its total coal exports by 6.7m tons, but those to China by 17.3m tons. China acts like the cuckoo in another bird’s nest, as it literally muscles out the original inhabitants. Here Japan and Vietnam have been muscled out, seeing coal trade drop by 25% and 20% respectively during the first six months of 2021.

At a different scale, Australia has just about been able to find a new home for the 51m tons that used to go to China. Indian-bound exports are up by 111%, but more noteworthy from a tonne-mile perspective, the Netherlands are up by 90% to 4m tons, Brazil jumps 79% to reach 2.8m tons, while Poland doubles up to reach 1.1m tons.

Fraternité

The number of monthly voyages is up by 9% in the first half from last year. Hardly a surprise. But when compared to 2019 – the number of voyages performed has risen only 1%. To Splash Extra this is where the brotherhood has succeeded. By commanding higher freight rates, taking advantage of the inefficiencies offered in the market. In H1 2021 volumes are up by 7.3% but when taking the tonne-mile approach, demand has only risen 2%.