Shipbrokers have tallied secondhand sale and purchase (S&P) deals worth $22.5bn so far this year as tankers and bulkers prove particularly interesting to buyers. Clarksons Research tallies 337 oil carriers changing hands in 2022, and Allied Shipping Research puts the figure at 346. The company said firm enquiry for these ships continues to be seen in the market, although the week ending 15 July was quieter in terms of deals completed. Owners have been adjusting their fleet capacity to take advantage of a recovery in tanker rates this year. Firmer trends have been seen across the crude carrier market amid increased activity, with average VLCC spot earnings up 68% week-on-week to $7,715 per day, the highest level since early April, Clarksons said. In the product tanker sector, MR spot earnings eased back slightly by 7% to a still very strong $37,414 per day, amid pressure in the US Gulf.

Allied Shipping logs 1,054 vessels of all types being sold for a combined $22.5bn to 10 July. Bulkers constitute the biggest total, with buyers taking 413 ships. Of these, supramaxes came out on top with 123 units of 6.7 MDWT changing hands, followed by handysizes on 118 and panamaxes on 113. The average age of the dry cargo vessels sold was 12 years and the total value came in at a touch under $8bn. Allied’s 346 recorded tanker deals were worth $6.7bn. The buoyant MR sector proved the most attractive to buyers, with 140 sales worth $2.4bn completed, the highest number of any single ship type and 40% of the tanker total. In deadweight terms, resurgent aframaxes topped the list at 6.43m dwt. The 68 ships sold were worth $1.1bn. Buyers added 45 VLCCs to their fleets in the period through transactions worth $1.9bn.

Container ships were still popular with buyers as record rates continued to be seen. Allied charts a total of 129 vessels sold for $6.7bn. Then there were 49 gas carrier deals worth $1.5bn and 40 general cargo ship acquisitions for a total of $399m. Allied also noted 10 sales of ro-ros or ropaxes for $193m and 69 other vessels changing hands for $1.2bn. Overall, the total capacity moving between owners was 68.98m dwt at an average age of 13 years. Greek and Chinese owners dominated, buying 160 and 124 vessels, respectively. The top sellers were Greece on 125, Japan with 103 and China on 97.

These figures show S&P deals on track to beat the total last year of 1,901 ships of 130.56 MDWT and $31.7bn in value. 2021 was a busy year, well ahead of 2020, when the total was 1,177 vessels worth $16.3bn. Allied’s figures for 2017, 2018 and 2019 also show 2022 will be much stronger. The highest number of deals in those years was 1,584, for a total of $20.4bn.

Shipbrokers have tallied secondhand sale and purchase (S&P) deals worth $22.5bn so far this year as tankers and bulkers prove particularly interesting to buyers. Clarksons Research tallies 337 oil carriers changing hands in 2022, and Allied Shipping Research puts the figure at 346. The company said firm enquiry for these ships continues to be seen in the market, although the week ending 15 July was quieter in terms of deals completed. Owners have been adjusting their fleet capacity to take advantage of a recovery in tanker rates this year. Firmer trends have been seen across the crude carrier market amid increased activity, with average VLCC spot earnings up 68% week-on-week to $7,715 per day, the highest level since early April, Clarksons said. In the product tanker sector, MR spot earnings eased back slightly by 7% to a still very strong $37,414 per day, amid pressure in the US Gulf.

Allied Shipping logs 1,054 vessels of all types being sold for a combined $22.5bn to 10 July. Bulkers constitute the biggest total, with buyers taking 413 ships. Of these, supramaxes came out on top with 123 units of 6.7 MDWT changing hands, followed by handysizes on 118 and panamaxes on 113. The average age of the dry cargo vessels sold was 12 years and the total value came in at a touch under $8bn. Allied’s 346 recorded tanker deals were worth $6.7bn. The buoyant MR sector proved the most attractive to buyers, with 140 sales worth $2.4bn completed, the highest number of any single ship type and 40% of the tanker total. In deadweight terms, resurgent aframaxes topped the list at 6.43m dwt. The 68 ships sold were worth $1.1bn. Buyers added 45 VLCCs to their fleets in the period through transactions worth $1.9bn.

Container ships were still popular with buyers as record rates continued to be seen. Allied charts a total of 129 vessels sold for $6.7bn. Then there were 49 gas carrier deals worth $1.5bn and 40 general cargo ship acquisitions for a total of $399m. Allied also noted 10 sales of ro-ros or ropaxes for $193m and 69 other vessels changing hands for $1.2bn. Overall, the total capacity moving between owners was 68.98m dwt at an average age of 13 years. Greek and Chinese owners dominated, buying 160 and 124 vessels, respectively. The top sellers were Greece on 125, Japan with 103 and China on 97.

These figures show S&P deals on track to beat the total last year of 1,901 ships of 130.56 MDWT and $31.7bn in value. 2021 was a busy year, well ahead of 2020, when the total was 1,177 vessels worth $16.3bn. Allied’s figures for 2017, 2018 and 2019 also show 2022 will be much stronger. The highest number of deals in those years was 1,584, for a total of $20.4bn.

Reports that China is considering lifting its embargo on the imports of Australian coal could end up being negative for the bulker market, says Clarksons Platou Securities. According to Bloomberg, China is looking at ending the ban, which was put in place in December 2020, over fears about supply shortages. “Historically, most Australian coal exports to China have been on capesizes. Thus, the removal of the ban could be positive for capesizes,” said analysts Frode Morkedal and Even Kolsgaard. “However, the shipments to China would have to replace shipments going elsewhere since there is little excess supply.”

The analysts said data from Clarksons Research shows that the average distance for Australian coal increased after the ban, which means removing the ban is likely to have the opposite effect. Chinese officials are reportedly concerned that supply may tighten when Western-led sanctions on Russian energy kick in. That has been prompted by fears that European-led curbs on Russian energy will increase competition for coal from China’s main suppliers such as Indonesia, said Bloomberg. Though it remains uncertain whether a decision will ultimately be made to lift the ban, some companies are already preparing to resume imports, the news agency reported quoting two unnamed sources. Australia has an opportunity to “build up positive energy and create favorable conditions for sound and steady development between China-Australia trade relations,” Chinese foreign ministry spokesman Wang Wenbin said at a regular briefing in Beijing last week when asked about the prospect of ending the ban. Removing a ban on Australian shipments will provide China with greater flexibility when buying coal.

Australia makes up almost 30% of total coal exports, making it the largest supplier behind Indonesia. The European Union drastically scaled back its imports of Russian thermal coal in June ahead of a full ban in August, reported The Financial Times on Friday. Just 1.7 MMT of Russian coal were shipped to the EU by the sea in June, a decline of 48% compared with May, it said quoting figures from commodities consultancy CRU. In contrast, coal imports into the EU in the first six months of 2022 have seen large increases from the likes of the US, Australia, and Colombia according to statistics from Banchero Costa. Imports from the US surged 91.6% year on year to 11.2 MMT, making the US the second largest supplier to Europe after Russia with a share of 19.4%. Imports from Australia are up 27.3% year-on-year to 10.2 MMT, making Australia Europe’s third largest coal supplier with a share of 17.6%. Colombia is in fourth place, with a 12.7% share of Europe’s coal imports, which in the first half of the year were up 113.6% to 7.3 MMT, according to the Italian broker.

Outbound sailings of commercial vessels from Russia to foreign ports are approaching levels recorded prior to the incursion into Ukraine. This comes despite a raft of sanctions designed to pressure the Kremlin in response to the conflict, and the numerous shipping entities and stakeholders that have since moved to reduce trading ties with the Russian Federation. Departures of bulk carriers, general cargo ships, tankers and containerships dropped 22% in the immediate aftermath of the incursion, according to vessel tracking data from Lloyd’s List Intelligence. Total sailings from Russia to foreign ports was 2,020 in March, compared with 2,230 in February.

Western nations have piled sanctions on Russia since the start of the military operation in February while businesses have distanced themselves from the country in line with government sentiment. All of this has had a limited impact on seaborne trade so far. The number of vessels departing Russian ports is slowly creeping up, although the figure is still about 15% lower than the year before. Bulk carrier trades have been the least affected because this has largely not been subject to restrictions. In March, there were 402 departures of bulker carriers, down from 417 in February. There were 462 outbound sailings in May, which is 7% less than a year earlier. Given Russia is an important source of wheat and fertilizer, sanction measures have been carefully worded to enable the flow of agricultural trade. The situation for bulk commodities will be changing soon, though. The European Union’s ban on Russian coal takes effect on August 10. Japan, one of the top buyers of Russian coal behind the EU and China, is also looking to gradually reduce its imports of this commodity. Meanwhile, China and India have been increasing their imports of coal to take advantage of cheaper prices. Departures of bulk carriers and general cargo ships are increasing month-on-month and are above January levels.

Containerized trade has been the most affected by consequences of the situation in Ukraine. Major container line operators and third-party feeder operators started to reduce or phase out services relating to Russia’s container ports in the first weeks after the invasion.

Data released today shows China’s coal production totaled 379.3 MMT in June.  This is up month-on-month by 11.5 MMT (3%) and is up year-on-year by 56.1 MMT (17%).  Coal-derived electricity generation totaled only 455.3 billion kilowatt hours.  This is up month-on-month by 50.8 billion kilowatt hours (13%) but is down year-on-year by 26 billion kilowatt hours (-5%). 

Growth in domestic coal production again exceeding growth in coal-derived electricity generation is not supportive for coal import prospects (coal-derived electricity generation has now contracted on a year-on-year basis for four straight months).  A surge in hydropower production has continued to contribute to weakness in   coal-derived electricity generation. 

Shipping researchers believe 2023 could see a return to high newbuilding ordering levels in all vessel sectors. A new report by UK valuation platform VesselsValue and its Norwegian research subsidiary ViaMar suggests bulker owners will lead the charge back to shipyards next year, potentially endangering a favorable vessel supply outlook. The fourth quarter of 2021 saw ordering activity reduce sharply across most shipping markets following high activity in the first parts of the year, the companies said. “This activity is the principal reason behind newbuilding prices rising to levels not seen since 2008,” VesselsValue and ViaMar added.

Tanker and bulker ordering remains quiet, but container ships and gas carriers have stayed in high demand through the second quarter of 2022, though at a lower level compared to 2021, they said. But the researchers believe 2023 will see high levels of ordering activity across all vessel sectors, led primarily by bulkers, with shipyards maintaining strong negotiating positions as orderbooks begin to fill. “The high levels of activity over the past two years have meant yards have built their orderbooks well into 2024,” the companies said. As container ship appetite declines, interest in other sectors is unlikely to fully replace it, with newbuilding prices forecast to cool off, they added. The report argues steel plate prices are likely to follow a similar downward trajectory, following what has been exceedingly strong development through 2020 and 2021.

Turning to tanker markets, VesselsValue and ViaMar said that following low newbuilding contracting, ship supply should further reduce, with a significant portion of the Russian commercial fleet facing sanctions. Earnings and tonne-mile demand for tankers are expected to improve as Opec cuts are reversed, and demand returns post-pandemic. “While Russian exports are forecasted to decline, demand for supplies from further afield (US, Middle East) will support rates going forward,” the report states. Earlier in July, Clarksons Research said the capacity of container vessels on order globally has soared past that of tankers and bulk carriers for the first time ever. The UK company said record contracting of boxships has seen close to 900 units of 7m teu added to shipyards’ books since the final three months of 2020. This has led to a record high dwt-equivalent figure of 76m dwt on order, beating tankers on 35m dwt and bulkers on 69m dwt. Tankers and bulkers make up 75% of the world fleet capacity on the water, but newbuilding deals have been limited. The tanker orderbook has shrunk to its smallest level in 25 years and is at a record low of just 5% of fleet capacity, Clarksons Research calculated. Bulkers stand at close to an 18-year low, just 7% of the fleet.

Bulker futures moved higher on Thursday even though most segments of the dry bulk spot market dipped to their lowest level in five months. Forward freight agreement (FFA) data from Braemar Atlantic Securities showed increases for capesizes, panamaxes and supramaxes for August contracts, as well as for the final two quarters of this year and for full-year 2023. Supramaxes led the charge, with FFAs for August jumping 10.4% on in a single session to $22,500 per day on Thursday. But the spot market moved in the other direction, with the Baltic Exchange’s assessment of average supramax earnings dipping $294 during the session to just under $26,600 per day. That was the lowest level since 9 February, roughly two weeks before Russian troops entered Ukraine and bulker markets responded by surging. “Sentiment remained fairly pessimistic in many regions of the Atlantic,” the exchange’s analysts said in a daily report. “From Asia, brokers reported that prompt tonnage availability remained high helping keep rates in check.”

A similar divide was seen in the panamax market, where August contracts jumped $1,125 on Thursday to top $18,600 per day while FFAs covering the third quarter of this year gained $1,350 to approach $19,200, according to the Braemar Atlantic data. But spot rates headed in the opposite direction, with the Baltic Exchange’s average earnings in that sector dipping $795 on Thursday to nearly $17,300 per day, the lowest level since 7 February. The day’s spot charter market saw positive sentiment. But the Baltic Exchange’s analysts noted some talk of resistance for offers on tonnage coming open on the east coast of South America, particularly as rising FFAs give reason to wait. They cited talk that Sea Pioneer Shipping’s 76,600-dwt Bravery (built 2004) scored a fixture for a journey from the Middle East to South America’s east coast and back for $23,000 per day, but that was “refuted” later in the day. “Fundamentals appear largely unchanged with tonnage outweighing demand still,” the analysts said.

As small and midsize vessels lost ground in the spot market, capesizes fueled an eight-point rise in the Baltic Dry Index, which came in at 2,010 on Thursday. Average spot earnings in the sector rose 5.3% on Thursday to just under $20,400 per day, the highest level since 21 June. Australian miner Rio Tinto grabbed three capesizes during the day to carry 170,000-tonne cargoes of iron ore from Western Australia to Qingdao at rates between $10.45 and $10.75 per tonne. That’s up from $10.25 per tonne for the last done fixture on the route, paid by Fortescue Metals Group for a smaller cargo of 160,000 tons. Capesize FFAs followed the upward trajectory, with August contracts rising $1,125 on Thursday to nearly $28,900 per day, according to Braemar Atlantic.

Supramax and ultramax bulker rates for lifting cargoes along the US Gulf Coast are rebounding thanks to lower vessel availability and growing coal exports, despite slumping spot market earnings in other Atlantic markets and beyond. Baltic Exchange data shows that the rate for a journey from the region to Europe on a 58,200-dwt supramax could fetch nearly $29,600 per day on Thursday. That represents a 29% increase since rates on the route reached a nadir of just below $22,900 per day on 28 June. It is well below the peak of nearly $49,200 per day reached in mid-May, but it still represents a march in the opposite direction compared to the global supramax market, where average rates hit a five-month low of $22,500 per day on Thursday.

Baltic Exchange analysts also said a 58,000-dwt supramax was believed to have been fixed for a voyage from the Mississippi River to Turkey at $30,500 per day on Thursday. “The US Gulf has been the only market in the Atlantic that is seeing an upside, mainly attributed to a decreased tonnage list and more coal cargo, particularly out of US East Coast,” said Braemar Shipping Services on Thursday. The UK-based shipbroker said in its weekly shipbroker report that at the start of this week, a prompt ultramax bulker could fetch a rate in the high $20,000s per day for a trip to continental Europe. That reached $32,000 per day by Thursday, for an eco-vessel in the region of Louisiana’s Southwest Pass, near the mouth of the Mississippi River. Voyages from the US Gulf Coast to Asia are also seeing higher rates. Baltic Exchange data shows that the rate for a journey from Southwest Pass to Shanghai or Tokyo Bay on a 58,200-dwt supramax was worth nearly $27,500 per day on Thursday. That’s up from a low of $24,800 at the end of last month, though mid-May’s rate of $42,100 per day is certain to have been more exciting for supramax owners.

Elsewhere in the Atlantic, activity was quieter. Braemar said expected scrap cargoes on Europe’s Atlantic coast failed to materialize this week, sending empty ships into the Mediterranean to seek clinker cargoes. “As it stands, we don’t expect the market to pick up unless more scrap enters the market,” the broker said of the Continent market, a reference to the Atlantic coast from Hamburg to Bordeaux. “From the Med, things are less bleak. There was a relatively healthy amount of cargo for the second half of July. But with a long tonnage list, rates did not improve.”

Rio Tinto shipped more iron ore in the second quarter of 2022 but warned that uncertainties remain about China’s industrial activity due to the potential for on-going covid-19 outbreaks. The world’s largest iron ore producer shipped 79.9 MMT between April and June, up 12% on the first quarter and 5% higher than the corresponding period in 2021. Shipments for the first half of the year were down 2% year-on-year to 151.4 MMT.

Rio Tinto attributed the decline to skilled labour supply constraints, Covid-19 disruptions, first quarter delays of mine replacement projects and significantly higher than average rainfall in May. The company warned that it was currently experiencing “elevated levels” of unplanned absences at its Pilbara operations due to a spike in Covid-19 cases in Western Australia.

Iron ore Platts CFR prices trended downwards to $120 per dry metric ton (dmt) at the end of the second quarter, even though the average prices were just below $140 per dmt year to date. “The downward pressure was driven by extended Covid-19 restrictions that impacted China’s downstream steel demand to a greater extent than steel production and iron ore consumption,” Rio Tinto said. The quarter saw the delivery of first ore at Gudai-Darri, Rio Tinto’s first greenfield mine in the Pilbara for over a decade, which it said would increases mine capacity. Production from the mine will continue to ramp up through the remainder of this year and is expected to reach full capacity during 2023. The mine’s commissioning and ramp-up is expected to increase Rio Tinto’s iron ore production volumes and improve product mix from the Pilbara in the second half of this year. However, the miner said full-year shipments guidance for 2022 remains at 320 to 335 MMT subject to risks around the ramp up of new mines, weather and management of cultural heritage.

Rio Tinto’s bauxite production of 14.1 MMT was 3% higher than the second quarter of 2021 due to strong operational performance at Weipa because of improved plant reliability.

China released official Q2 GDP figures today showing how damaging ongoing lockdowns have been to shipping’s most important economy. Output contracted by 2.6% between April and June compared with the previous quarter, the statistics bureau said, the poorest performance since the Wuhan lockdown at the start of the pandemic. Lockdowns are persisting into Q3. Thirty-one Chinese cities are under full or partial lockdowns, affecting 247.5m people in regions accounting for about 17.5% of the country’s economic activity, according to an analysis released this week by Japanese investment bank Nomura. Analysts remain divided on whether the economy has now bottomed out.

Julian Evans-Pritchard, China economist at Capital Economics, in a note on Friday, said growth was “likely to remain relatively weak over the coming quarters. We expect the official GDP figures to eke-out growth of 3%-4% this year but think the reality on the ground will be closer to zero growth across the year.” The data comes in the wake of mounting challenges in China’s key real estate sector, which by some estimates accounts for a quarter of gross domestic product, with weak home sales in recent months. A growing number of homebuyers are also refusing to pay their mortgages over worries their homes will not be built on time. Buyers in more than 100 unfinished housing complexes across the country have taken to social media to warn that they will stop making monthly mortgage payments until developers complete the projects. Up to RMB1.5trn ($220bn) of mortgage loans are linked to unfinished residential projects, according to ANZ.

Nomura estimates that developers have only delivered around 60% of homes they pre-sold between 2013 and 2020, while in those years China’s outstanding mortgage loans rose by RMB26.3trn. “The presale model has significantly increased developers’ leverage, so a disorderly deleveraging may not only lead to a credit crunch for developers and massive defaults in offshore dollar bond markets, but also rising nonperforming loans for banks, which sit at the center of China’s financial system,” Ting Lu, chief China economist at Nomura, said in a research note.

For dry bulk, the sluggish Chinese economy and troubled real estate sector saw iron ore exports to the world’s most populous nation fall in the first half by 3.2%. Given the lower requirements for iron ore, not only have exports to China declined, but there has also been a build-up of inventories in steel mills and ports. This is likely to delay the recovery in iron ore exports to China. “With China accounting for 71% of total iron ore trade, and iron ore accounting for 74% of cargo handled by capesizes, this slowdown has greatly affected the segment,” commented Niels Rasmussen, chief shipping analyst at BIMCO.

In the first half of the year, China’s seaborne bulk commodity imports declined by 8.3% year-on-year to 941.7 MMT, with June amounting to just 146.4 MMT, the lowest level since February 2020, according to data from Braemar. “While Q2 will largely reflect the impact of the lockdowns, we are still confident activity will improve in 2H 2022, replicated by a rise in the country’s dry bulk commodity demand,” Braemar predicted. Capesize vessels have brighter prospects in the second half, according to a new report from Arrow Group, as coal and iron ore demand should remain propped up by the energy crisis and China reopening. In a move to jumpstart the economy, the Chinese government has accelerated the issue of special purpose bonds, issuing the majority of its 2022 quota of RMB3.6trn in the first six months of the year.

“In addition, China’s Ministry of Finance is considering issuing an additional RMB1.5trn out of their 2023 quota in the second half of the year to boost growth,” said BIMCO’s Rasmussen “As most of these bonds are allocated to infrastructure projects, if the government approves this additional stimulus, the Chinese steel sector should recover in the second half of the year.” Also suggesting a better H2 is on the cards are analysts at Dutch bank ING, who argued in a research note published today that the recovery of the economy has begun. “As we believe the economy has bottomed out, we are revising upward China’s GDP growth rate for 2022 to 4.4% from 3.6% previously. It is still slower than the government target of 5.5% for this year,” ING stated, pointing to June’s recovery in retail sales up 3.1%year-on-year from -6.7% year-on-year in May, with car sales increasing by 13.9% year-on-year in June from -5.9% year-on-year in May, mainly because of subsidies for the consumption of new energy cars. Industrial production rose 3.9% year-on-year in June from 0.7% in May.