The chief executive of the only bulker owner listed in Singapore has shown his confidence in the company following a sell-off in its shares. Uni-Asia Group’s Kenji Fukuyado acquired 70,000 shares worth SGD 74,679 ($54,323) on 1 June 2022, according to a regulatory filing on the Singapore Exchange.

Fukuyado, who has been chief executive for just over two years, now holds 1.47m shares of Uni-Asia Group, or a stake of around 1.87%. His previous acquisition of shares was on 16 March 2022 when he acquired 50,000 shares at SGD 1.12 per share, and prior to that he acquired another 50,000 shares at SGD 0.633 per share in December 2020. Fukuyado’s latest acquisition comes just days after a major shareholder offloaded almost 2m shares in the company in late May 2022.

Ham Yong Kwan sold 1.9m Uni-Asia Group shares worth just over SGD 2m on 26 May 2022, according to a regulatory filing. The sale represented a 26% reduction of his stake in the company which prior to the disposal stood at 7.35m shares or 9.36% in the company. In March, Ham sold 514,100 shares worth SGD 579,663. Uni-Asia Group shares closed at SGD 1.09 on Monday evening down over 14% in less than a month, but up from a low of SGD 1.01 on 26 May 2022.

In March 2022, Uni-Asia Group announced it was paying out its highest dividend in a decade following record freight rates in 2021. The Singapore-listed company achieved a full-year net profit of $18m — its highest net profit since going public in 2007 — reversing a loss of $7.5m seen in 2020.

The group’s fleet comprises 10 wholly owned Japanese-built handysize bulkers built between 2007 and 2016 and seven ships in which it has stakes of 18% and an eighth ship in which has a 49% stake. Notably, four of the 10 wholly owned bulkers were due for renewal in the first quarter of 2022, according to analysts that follow the company. Current handysize freight rates were close to $30,000 per day on 1 June 2022, the latest available data from The Baltic Exchange due to the UK public holiday weekend.

Uni-Asia Group became the only bulker owner listed on the SGX after South Korean shipowner Pan Ocean delisted its shares in June 2021. It pulled its dual listing in the city state due to what it described as various “compliance and associated costs” and that these resources could be better spent on business operations.

Globus Maritime’s earnings have soared into the black as charter rates skyrocketed from a year ago. The Athanasios Feidakis-led owner of nine bulkers with three bulkers on order posted a $12.1m profit for the first quarter versus a $766,000 loss a year earlier. Revenue spiked to $18.4m from $5.2m, thanks to time-charter equivalent (TCE) rates for the quarter that improved to $23,643 per day from $9,857 per day a year ago. “This has been one of the best first quarters in the company’s recent history,” the shipowner said in a statement.

Vessel operating costs increased to $4.4m during the first quarter from $3.1m a year ago because the company’s fleet grew to nine ships. Globus said it took major steps in the last two years to improve its balance sheet and renew and grow its fleet while refinancing debt at lower costs. Its debt stood at $30.8m as of 31 March 2022.

“We are pleased that our efforts are now bearing fruits,” the New York-listed owner said. “The company is well-positioned to grow further while it takes full advantage and enjoys a strong market.” Globus said shipping faces numerous threats and uncertainties including the effects of the pandemic, the conflict in Ukraine and port congestion. “Therefore, we always need to be ready and agile to adjust and cope with any such difficulties,” Globus said.

“We also find ourselves operating in an uncertain world economic environment, the galloping inflation and possible hike in interest rates are major events that we are closely monitoring.” Despite the uncertainties and challenges, Globus said it still intends to expand its fleet further if the spot market remains robust so that it can increase shareholder value.

As of 31 March, Globus held a cash balance of $59m and a working capital surplus of $50.1m.

The invasion of Ukraine and a global pandemic have been disastrous for the world but good for shipping, a Capital Link conference was told. Increases in commodity prices and sanctions on Russia have lengthened the distances commodities must be carried around the world, benefiting bulkers and tankers. Boxships, the least-affected segment, continue to do well from supply chain chaos. But that chaos coupled with sanctions, uncertainty about future emissions regulations, and the crewing crisis continue to challenge the industry, panelists told a Posidonia audience in Athens.

While sanctions have meant an increasing burden on operators, they are also spurring the creation of new trade routes as people seek to subvert them. The situation in Ukraine and the health crisis have been “disastrous things for the world… but it’s been very good for shipping”, according to Aristides Pittas, chief executive of Euroseas. “It didn’t feel like that at the beginning, but it has been.”

Navios Group vice-chairman Ted Petrone said tonne-miles were up 4.5% for crude carriers and 3.5% for oil products. But supplies of coal and wheat from the Black Sea were restricted and food shortages loomed. Pantheon Tankers director Frangiskos Kanellakis said sanctions had led to an opportunity from new trade routes and boosted LNG carriers as countries shunned piped Russian gas. But the war has also threatened ships and their crews.

Hellenic Chamber of Shipping chairman George Pateras said there were 86 ships trapped in Ukraine, 14 of which were Greek, adding these could cost insurers $3bn-$4bn if they were not released. “Lloyd’s is going to suffer tremendously,” he said, adding premiums would rise as a result.

Shifting seaborne trade of Ukrainian grain to rail would be hard: there were seven different railway gauges used between Ukraine and the UK, Mr Pateras said. He said the sanctions punished Russian people who could not be blamed for the actions of their leaders. Russians should be allowed food and “certain wares” so they could get on with their lives. He said a €5,000 ($5,365) Louis Vuitton skirt would end up costing €300 more as it was shipped from Paris to Shanghai and from there to Moscow. “I don’t think any oligarch’s wife would worry about the additional price,” he said. “It just adds tonne-miles.”

Mr Pateras, deputy chairman of Contships Management, added that shipping should stand up to and protest the “state-financed piracy” of Iran’s Islamic Revolutionary Guard Corps, which last month detained two tankers, reportedly in retaliation for Greece’s ‘stealing’ of Iranian oil.

Pavimar chief executive Ismini Panagiotides said the crewing crisis had not gone away and supply of seafarers would continue to fall, with 10% of seafarers coming from Russia and 4% from Ukraine. Columbia Shipmanagement president Mark O’Neil said the pandemic had shown the need for size and scale, and niche shipping companies risked “being absorbed into the wider logistical chain”. “Shipowners need to read more about politics,” said Ms Panagiotides.

Mr Pittas said it was “extremely difficult” to plan for the future, but companies should focus on having strong balance sheets and “don’t be too adventurous”.

The capesize bulker market fell on Monday despite significant gains in iron-ore prices as China reportedly got a grip on Covid and plans to lift stringent lockdowns. Removing the restrictions from Beijing has led the steel-making commodity’s price to jump to $144 per tonne in three days as of Friday after staying under $134 per tonne for most of May, according to the New York Mercantile Exchange. Beijing authorities plan to resume public transportation and dine-in restaurant services and allow workers to return to their offices after achieving zero new Covid cases in most districts, Bloomberg has reported.

Capesize rates fell nonetheless on Monday because of holidays last week and Posidonia 2022 taking place in Athens this week. “The capesize market was quiet as expected,” Baltic Exchange analysts wrote on Monday after the index closed on Thursday and Friday to honor Queen Elizabeth’s 70th Jubilee. The capesize 5TC, a spot-rate average of five key routes, declined 5.8% since Wednesday to $22,866 per day on Monday.

Fortescue Metals Group (FMG) on Monday fixed an unnamed capesize to carry 160,000 tonnes of ore from Port Hedland, Australia to Qingdao, China at $12.93 per tonne. Loading is set to take place on 19 and 20 June. On Thursday, FMG hired an unnamed capesize to ship the same quantum of ore on the same route at $13.50 per tonne. That vessel is scheduled to take on ore from 13 to 15 June.

VesselsValue noted that Shanghai is also lifting Covid restrictions. “As shops reopened on Wednesday and people returned to offices, parks and markets, there are many encouraging signs of normalization,” it wrote in a report on Monday.

The online vessel-valuation platform said the city’s factory activity shrank less sharply in May than in April, but the decline was still the second sharpest monthly slump since the pandemic began in February 2020. It maintained this positive outlook despite also pointing out that port congestion, which raises spot rates by lowering supply, has diminished markedly.

“Congestion for bulkers is now low for the time of year,” it said. “Having peaked at 75 hours in late April, average waiting times are now 21 hours, which is level with the lowest average waiting times recorded for this time of year over the last three years.”

How would big-name Greek shipowners spend $100m? — Inflation means it won’t buy you as many ships as it used to. That was the consensus. Shipowner George Economou revealed that he sees upside in the dry-cargo market over the next few years and said that bulk carriers would be among his picks. “What do you do today with $100m, I think you have to understand that if you are a new company, you will not get much financing,” he told the Capital Link conference at Posidonia on Monday. “If I started with $100m, I would probably do two things. I think the first thing to look at is the next three years: always cash flow. You want to protect your downside — and I’m pretty convinced the dry bulk market is going to be good for the next three years at least. So, I would start with bulk carriers.”

Economou said that he was told while at university that the best investment is a seven-year-old Japanese bulk carrier. “It’s still a good investment. We didn’t go all-in on that and would buy bigger and older capes, which we have done,” he said. As it happens, Economou’s company TMS Dry was linked in May to a $71m deal to purchase two seven-year-old kamsarmax vessels, both of which were built in Japan, as TradeWinds has reported. Shortly after, TMS Dry was also linked to the purchase of the 182,100-dwt, Danish-built capesize Aquadiva (built 2010) between $31m and $32.6m from Carras (Hellas). TMS Dry’s existing fleet comprises a newcastlemax bulker, a kamsarmax and a panamax of between six and nine years of age, according to shipping databases.

Aside from bulk carriers, Economou said he had an eye on the tanker sector, which is more difficult to predict, as demonstrated by the fact the VLCC market has not rebounded as had been hoped. “In business, you have to look forward,” he said. “LNG is probably good or a container [ship] probably if you have long-term employment. The question is a chicken and egg situation: you cannot buy a ship with employment, so you must take a risk. So, the question is about appetite for risk.”

Buying bulk carriers and then ordering a couple of LNG carriers might be a good way to go with $100m but will cost “a lot of money” and comes with the problem of arranging technical management for the gas ships, Economou said. Alternatively, spend the $100m on bulkers, take scrap financing at 6%, take the cash to the bank “and then you pick your next move,” he said.

Shipowner George Procopiou said that he favors a pragmatic approach to asset trading and would not be seduced by what he called “fantasy stories” surrounding battery technology and alternative marine fuels like hydrogen. “If I’m very eager to do something, I would concentrate on second-hand ships. And I will wait for technology to settle down and then to be tested, not to be the guinea pig to go to the next day,” he said.

George Procopiou and Evangelos Marinakis, two major Greek shipowners, expressed concerns at the way the sanctions weapon is being wielded by Western powers against Russia. “Sanctions have never worked,” Procopiou told a panel at Capital Link’s Maritime Leaders’ Summit, a Posidonia event, on Monday. Calling the conflict between Russia and Ukraine “the biggest miscalculation of the century” and “a tragedy for humanity”, Procopiou pointed to the conclusions he drew from previous sanctions against Venezuela and Iran. “Iran became stronger and better at being self-sufficient … Venezuelans are suffering, and the elite is having a good time,” he said.

Apart from being counterproductive, sanctions are also spelt out in a confusing manner, said Procopiou. “We’re living in a grey area all the time — what is legal, what is illegal.” Bankers and insurers make matters worse by being stricter than the regulations itself and “create a lot of misunderstandings”. Marinakis was particularly concerned at the way sanctions work against Russia. “I think European leaders are making a mistake,” said the principal of Capital Maritime. Pointing to the economic fallout of sanctions on inflation and commodity prices, he added: “Instead of trying to find a peaceful solution that will solve this big problem … they’re discussing more sanctions.”

As heavily discounted Russian oil flows to India and China, Marinakis said Asian refiners are pocketing these discounts to sell refined products back to Europe at “sky-high prices”. “Instead of penalizing Russia, we’re penalizing ourselves,” he said. “Sooner or later, we’ll see the consequences … we’re going to have a huge recession in front of us”.

Procopiou beat the same drum: “We Europeans are shooting ourselves in the foot and the only winner of this is China, and maybe India, even though not intentionally. After the invasion we have a new reality — a new world is before us and never will be the same as before.” That new world may offer wider opportunities for shipping.

The change of trading patterns has increased tonne-miles, to the effect that all shipping segments benefit — even VLCCs, whose earnings have been lagging for years. “It is an amazing rewriting of shipping lanes. We must have in mind to turn the mishap to opportunity,” Procopiou said. “By the end of the year we’ll see very, very good markets in all the segments, I’m very optimistic. As nobody wants to be a guinea pig in ordering ships [due to uncertainty over future fuels] ships will last longer and will command much higher prices.”

Environmental regulations will adapt to this new situation, Procopiou said, “because without ships, we can turn off the lights”. Procopiou, whose gas carrier arm Dynagas has a raft of LNG carriers tied up on term charters to Russian entities, is already reaping some of the benefits created by sanctions. Two of the veteran shipowner’s tankers have been hired to carry loads of a seized Iranian cargo from Greece to the US. Dynacom Tanker Management’s 70,400-dwt panamax Ice Energy (built 2006), which already carries 68,000 tons of oil from the Iran-flag 115,400-dwt Lana (built 2003) — a ship seized in April in Greece — has inexplicably failed to depart to the US so far and is anchored in Piraeus. The delay in the departure of the Ice Energy may create breathing space for Athens and Tehran to resolve a standoff that ensued after Iran reacted to the Lana’s seizure by boarding and seizing two Greece-flag tankers sailing off Iran. Speaking separately at Capital Link on Monday, Greek shipping minister Yiannis Plakiotakis continued to sound tough against Tehran. “It is important that the international community stands firm against Iran’s illegal actions and call on the Iran government to release the two ships immediately,” he said.

Shipowners gathering in Greece for the Posidonia event this week can look forward to years of improving earnings, according to Clarksons Platou Securities. “Shipping has much to celebrate,” the Norwegian investment bank said, pointing to an average rise in maritime stocks of 44% so far in 2022. This compares to a general drop for all shares of 13%. “Shipping is a cyclical sector with booms and busts, although the previous peak was a long time ago,” said Clarksons Platou analysts Frode Morkedal and Even Kolsgaard. But they added: “Based on high commodities demand, restricted shipyard capacity, and a re-routing of the global trade map, we believe the industry has started a multi-year upcycle. Let the festivities begin.”

The analysts argue that there must be some constraint on newbuildings if these kinds of positive cycles are to last. “That condition has returned in full force,” they said. The number of operational shipyards in the world with at least one vessel in the orderbook has slumped to 238 from 551 in 2007. Those that remain are primarily booked well into 2025.

Because of new carbon emission regulations that will affect the industry in the coming decades, there is a tremendous need for renewal to occur. This puts increasing upward pressure on the prices of newbuilds, secondhand vessels, and shipping companies’ net asset values, Morkedal and Kolsgaard said. Clarksons Platou has tallied 1.38m teu of container ship orders so far in 2022, or 43% of all contracts. LNG carriers account for another 10.8m cbm or 33% of the new tonnage added this year. “Despite a lack of interest in tankers and dry bulk newbuilds, shipyards’ overall backlog has grown, giving builders more bargaining power,” the analysts added.

Average newbuilding prices have increased by 26% since mid-2020, they calculate. The cost of an LNG vessel has risen by $40m to $228m in that period. Higher steel prices explain about $23m of this, Clarksons Platou said. “Looking ahead, we anticipate a greater need to replace older tonnage, particularly as new carbon limits go into effect in 2023,” Morkedal and Kolsgaard said.

Only 27% of the existing fleet is made up of eco-vessels, defined as built after 2015. “As tonnage demand grows, more shipbuilding capacity is required, as are operational margins for shipbuilders in order to reactivate idle capacity,” the analysts added. They argue newbuilding prices will need to rise another 20% to achieve this. “This general increase in replacement value is anticipated to strengthen secondhand ship values and, as a result, the net asset values of shipping companies,” the analysts said.

The VLCC orderbook is lower than at any point for the last 25 years. No new VLCC tankers are currently scheduled for delivery in 2024, when analysts anticipate a boom in oil supply. “To put it another way, we believe that owning an oil tanker, or stock in a tanker company, may be quite profitable,” the analysts concluded.

Navios Maritime group head Angeliki Frangou used a company dinner at Greece’s National Gallery to paint a positive picture of the road ahead for shipping. The chief executive of New York-listed Navios Maritime Holdings and Navios Maritime Partners, which span the bulker, container ship and tanker sectors, said her optimism boils down to one thing: tonne-miles. She acknowledged that the global geopolitical and macroeconomic backdrop is more uncertain amid a Covid-19 recovery that is still not complete in Asia and the fallout from the “tragic” war in Ukraine. “In terms of future prospects, I am optimistic,” she said. “But I wish it were for different reasons.”

Frangou said the worst of the pandemic is fading in the West, and consumer behavior, which shifted from goods to services during Covid-19, is returning to normal. Expenditure is growing in travel, entertainment, and other services. But in the East, she said, China continues to struggle with its zero-Covid strategy. The Ukraine conflict and the sanctions against Russia, the consequences that have resulted from it are accelerating inflation and the rise of interest rates, Frangou added.

“It is impossible to know what this all means. There are too many possible consequences to digest and analyze,” she said. But Frangou said that in shipping, people look through the lens of tonne miles. “In this limited sphere, we are very optimistic,” the chief executive said.

Her positive outlook was rooted in two factors: shifts in manufacturing in the wake of Covid-19 and changes in commodities trade lanes because of the Ukraine war. The pandemic highlighted weaknesses of just-in-time manufacturing, and that has resulted in a move to what she described as a “just in case” approach that should result in more tonne miles. And she pointed to the Russian supplies of natural gas and oil that Europe relied on, as well as wheat supplies from the country and Ukraine, that now must come from further away. “The displacement of established supply has not only increased the price, but it has increased the tonne miles,” she said. “We do not see this easing any time soon, but we are watching very carefully.”

Global shipments of grains have tightened in the past months after Russia’s invasion of Ukraine and together with India’s recent move to ban wheat exports and adverse weather in the US, prices have risen to all-time highs.

Australia has nearly finished this year’s wheat planting on about 14.5 Mn hectares, an all-time-high, encouraged by the surging prices. The 2021/22 season, which was produced on 14 Mn hectares, saw a record 36 MMT harvested. Though early, analyst estimate total output for the 2022/23 crop at 30-35 MMT. Wheat output in the past 10 years has averaged 25 MMT as the nation sees another potential above-30-MMT crop this season with the anticipated favorable weather.

Global wheat production is set to fall, however, as the USDA estimate a decline to 775 MMT in 2022/23, from 780 MMT last year.

China emerged as the biggest buyer of Australian wheat this year, with Indonesia, Japan, and South Korea being other key importers in the region.

In August 2016, Glencore had a deal with another trading firm to purchase 45,000 tonnes of heavy fuel oil over five days. The price was tied to an assessment published by S&P Global Platts for bunkers at the Port of Los Angeles. And each of those five days, a Glencore marketer submitted bids into a Platts system and pushed them lower, according to court documents filed as part of an agreement to plead guilty to price manipulation. In one day alone, the Glencore employee identified only as Marketer-1 lowered the bid price 41 times during Platts’ trading window, dropping the price from $245 per tonne to $204.50, the document shows. The moves are among details, revealed in documents in a federal court in Connecticut, of a scheme that has culminated in Glencore, the global trading giant, agreeing to pay the $486m to the US for market manipulation in fuel oil markets.

As TradeWinds has reported, the plea agreement was part of deals with the US, Brazil and the UK that will see Glencore pay at least $1.1bn in fines for charges that also include bribery. In the fuel oil case, the company pleaded guilty to one count of conspiracy to manipulate prices. At the heart of the bunker price manipulation scheme were Glencore traders’ efforts to hike or drop fuel oil price assessments by Platts for the ports of Los Angeles and Houston, according to documents filed with the court. The Platts assessments are meant to reflect prevailing market conditions in the ports, which in turn are used as reference prices in bunker contracts. The assessments in the case were based on the US-pricing service’s market-on-close process, in which bids and offers were submitted to Platts during 30- to 45-minute windows. While admitting the criminal charges, Glencore has sought to highlight the ethics and compliance programme that it started implementing before the price manipulation and bribery allegations emerged. “Glencore today is not the company it was when the unacceptable practices behind this misconduct occurred,” chairman Kalidas Madhavpeddi said when the company announced the plea agreements.

“We were not accused of any wrongdoing, and we maintain that our robust, rigorous and transparent methodology and the safeguards we have in place continue to allow Platts to publish assessments reflective of market value,” said S&P Global Commodity Insights in a statement provided to TradeWinds. A bunker market expert said Platts’ market-on-close process has been an effective tool for pricing in high-volume markets. But the market in Los Angeles and neighbor Long Beach, once the world’s largest bunker market, may have been more vulnerable to market manipulation because of thin liquidity and a small number of players. State oil company Petroleos de Mexico and trading subsidiary PMI Comericio International were key users of the Platts Los Angeles price but have since pulled away from it because of Mexican energy reform. According to a statement of facts agreed by Glencore, the price manipulation scheme took place between 2012 and 2016 and involved employees at Chemoil and subsequently Glencore. Chemoil, an oil trading firm, was majority-owned by Glencore until a full takeover in 2014. The scheme at the Port of Los Angeles involved Emilio Jose Heredia Collado, who had been vice president of trading at Chemoil and who has pleaded guilty to charges associated with the scheme. Also involved were three unnamed marketers at Chemoil and later Glencore.

In addition to submitting bids to move price assessments higher or lower, Heredia and the marketers also gave “false and misleading statements” to Platts reporters in the form of market color that could also influence the price assessment. Court records included brief online chat communications in which a Platts reporter asked for updates on Los Angeles bunker prices from Marketer-1 in October 2014. At the time, Chemoil had a deal to buy 58,000 metric tonnes of fuel oil from a firm identified as Trading Firm A based on the Los Angeles price assessment. The marketer talked down the market on the same day that he submitted at least one offer to the Platts system and lowered it 44 times during the trading window, dropping the price from $515 per tonne to $471.50, according to court records. A similar pattern followed over the second and third day of the contract, including another conversation with the Platts reporter on the final day. “Hearing anything out of LA?” the reporter asked. “Still super weak… minimal bunker demand and very high supply,” Marketer-1 replied, with the quote later appearing in a Platts daily market commentary. According to Glencore’s plea agreement, the company and its co-conspirators profited from the scheme to the tune of $180m.