Back in the day, as they say, it was a commonplace (particularly in England) that ‘things have to get worse, before they get better’.
Since things have gotten plenty worse over the last eight years or so, I am ready to proclaim that everything is going to start getting better for all sectors of shipping that have, as they say, been adversely affected by market conditions. This business of getting better will start immediately. In the words of that great songwriter, Johnny Mercer, it’s time to accentuate the positive. No more Mr Negative, and don’t let’s have anything to do with Mr In-Between.
It’s great to start over in a fully positive state of mind.
First of all, the Volkswagen emissions scandal will lead to much larger supplies of unwanted diesel fuel for other uses, at lower prices. That means cheap low-sulphur fuel, with plenty of high-quality emissions tests, courtesy of the California Air Resources Board (CARB).
If you don’t think that happy days are here again (another great old song), consider the bankruptcies of Daiichi Chuo and Global Marine Investments. If you?re not employed by them, accentuate the positive: you still have a job! Besides, dry bulk has fallen so far, it can’t fall any farther, agreed?
More happy news: it looks like the longstanding ban on US crude oil exports will be lifted by the US Congress in the next few months. This is amazing news, for those of us who thought that the collective membership of the Senate and House of Representatives didn’t have enough wheeze left in them to fog a mirror, much less pass legislation (unless it meant dumping the Speaker of the House). If in fact they repeal the ban, it is a fair wager that the crude tanker market will get a boost, with light crude heading across the Atlantic to Europe. This will probably free up additional oil from West Africa for long-haul shipments to Asia-Pacific consignees. Of course, this might limit the growth in refined product exports, in all directions.
Finally, what is really hurting dry bulk shipping is its exposure to the ‘transition’ – meaning ‘slump’ – in the Chinese economy. China’s coal imports plummeted by 15% in 2014 and a further 32% year-on-year in the first eight months of 2015. Its iron ore imports were marginally down in the first eight months of this year. Despite the increased scrapping of dry bulk vessels this year, the segment performed poorly with the Baltic Dry Index average for the year to date at its lowest in 10 years.
This means, I’m sorry to say, a few more bankruptcies are in the offing. But, accentuating the positive, so is a lot more scrapping. There?s an optimistic Louisiana expression, which is also the title of a song: ‘Shrimp Boats Are A-comin’, ‘There’ll Be Dancin’ Tonight!’?
