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Containers Share prices for the main container shipping companies have risen on average 140% since the start of the year, with stocks once again on the move after a dip in October, a new report from Alphaliner pointed out this week. Gains which began after the release of the carriers’ third quarter results have further accelerated since the emergence of the omicron variant. Share increases have occurred in a narrower band this year, although Taiwan’s carriers again led the field with gains of between 200-300% since January. Closely held Hapag-Lloyd’s stock has risen 150% so far this year, while Matson, Cosco and Maersk have enjoyed increases of 46%, 47% and 56% respectively. The 10 leading publicly listed container shipping lines are on track to earn a record $115bn to $120bn in profit in 2021, Alphaliner predicted earlier this month. Tankers One of the world’s most respected tanker brokers has warned that the markets are harder to predict than at anytime in recent history. In a market report headlined ‘Tanker markets are more uncertain than ever’, New York-based Poten & Partners said a combination of factors has made forecasting the direction of the tanker market increasingly difficult. OPEC+’s decision to raise oil production in January by 400,000 barrels per day in line with their long-term plan to unwind last years’ production cuts by September 2022 caught many by surprise. Many analysts expected the oil producing cartel to announce a production freeze against the backdrop of sharply lower oil prices due to the emergence of the new omicron variant of Covid-19. “On the face of it, this appears to be relatively good news for the tanker market, but OPEC has kept the door open to change their mind and reverse the increase or even lower crude oil output if the Omicron variant ends up having a strong negative impact on oil demand,” Poten pointed out. In addition to the vagaries of future oil demand and supply in the context of a continuing global pandemic, Poten said the tanker market must also consider government inventory releases and the potential impact of a new Iran nuclear deal, for which the negotiations have started up again. Late last month, just before the World Health Organization declared omicron a new variant of concern of Covid-19, a group of large oil consumers, including the United States, the UK, India, Japan, South Korea and China, announced a coordinated release of oil reserves. Most of the crude – 50m barrels – is scheduled to come from the US Strategic Petroleum Reserve (SPR). “A release of oil from reserves is obviously a short-term negative for the tanker market. However, reserves will need to be replenished and this could be supportive of tanker rates further down the road,” Poten observed. Iran and the remaining parties to the Joint Comprehensive Plan of Action (JCPOA) – China, Russia, France, Germany and the UK – have just restarted negotiations on the possible return of the US to this agreement, which limited Iran’s nuclear activities in return for the lifting of sanctions. The US is indirectly participating in the negotiations. “If a deal is negotiated and the restrictions on Iran’s oil exports are lifted, this could add about 1-1.5 million barrels per day of oil to the market, a boost to the tanker market. This would also render the rogue tanker fleet obsolete and – lacking legitimate other employment opportunities – these tankers may well be retired, providing an additional boost to the market,” Poten predicted. If the negotiations are not successful, this would not necessarily mean a return to the status quo, the New York brokerage suggested. Dry Bulk COP26 already feels like a long time ago. For all the platitudes the fact is the global energy transition has stalled this year, and nowhere is this more evident than in the return of king coal. In January to November 2021, global exports of coal reached 1.08bn tonnes, according to Refinitiv vessel tracking, marking a 5% increase year-on-year. In November Chinese coal imports reached a new year-to-date high of 31m tonnes on the back of recent attempts to secure supplies amid the tight domestic market. Braemar ACM analysts conceded their surprise this month at how much support has come from coal this year, accounting for 43% of demand growth over the first 10 months of 2021, driven by China’s energy shortages plus the shake-up to trade flows resulting from China’s ban on Australian coal.

Analyst Abstract

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