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Tankers Product tankers continue to be solid with both LR2s and MRs holding firm at $37,000 a day (eco $42,000 a day) and $25,000 a day (eco $30,000 a day), respectively. “While refining margins have moderated from their highs recently, they remain elevated and supportive of firmer earnings. The impact of the Russia diesel and gasoline export ban remains to be seen; while ton-miles may not be affected, vessel dislocation and trade complexity are likely to keep spot rates elevated,” a report from Jefferies stated yesterday. The loss of these exports will likely further worsen the global diesel shortage that already existed before the Russian ban, Poten pointed out. In 2023, Russia was the largest seaborne exporter of diesel and gasoil, followed by the US and Saudi Arabia. “Initially, there could be a dislocation of tankers that could raise rates as charterers try to secure tonnage, but much depends on how effectively the current fleet serving Russian exports is able to transition to other trades,” Poten suggested. Looking at other reasons for the ongoing strength in product tankers, BRS noted US Gulf CPP exports remain strong on the back of high US refinery utilisation with inefficiencies caused by the Panama Canal congestion expected to persist. Further down the line, however, a tonnage overhang is building at yards in Asia. Year-to-date product tanker newbuild contracting has hit a 10-year high according to BIMCO. During the first eight months of 2023, contracting of product tanker newbuilds hit a 10-year high, reaching 140 ships and 10.72 m dwt. The last time more than 10m dwt were contracted from January through August was in 2013. Dry Bulk For the first time this year there’s wind in dry bulk’s sails led by the largest segment with capes approaching the $20,000 mark. Chinese imports and exports of iron ore, steel and coal are moving in higher grounds compared to a year ago, Xclusiv Shipbrokers pointed out, noting the solid rates for all dry bulk segments. “These rates are probably the evidence that China’s dry bulk demand is not driven mainly by its property sector and that dry bulk seaborne trade can keep its ‘head up high’ even with China’s growth not at full speed,” Xclusiv stated. “Coal demand has been a key driver for dry bulk rates, and production disruptions due to well publicized mine accidents in China should continue to support strong import volumes,” Breakwave Advisors reported. Iron ore activity remains strong, while bauxite trading has once again resumed, following the seasonal decline due to summer rains in West Africa. “With fleet operating efficiency at all-time highs, winter weather unpredictability seems to be the key for a tightening market which could propel spot rates higher and beyond what is already priced in the futures curve,” Breakwave Advisors suggested. Coal imports into China made headlines in August as a monthly all-time high, but the recent release of the breakdown by source generates additional interest for the emphatic return of Australian coal imports into China — overwhelmingly thermal coal. “This is all the more relevant, given reports this month of further high volumes of Australian coal sold into China,” dry bulk experts at Braemar pointed out. Containers With nearly a container newbuilding scheduled to deliver daily for the rest of the year, brokers Braemar warned this week it remains difficult to anticipate where the demand should be coming from to overcome the current supply situation. What’s more, blanked sailings are not helping to overcome the dropping rates across the world. “Container market sentiment continues to deteriorate, with freight rates still slipping with little prospects for a rate rebound in October despite carriers’ efforts to contain capacity availability through blanked sailings,” a recent report from Asia-based consultants Linerlytica suggested. The planned capacity cuts over the Golden Week holidays in October are still smaller than the capacity removed during the Lunar New Year holidays in February this year, according to Linerlytica, claiming they are insufficient to stem the rapid rate decline. “Looking ahead, it appears that ocean carriers are taking a cautious approach. Global forwarders are cautioning about a notable rise in blank sailings anticipated for the fourth quarter on the trade routes from Asia to North Europe and the Mediterranean. The continuous expansion of shipping capacity, driven by the introduction of new mega-vessels, is outstripping the existing demand, leading to considerable strain on already oversupplied trade lanes,” Container Xchange warned in a report last week. Blanked sailings already account for 16% of mainline capacity according to Drewry. “Blanked sailings – often announced at the last minute – will mean poorer schedule reliability,” observed Judah Levine, head of research at Freightos.

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