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In October 2020, the order book for new container ships bottomed out at 8.4% of the combined trading fleet. For ships smaller than 8,000 TEU, the order book bottomed out one month later at 3.7% of the trading fleet, and only accounted for 18.2% of the total container order book. Interest in the smaller segments, however, is bouncing back after months of hibernation.
The spread between very-low sulphur fuel oil (VLSFO) and high-sulphur fuel oil (HSFO) has widened following Russia's invasion of Ukraine. The HSFO price, however, could rise if Russian volumes coming into the market start declining due to sanctions.
From mid-2020, global container export volumes saw strong growth, and combined with increasing port congestion it caused supply chain challenges and historically high liner operator financial results which have been the norm since. In September 2022, however, container volumes dropped below volumes recorded in the same month in 2019 for the first time since mid-2020 and statistics just released by Container Trade Statistics have confirmed the trend.
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electricity produced using renewable energy rose. Also slowed economic activity and high energy prices affected electricity demand.
The container ship orderbook hit a post-financial crisis low just below 2m TEU in October 2020. In the eighteen months since then, liner operators have seen record profits and a large percentage of these have been poured into newbuilding contracts.
In 2023, only seven product tankers with combined deadweight tonnes (DWT) capacity of 265,000 were recycled. This was a year-on-year drop of 82% compared to 1.5 million DWT (27 product tankers) recycled in 2022. It was also the lowest level of recycling seen since records began in 1996.
High energy prices in Europe have shifted aluminium production to China. Due to China’s increasingly depleted bauxite reserves, this shift has resulted in an increase in bauxite shipments, benefitting the capesize segment. Guinea, the world’s largest exporter of bauxite, accounts for around half of traded volumes and has seen a 14.9% increase in bauxite shipments so far in 2022.
India is heading for its highest wheat harvest on record of 112 million tonnes this spring. However, exports will likely be limited in the coming year as the country is still recovering from last year’s poor harvest and is expected to focus on rebuilding its own wheat inventories.
In 2023, sanctions on Russian oil exports by the EU caused a major shift in tanker trades and a 10% increase in average sailing distances for EU tanker imports. Now, attacks on ships in the Red Sea area have caused average sailing distances to increase a further 16% and tonne mile demand to increase 12% despite falling volumes.
On 9 August, the Indonesian Energy and Mineral Resources Minister announced that 71 coal miners failed to meet their domestic market obligations, and that 48 of them are now banned from exporting coal. The ban comes into force just as the EU ban on Russian coal takes full effect and demand for non-Russian coal increases.
