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This week's chart (on the right) illustrates the correlation between the number of ballast vessels for Panamax-size ships in the ECSA region and the evolution of P6 $/mt freight rates. Meanwhile, the left chart examines the daily volume loaded (14-day moving average) in comparison to the current demand benchmark, which shows an increase above the benchmark. Additionally, there is a noticeable decline in the number of ballast vessels, coinciding with a strong upward trend in freight rates.
In March, the trend indicated another decrease in the number of ballast vessels, but the recent firmness in the freight market has not yet matched the peak observed at the end of November 2023, when $/mt freight rates reached 30.
In the second week of June, there's a notable development in Capesize vessel rates on the Brazil to North China route, indicating a firmer momentum. Concurrently, the In the third week of June, significant developments are observed in the Capesize vessel rates on the Brazil to North China route, as well as in the Panamax Cont FE routes, indicating a stronger momentum for larger vessel size segments as we approach the end of the month. Specifically, the Panamax P6 route in ECSA shows promising signs for the firming of freight rates in the coming days, supported by a notable decrease in the number of ballast vessels from their peaks in mid-February and before mid-March. Looking ahead, June appears poised to conclude with an upward trend in the growth of dry bulk demand tonne days. If this trend continues, it could lead to higher vessel employment utilisation in both the Atlantic and Pacific markets, setting the stage for a potentially robust July.
On the macro side, Chinese economic development continues to disappoint with its indicators for the future steel and iron ore demand needs. Iron ore futures prices declined on Monday following disappointing economic data from China, amidst ongoing challenges like floods and high temperatures affecting near-term demand prospects. The most actively traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) closed daytime trading 1.63% lower at 813 yuan ($112.05) per metric ton. Meanwhile, the benchmark July iron ore contract on the Singapore Exchange, SZZFN4, fell 2.51% to $104.8 per ton as of 0710 GMT.
Market sentiment was notably impacted by weaker-than-expected data from China's property sector, which is a major consumer of steel. Despite intensified efforts by policymakers to bolster the struggling sector and boost consumer confidence, property investment in China dropped by 10.1% in the first five months of 2024 compared to a year earlier, following a 9.8% decline in January-April, according to statistics bureau data. The combination of these factors contributed to a downturn in iron ore prices, reflecting market concerns over the economic outlook and demand conditions in China. The major iron ore producers listed on the ASX 200—BHP Group (ASX: BHP), Rio Tinto (ASX: RIO), and Fortescue Metals Group (ASX: FMG)—are currently navigating the repercussions of an economic deceleration in China.
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Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
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Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
Creating a sustainable world requires us to embark on a journey towards a zero emission future, where every step is a commitment to preserve our planet for future generations.
Albert Greenway
Environmental Scientist, Sustainability Expert
Increased Use of Renewable Energy:
Shipping companies are embracing renewable energy sources to power onboard systems and reduce emissions during port operations. Solar panels and wind turbines are being installed on vessels to generate clean energy, reducing reliance on auxiliary engines, and cutting down emissions. Shore power facilities in ports allow ships to connect to the electrical grid, eliminating the need for onboard generators while docked.
Collaboration and Industry Partnerships:
Recognizing that addressing emissions requires collective action, shipping companies, governments, and organizations have formed partnerships and collaborations. These initiatives focus on research and development, sharing best practices, and promoting knowledge transfer. Joint projects aim to develop and deploy innovative technologies, improve infrastructure, and create a supportive regulatory framework to accelerate the industry's transition towards a greener future. The Zero Emission Shipping - Mission Innovation.
To pave the way for a greener future in shipping, the availability of alternative fuels plays a vital role in their widespread adoption. However, this availability is influenced by factors such as port infrastructure, local regulations, and government policies. As the demand for cleaner fuels in shipping rises and environmental regulations become more stringent, efforts are underway to improve the accessibility of these fuels through infrastructure development, collaborations, and investments in production facilities.
Liquefied Natural Gas (LNG) infrastructure has seen significant growth in recent years, resulting in more LNG bunkering facilities and LNG-powered vessels. Nonetheless, the availability of LNG as a marine fuel can still vary depending on the region. To ensure consistent availability worldwide, there is a need for further development of LNG supply chains and infrastructure. For biofuels, their availability hinges on production capacity and the availability of feedstock. Although biofuels are being produced and utilized in various sectors, their availability as a marine fuel remains limited. Scaling up biofuel production and establishing robust supply chains are imperative to ensure wider availability within the shipping industry.Hydrogen, as a fuel for maritime applications, is still in the early stages of infrastructure development. While some hydrogen vessels have been tested or introduced in the first quarter of last year, the infrastructure required for hydrogen production and distribution needs further advancement.
Ammonia, as a marine fuel, currently faces limitations in availability. The production, storage, and handling infrastructure for ammonia need further development to support its widespread use in the shipping industry.Methanol, on the other hand, is already a commercially available fuel and has been used as a blend with conventional fuels in some ships. However, its availability as a standalone marine fuel can still be limited in certain regions. Bureau Veritas in October 2022 published a White Paper for the Alternative Fuels Outlook. This white paper provides a comprehensive overview of alternative fuels for the shipping industry, taking into account key factors such as technological maturity, availability, safety, emissions, and regulations.
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