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This week's chart illustrates the increase in monthly soybean export volumes from Brazil to China starting from the beginning of 2022. It highlights the gradual increase observed this year, with June's volume reaching a new peak of over 10 million tons, surpassing a similar peak recorded at the end of March last year. This year's trend shows a persistent upward trajectory compared to the first six months of the previous year, which saw a decline following the March peak. Typically, we observe an increase in Brazilian soybean exports in the first quarter of the year; however, this year’s trend indicates a new shift with the increase sustaining through the first six months. At this point, we can recall the decreasing trend in the monthly volume of U.S. grain exports to China, as noted in our Weekly Market Monitor during week 50 of 2023.
The first week of July began on a positive note for the Capesize dry freight market, with rates for Brazil to North China reaching one of the highest points for the year, surpassing the previous peak recorded in week 10. This rise is particularly noteworthy as it coincides with a decreasing trend in the number of Capesize ballasters in Southeast Africa, which fell below the annual average at the end of June.
In our previous Weekly Market Monitor, we illustrated the relationship between the number of ballasters and the strengthening of the freight market on the C3 route. This analysis was supported by the Capesize Insights market report, which confirmed the firmness of the market in early July. The report highlighted how a reduction in the number of ballasters led to tighter vessel availability, which in turn drove up freight rates.
This relationship underscores the importance of supply dynamics in the Capesize segment. As fewer ballasters head to loading areas, the reduced supply can cause freight rates to climb, reflecting the supply-demand balance. Our data showed a noticeable decline in ballasters in the South Atlantic, aligning with the observed increase in freight rates on the C3 route from Brazil to China.
Additionally, there was an upswing in tonne-days demand growth just before the end of June. The improved supply-demand balance is now being reflected in the freight market with stronger momentum, although it remains to be seen how long this will last in the coming weeks of July.
Furthermore, improved factory output in China and hopes for more stimulus measures have supported a firmer market for iron ore prices. Last week, Beijing introduced measures to reduce the cost of buying homes, including cutting mortgage interest rates and lowering the minimum down payment ratio. As a result, iron ore futures prices rose on Monday to their highest levels in nearly two weeks, buoyed by better-than-expected factory data from China and expectations of additional stimulus measures in the world's second-largest economy later this month.
The most-traded September iron ore contract on China’s Dalian Commodity Exchange (DCE) ended daytime trading 2.5% higher at 840 yuan ($115.58) per metric ton, the highest level since June 18. The benchmark August iron ore on the Singapore Exchange was nearly 1.7% higher at $108.4 per ton as of 0707 GMT, marking the highest point since June 20.
In June, the Caixin/S&P Global manufacturing purchasing managers’ index (PMI) rose to 51.8 from 51.7 in May, marking the fastest pace since May 2021 and surpassing analysts’ forecasts of 51.2. This positive manufacturing data, coupled with the anticipated economic measures, suggests continued strength in the market for the near term.
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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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