This map shows the current position of oil tankers, mostly filled with oil. They are “stranded” around the world because there is no way to unload, since onshore warehouses are full, pipelines are full, and without flow, due to the low demand for oil. Although oil is now worth zero, keeping it in this condition costs about $ 30,000 a day per vessel. There is no one who buys oil if airplanes do not fly, if vehicles do not travel in cities.
Never in contemporary history has there been such a drastic reduction in the consumption of fossil fuels. The oil is standing on the surface of the oceans (in the tanks of the ships), in the deposits that are on land and in the pipelines. There is no clearer index to understand the magnitude of the paralysis and the problems that modern capitalism faces, since the ballast of the dollar is this, stopped, floating in the oceans.
The Baltic Exchange's main sea freight index hit a nine-month low on Monday, dragged down by falling rates of capesize and panamax segments as world trade continues to slump.
The Baltic Dry Index, which tracks rates for capesize, panamax and supramax vessels that ferry dry bulk commodities across the world, dropped 25 points, or 3.3%, to 729 (according to Refinitiv data), the lowest level since April 2019:
The capesize index .BACI dropped 119 points, or 16.7%, to 593 - its lowest since April 23.The index registered its 27th straight session of losses, and also its largest daily percentage loss since early April.
Average daily earnings for capesizes, which typically transport 170,000-180,000 tonne cargoes including iron ore and coal, fell $592 to $7,760.
The panamax index .BPNI lost 4 points, or 0.5%, to 866.
Average daily earnings for panamaxes, which usually carry coal or grain cargoes of about 60,000 tonnes to 70,000 tonnes, declined $39 to $7,791.
The supramax index .BSIS remained unchanged at 560 points.
Baltic Dry Index Falls 3.32% to 729 in London •Capesize -7.09% to $7,760 •Panamax -0.6% to $6,455 •Supramax 58k tons 0.0% to $6,156 •Handysize -0.47% to $4,836#DryBulk#Shipping$GOGL$SBLK$GNK$DSX$SB$SALT$EGLE$GBLK
We've noted how the "front-loading" effect ahead of tariff deadlines ended in late 3Q19 when the first signs of a trade resolution emerged between the U.S. and China.
In the last four months, the Baltic index has crashed 70%, the most since 2008, and has confirmed our slowbalisation thoughts.
The chart below makes clear that the spike in shipping rates was a one-off event spurred by importers front-running tariffs in 2019, now that is over, shipping rates are plunging as a manufacturing recession in the U.S. deepens and across the world.
And it was no surprise to us Monday that the IMF slashed the global economic outlook for 2019 to 2.9% in October, the lowest since the financial crisis, and warned that global trade growth is "close to a standstill."
The Baltic Dry Index is seen as a leading indicator that provides a clear view of the global demand for commodities and raw materials.
The IMF also downgraded its forecast for global GDP for 2020 and 2021, its sixth straight reduction, although in a sliver of optimism, global GDP in 2020 is now expected to post a modest rebound from 2.9% to 3.3%, (down from 3.4% in October) and to 3.4% in 2021 (down from 3.6%) as the IMF says "there are now tentative signs that global growth may be stabilizing, though at subdued levels."
However, the IMF warned that there are "few signs of turning points are yet visible in global macroeconomic data."
The global shipping industry was thrown a curveball on Wednesday when the U.S. imposed fresh sanctions on Chinese entities and people who it accuses of deliberately purchasing oil from Iran in violation of Washington's sanctions against Tehran, Bloomberg reported.
The U.S. Treasury Department announced new sanctions on five Chinese nationals and six entities, including a unit of COSCO Shipping Corp., who were knowingly violating restrictions on purchasing Iranian petroleum.
"And we are telling China, and all nations: know that we will sanction every violation," Pompeo said at a conference on the sidelines of the U.N. General Assembly in NYC.
Bloomberg spoke with oil traders who canceled bookings with sanctioned entities and let provisional charters lapse as they wanted to avoid being caught up in the fight between Washington and Tehran.
Oil traders are concerned about the cargoes that have already been loaded on vessels and don't know if they have to transfer loads to unsanctioned tankers. It's a chaotic mess, traders said.
"The sanctions this time are more direct and will have an immediate effect on anyone chartering sanctioned tonnage," said John Driscoll, chief strategist at JTD Energy Service Pte. "These latest moves are likely to add more inconvenience and result in higher costs. Anyone time-chartering tonnage from a sanctioned owner better have a Plan B."
Recent missile and drone attacks on Saudi Aramco oil facilities in Saudi Arabia, mostly blamed on Iran, have boosted oil prices, and driven up concerns about a regional war. Iran has since denied responsibility.
"The more Iran lashes out, the greater our pressure will and should be," Pompeo said. "That path forward begins now with two new actions."
In a speech at the U.N. General Assembly in New York on Tuesday, President Trump said he would continue pressuring Iran's economy with sanctions until Tehran collapses.
Trump called Iran “one of the greatest security threats facing peace-loving nations today” at the UN General Assembly this morning. https://cnb.cx/2llnBzX
Ahead of trade talks with China, slated for early October, the new round U.S. sanctions on Chinese companies could complicate negotiations. China has clearly stated that it would like all economic duties and sanctions removed before it would consent to a deal, something that the Trump administration isn't likely to do. The trade war is more about crushing China, and it's about defending the American empire against a rising power, that is China, so the idea of removing all sanctions and making a deal with the communists isn't likely in the next few weeks.
"The U.S. disregards the legitimate rights and interests of all parties and arbitrarily wields the stick of sanctions," said Chinese Foreign Ministry spokesman Geng Shuang at a daily news briefing in Beijing earlier this week. "It is a gross violation of the basic norms of international relations."
The sanctioned Chinese firms include China Concord Petroleum Co., Kunlun Shipping Co., Pegasus 88 Ltd., and COSCO Shipping Tanker (Dalian) Seaman & Ship Management Co. All have been charged with violating restrictions on transporting Iranian crude and petroleum products. Additional restrictions were also imposed on executives at some of the companies sanctioned.
Several shipbrokers and charterers spoke with Bloomberg, who asked not to be named, said several tankers operated by COSCO had their bookings dropped, while others saw provisional charters canceled.
Sanctions against Iran and anyone who purchases crude and petroleum products from the Middle Eastern country are aimed at economically destroying Tehran.
China imported 788,000 tons of crude from Iran in August, that compares with a monthly average of 2.4 million tons last year.
And the probabilities of a trade deal between the U.S. and China this year continue to move lower as China has explicitly said it wouldn't tolerate increasing duties and or sanctions, indicating that the only way to make a deal is the complete removal of all duties and or sanctions.
Two ships have caught fire while moving through the Kerch Strait separating Crimea from mainland Russia, after one of them was apparently rocked by an explosion. At least 10 sailors have died, Russian Maritime Agency said.
One vessel was “allegedly struck by a blast,” which caused the fire that then spilled over to another ship, an official with the Russian Maritime and River Transport Agency said. Clouds of black smoke can be seen billowing over a vessel engulfed by a blaze on YouTube footage, which shows the scene of the incident. Another ship can be seen floating nearby.
Some three dozen sailors managed to escape the burning ships by jumping off the vessels. At least 10 people died in the incident and 12 have so far been rescued from the sea. Eight sailors are still listed as missing.
The crews of the affected ships included Turkish and Indian nationals, the emergency services said, adding that there were no Russian sailors. Turkey confirmed that 16 of its citizens were aboard the affected vessels.
Between eight and ten ships have been sent to the rescue and are picking up the sailors, the emergency services said. The explosion might have been caused by a safety rules violation during the fuel transfer, according to some reports.
Both vessels were flying Tanzanian flags. One of them was a liquefied natural gas carrier and another one was a tanker. The fire broke out as the two ships were transferring fuel from one to the other.
Maritime traffic was not affected by the incident and navigation through the Kerch Strait is still open, the director of the Crimean Sea Ports said. The image is not as "covert" as made out; it is in the video above, arrived by RT.
TWO SHIPS ON FIRE IN KERCH STRAIT -- TORPEDOED ????
Two large tanker/freighter vessels are on-fire in the Kerch Strait between Crimea and Russia as of 11:18 AM eastern US time on Jan. 21, 2019.
Images of one ship burning suggest the vessels MAY have been . . . torpedoed.
One of the vessels was clearly rocked by an explosion. At least one sailor has died, Russian Maritime Agency says.
One vessel was “allegedly struck by a blast,” which caused fire that then spilled over to another ship, an official with the Russian Maritime and River Transport Agency said.
Clouds of black smoke can be seen billowing over a vessel engulfed by a blaze on YouTube footage, which claims to show the scene of the incident. Another ship can be seen floating nearby, although it is unclear, if it caught on fire as well.
The image below, obtained via Covert Intelligence, suggests these ships were TORPEDOED. The image, taken through what seems to be a submarine periscope, says all that needs to be said . . .
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Sailors from the burning ships were seen jumping into the sea, where they were being picked up by rescue vessels. One person died and more than three dozen sailors were rescued. The crews of the affected ships consisted of 17 and 14 people, including Turkish and Indian nationals.
The image below appears to have been taken from a Submarine. It is not yet known if either of the ships on fire were TORPEDOED:
Both vessels were flying Tanzanian flags. One of them was reportedly transporting liquefied natural gas.
Maritime traffic was not affected by the incident and navigation through the Kerch Strait is still open, the director of the Crimean Sea Ports said.
The
world’s biggest carrier of seaborne freight, Maersk Line, is set to
send its first cargo from east Asia to Europe via the Arctic Ocean,
using Russia's Northern Sea Route.
Later
this month, the company’s new ship ‘Venta Maersk’ will
reportedly take the Northern Sea Route after leaving the Russian port
of Vladivostok. It will sail through the Bering Strait and over the
top of Russia to reach St. Petersburg by the end of September.
“This
is a trial designed to explore an unknown route for container
shipping and to collect scientific data,” said
a statement from the company. “Currently,
we do not see the Northern Sea Route as an alternative to our usual
routes.”
The
Northern Sea Route is expected to become an alternative to Egypt’s
Suez Canal as one of the key global shipping arteries connecting Asia
to Europe. The Arctic route could reduce journey time by up to two
weeks, but sailing through Arctic waters is still unfeasible without
using an icebreaker.
According
to the Danish group, the ice-class ship, which is able to carry
roughly 3,600 containers, is designed to withstand water temperatures
as low as minus 25 degrees Celsius. The crew of the ‘Venta Maersk’
have reportedly been trained to cope with exceptionally harsh
conditions.
The
company is reported to have no plans for commercial services on the
Northern Sea Route, which is accessible only during three months of
the year. Maersk will need to channel more investment into special
vessels designed to handle Arctic conditions.
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