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Your brief for the week ahead
Mon 6th August 

1. Reasons to be cheerful – It's not as bad as you might think out there

These updates have been somewhat obsessed by the risk associated with trade war, sanctions and bunker politics in recent weeks. But we don’t want to be negative nellies all the time. The sun is shining, summer holidays have lifted the mood and we all need to consider the upside for a moment.

So let’s take a moment to celebrate the fact that the Baltic Dry Index was stable at a four-year high yesterday with dry bulk earnings at a season high not seen since 2009.

Capesize vessels are in a great place right now (averaged $24,000 per day in July) and the dry fundamentals driving the market are generally positive, with Chinese steel margins hovering at near-term highs, and iron ore port stockpiles falling for the past five weeks.

Containers are looking better than they have been as the lines finally push freight rates higher. Very large crude carriers’ spot rates broke double digits last week, and LPG rates continue to improve as ship availability tightens (VLGC jumped above $20,000 per day, the highest since early 2016). LNG is now at its highest level since 2014 at $75,000 per day.

There’s even a positive side to the offshore story to report for floating production, storage and offloading vessels, where higher oil prices and project cost deflation mean an improved outlook in Brazil and FLNG units.

Feeling better? Good, because you might want to re-read this section after getting through the rest of it…

Read more on Loyd's List: VLGC earnings at highest level since 2016

2. China has proposed a 25% tariff on imports from the US

Honestly, we were trying to avoid it. Trade tariffs were not on our agenda this week, but this stuff just keeps coming.

China has proposed a 25% tariff on LNG imports from the US — a move that could put at risk the anticipated growth in gas trade between the two countries. The Chinese levies, if they materialise, would eventually undercut the competitiveness of US LNG and could deal a serious blow to the hopes of companies planning to invest in a new wave of export projects.

The move also came at the same day that China’s biggest US crude oil buyer, Sinopec, halted US crude oil imports due to the trade dispute.

There are complexities here and much of the actual impact is yet to be felt because there’s a lot of rhetoric and it’s tricky to assess the impact, but protectionism driving more regional flows is not a positive trend for shipping right now.

On the container side the story is a little different, but also not positive. The second tranche of US tariffs on Chinese imports proposed by the Trump administration will have far more negative effects on global supply chains and trade flows than the first round of tariffs introduced last month, according to US retailers and supply chain analysts.

Read more on Lloyd's List: Latest US-China tariff threat bears much greater significance for freight.

3. Let’s talk dirty bunkers and sludge precipitation

Dirty bunkers and sludge precipitation (they went off the boil after the second album) may not seem like a topic to get hearts racing, but it is about to be.

Recent stories of a contaminated batch of bunkers hitting Singapore may seem like a little local trouble, but there are significant insurance, legal and safety consequences that need to be understood here.

Cases of contamination highlight the fact that the supply chain is not as robust as it should be and that only increases when fuel blending is involved. The increased use of blended fuels to meet low-sulphur regulations raises fuel-quality issues and is being interpreted as an indication of what could be in store for the shipping industry from 2020, when a global limit of 0.5% on the sulphur content of fuel will be enforced.

Expect more on this from P&I Clubs as they look for assurances that this can be sorted, but anticipate legal risk when it inevitably goes wrong. There is a more general fear that even without contamination issues, the move to low-sulphur fuels is linked to increased fuel-related mechanical breakdown claims.

Read more on Lloyd's List: Recent fuels contamination cases spark doubts regarding 2020 blends
Listen to this weeks Loyd's List podcast: Shipping debt, ransoms and making a ship one km in diameter.

4. Iranian sanctions are back on the agenda. Again.

Washington intensified pressure on Iran on Monday, forging ahead with the reimposition of economic sanctions as the Islamic regime faces widespread social unrest.

The Trump administration says it expects Iran’s oil buyers to begin winding down their purchases in response. Some are seeking alternatives, but countries including China, India and France are considering creative measures to keep importing Iranian crude.

Meanwhile, the US government still aims to slash Iran’s oil exports when sanctions resume in November, but diplomats continue to discuss limited waivers for importing countries.

Some shipowners are making hay, transporting Iranian crude into Europe as the threat of falling foul of US sanctions scares off rivals with less nerve. European shipowners were today given formal legal permission to continue trading with Iran despite US sanctions, although the impact of Washington’s restrictions on insurance and trade finance may render that right nugatory in practice, experts have warned. The development comes at a time when Lloyd’s List Intelligence analysis shows a total of 36 tankers currently laden with Iranian crude, including 11 VLCCs heading for China. Keep tuned to for the news that matters and analysis that counts on this one.

Read more on Lloyd's List:
Iran's oil exports fall as sanctions kick in

5. Going to SMM 2018? Attend the Lloyd's List Business Briefings

Why you should attend this Lloyd’s List Business briefing.

SMM is the greatest celebration of maritime technology. Nowhere else can the boundaries of what is technically possible be pushed to better effect than here in Hamburg.

Technology will lead us to higher levels of efficiency. It’s a no-brainer, right? Well, perhaps. Higher efficiency might also reflect good seamanship, a deep appreciation of the spirit of regulation, tighter connections between sea and shore. Surely these are also skills we should strive to achieve. Surely efficiency is more than applied technology.

That’s the premise for Lloyd’s List’s SMM Business briefing.

Why you should attend.
We believe there are Three Elements of Efficiency in maritime. These are Technology, Regulation, and Human resources. Each has its role to play in building resilience, driving progress, achieving efficiency. 

Click here to secure your place for free.

Key talking points to include:
How does technology respond to new regulation? 
How does the human element respond to evolving technology? 
How does regulation change to reflect human element issues?

This briefing is not about technology, yet technology runs through it. Nor is it about regulation or the human element, yet these are deeply embedded throughout.

Join Richard Clayton, Chief correspondent, Lloyd's List as he leads a panel of experts in each of these fields to argue the case for their discipline, and to identify the areas of common interest.

Register today to secure your place on Thursday 6th September to explore the Three Elements and decide whether the technology on show at SMM is enough in itself .

If you want to find out more about other Lloyd's List Business Briefings or any other Maritime intelligence events 


Missed The List last month?
Click here to
 download the best of The List - Your monthly debrief for July!
The best of The List includes exclusive content, Interviews, Twitter poll results and articles not featured in the weekly edition.


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