In its latest weekly report, London-based shipbroker Gibson noted on China that “certainly, Chinese manufacturers have lost their appetite for commodities which has impacted heavily on demand for coal, iron ore and copper with an obvious impact on the dry cargo market.
China has taken advantage of the low crude oil prices to fill both their strategic reserve as well as commercial inventories. Crude oil imports to China hit a record 7.6 million b/d in July and are anticipated to remain at elevated levels into second-half of 2015 despite the slowdown in economic growth.
The People’s Republic is continuing to build vast storage caverns to house the expanded strategic petroleum reserve (SPR) which will continue to support crude imports and thus VLCC trade.
July’s record crude imports coincided with the opening of the new 15 million barrel SPR at Huangdao. Two additional SPR sites located at Huizhou and Jinzhou with a combined capacity of over 50 million barrels are scheduled for 2015 commissioning.
Another 8 million barrel facility at Hainan is also due to commence filling now. As yet it is unknown if the new SPR at Tianjin is closed as a result of the explosion 13th August. Between March-May the facility had been taking around 60,000 b/d but was due to ramp up intake prior to the explosion
China is now the world’s largest crude importer and as long as the oil price remains attractive, it will continue filling reserves. This week China has lent $5 billion to Venezuela in oil backed loan to secure continuity of supply. Also, the Beijing government will be eagerly waiting to step up imports of Iranian crude once sanctions are finally lifted next year
In the crude tanker market this week, in the Middle East, Gibson noted that there were signs at the end of last week that the VLCC market was due some inflation from recent lowpoints, but even Owners hadn’t seriously believed that by today they would have achieved a 50 percent Worldscale increase to the East….and all they had to do was ask for it!!
The rapid gain came not so much from a sudden lack of availability, but more due to Charterers stepchanging their previously easy fixing pace to a gallop which lent the market a temporarily unstoppable momentum.
Now, however, with rates almost equalising those of the still soggy Suezmax sector, a more solid ceiling is hoving into sight, and Owners main mission over the coming week will be to consolidate, rather than push for further glory. Rates now stand at ws 45/47.5 East and into the mid ws 20s West.
Suezmaxes, as stated, remained very much on the backfoot on good availability, limited enquiry, and no realistic ballast opportunities. Rates stay in the very low ws 50s East and mid/high ws 20s to the West accordingly.
Aframaxes failed to push on from 80,000 by ws 95 to Singapore despite reasonable attention and the upcoming Appec displacement is likely to prevent any near term.
