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Even though inflation’s pace...

Even though inflation’s pace, both in the U.S and Europe grew at the slowest pace since May 2021 & April 2022 accordingly, price pressures remain strong, pushing the Federal Reserve and the European Central Bank to maintain their hiking of interest rates, as inflation still remains above the acceptable rate. In its 10th rate hike in 14 months, the Federal Reserve raised its key interest rate by 25 basis points to a range of 5%-5.25%, the highest level in 16 years, with the FED hinting this rise may be the last one for now. Rates were also raised by the European Central Bank, though by a smaller amount than before. Following the FED’s announcement, the ECB also raised its interest rates by a smaller 25bps than the previous three preceding meetings. Oil prices fell around 8% w-o-w and around 17% down compared to April’s highs after the FED’s announcement, with WTI and Brent falling to around USD 68 and USD 72 per barrel respectively. These are levels not seen since 23rd March, closing the week a little bit higher at around USD 70 and USD 74 a barrel.

Despite the inflation “wave” that has hit consumers, travel has recorded an increase compared to 2022. In the first three months of 2023, Expedia and Booking Holdings reported record sales for accommodations. According to Expedia, revenue for the first quarter of 2023 reached $2.7 billion, an 18% increase from the same period last year. A 44 percent increase year-over-year in gross bookings - the total value of services booked - was announced by Booking. This is evidence that the travel industry is going to have another “heavy loaded” year, sustaining the need for fuels at last year levels or even higher. Another news that bolsters the positive feeling about oil product demand comes from the east. For the first time, Chinese tourist spending on domestic trips during previous week’s Labour Day holidays has exceeded pre-pandemic levels, almost 19% up compared to similar period of 2019 and 71% higher y-o-y. However, a lack of international flights and visa backlogs have maintained Chinese tourist’s overseas travel to low levels, far below 2019 numbers.

Many times, we have referred to the great and swift changes in the seaborne trade that Russian invasion to Ukraine and Western sanctions brought to the market. Now it is time to put numbers down and see what changes have been actually made. In January 2022 and just before the Russian invasion, Europe, China and South Korea were the major importers of Russian seaborne crude exports with 1.85, 0.7 and 0.3 million barrels/day respectively. In the end of March 2022 - just after the first shock of the war - , the highest Russian seaborne crude exports destinations were Europe, China and India with 1.6, 0.85 and 0.64 million barrels p/d, with India increasing crude oil imports from Russia by 30 times within 3 months. As most countries imposed sanctions against the Russian oil trade, China and India started to dominate Russian seaborne crude exports as in January 2023 China and India had 1.29 and 1.20 million barrels p/d imports, almost 75% of the daily seaborne Russian exports and in April 2023 India became by far the largest Russian crude oil customer as it imported 2 million barrels p/d while China imported 1.05 million barrels p/d. Both of them accounting for 82% of the daily seaborne Russian crude exports. This shows that European economies found alternative crude oil producers for about 1.8 million barrels p/d, creating higher demand for ships while the Russians turn to India to cover up the loss of European customers, creating new trade route towards India. There is on a similar picture Russian oil product exports. Europe was the largest importer in January 2022 with 1.7 million barrels p/d, almost 75% of the Russian seaborne oil product exports. As the war started, European imports started to slow down, while the US imports that accounted about 13% in January 2022, were zeroed out. In January 2023, Asian countries became the largest oil product importers from Russia, mainly with Turkey, China and Indian markets (302/219/159 thousand barrels p/d respectively) filling in the gap that was left by the reduction of the European imports to 721 thousand barrels per day. Today European imports of Russian product oil have dropped to only 14%, while Asian importers are accounting for 50% of Russian product oil exports. Its noteworthy that Russia exports to Middle Eastern countries and to Africa are 320 and 400 thousand barrels p/d in April 2023 in contrast with the start of 2022 when there were almost zero. Again this is proof that new seaborne trade routes have been created, mainly from Russia to the Middle East and Africa while Europe and the USA have been forced to find alternative sources of oil products for more than 1.7 million barrels p/d, increasing vessel demand in seaborne trade routes.

Sale and Purchase:

Despite the previous week’s Far East holidays’, dry bulk S&P activity was firm, with high buying appetite in Supramax/ Ultramax sectors that account to almost half of sales. The Capesize “Densa Cobra” - 180K/2011 STX was sold for USD 27.25 mills. Moving down the sizes, Greek buyers acquired the Kamsarmax “Thalassic” - 81K/2009 Universal for USD 21 mills. On the Ultramax sector, the “Vokaria” - 64K/2020 Cosco Yangzhou was sold for low/mid USD 30’s mills to S. Korean buyers, while the 5-year older “Bulk Electra”- 66K/2015 Mitsui found new owners for low USD 27 mills. The Supramax “Mandarin Dalian” - 57K/2010 Jiangsu Hantong changed hands for USD 14 mills, while the “Simge Aksoy” - 53K/2006 Chengxi was sold for USD 11 mills. Last but not least, Turkish buyers acquired the OHBS Handysize “Maestro Diamond” - 37K/2015 Saiki for USD 22.5 mills, while Indian buyers acquired the 5-year older “Ithaca Stockholm” - 35K/2010 Nantong Jinghua yard for USD 11 mills.

Wet S&P activity was also firm. The Scrubber fitted VLCC “Baltic Sunrise”- 309K/2005 HHI was sold for low USD 50’s mills. The Suezmax “Classic” - 159K/2005 HHI found new owners for USD 36.75 mills. The LR2 “Ps Pisa” - 109K/2010 Hudong Zhonghua changed hands for USD 36.5 mills. Far Eastern buyers acquired the CPP LR1 “Ever Victory” - 70K/2005 Universal for USD 21 mills. The MR2 “Adamas I” - 50K/2009 SPP was sold for USD 24.5 mills. Finally, Brightoil Petroleum has sold 7x Oil tankers, the “Guang Hui 628” - 7K/2013 Haidong, the “Guang Hui 619”- 7K/2013 Haidong, the “Guang Hui 636” - 7K/2013 Haidong, the “Guang Hui 626”- 7K/2013 Haidong, the “Guang Hui 616”- 7K/2013 Haidong, the “Guang Hui 629”- 7K/2013 Haidong and the “Guang Hui 618” - 7K/2013 Haidong, with four of these ships being sold to clients of Coral shipping, whilst the remaining three are believed to be bought by interests based in China and Dubai.

Xclusiv Shipbrokers Inc.