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Last updateΠαρ, 03 Δεκ 2021 6pm

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Xclusiv Shipbrokers Inc.: Weekly S&P Repor

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Despite being the world largest coal producer, China has imposed strict limits on domestic coal production, whilst boosting imports of coal over the past years. The hit from the world's energy crunch is starting to ripple throughout the globe, with countries imposing power use curbs on energy-intensive industries such as steel, aluminum & cement. China has already started to aggressively target imports of natural gas, and this will add to global gas price pressure. If electricity shortages & production cuts continue within China, this could hamper global supply chain and Chinese produced exports. The extreme electricity shortage in the world's largest exporter is set to hurt China's own growth, and the knock-on impact to the global supply chain could crimp a global economy already struggling to emerge from the pandemic.

The price of coal is not regulated in China, and is priced according to market forces such as availability & demand. Beijing has refused to buy Australian coal, driving up its energy costs. This is one of the main reason we had seen prices soaring. The price of coal has shot up more than four times from $60 per ton early in 2021 to a peak of USD 269.5/ton early this week, correcting to USD 238.5/ton on 8th of October. China ordered more than 72 mines in Inner Mongolia to boost their coal production by 98.4mil tons, from their annual capacity of 178.5mil tons. The proposed increase would make up nearly 3% of China's total thermal coal consumption. Major power plants have stockpiles of around 10 days, down from more than 20 days last year, and coal inventories at major Chinese ports last week are now at a 10-year low, at 52.34mil tons, down by 18% from the same period last year. China in its attempts to raise coal imports to levels on par with last year, has even released Australian coal from bonded storage, despite a one-year unofficial import ban on coal imports from Australia, and has tapped rare supply sources like Kazakhstan and the United States.

India is also dealing with a major energy crunch, following China, Europe & countries in the Middle East. The Indian government said the coal supply squeeze could last six months, as power plants are reported to only have enough coal reserves for an average of four days production. Internal commodity shortages are obviously good news for Bulker owners. Substantial percentage of Drybulk tonnage are also benefiting from the increasing port congestion of Bulker ships waiting outside Chinese ports. Port congestion has jumped again in recent weeks, as supply chain disruptions interfere with ports' ability to ship orders. China has approved the stimulus package of 1.5 trillion over the next 5-year period with emphasis on infrastructure investments. The materializing of these investments will result in a demand increase of raw materials & energy, which will boost seaborne volumes. This positive sentiment is not only reflected in Capesize spot rates, but also reflected in the futures markets and in period fixtures, with substantial daily rates reported across most Drybulk size segments.

On the secondhand sales, dry segment remains strong whilst tankers have begun to gain more momentum. The Kamsarmax "Vorana Manx"-82K/2021 Tsuneishi Zhousan sold for USD 42.2mills to Greek Buyers & the Panamax "Banasol"-72K/2001 Oshima reported sold at rgn USD 14mills. On the Handysize segment, we mention the sale of modern "Xing Zhi Hai"–34K/2015 which went for region USD 22 mills & the sale of vintage "Mel Pride"–32K/1999 Kanda Kawajiri which was sold for low-mid USD 8 mills. Clients of Jinhui Shipping bought the Supra "Tesoro"-53K/2007 Shanghai Shipyard for USD 15.75mills. On the Tanker sales, the LR1 "Justice Victoria"-75K/2010 Minaminippon changed hands for USD 17.5 mills and the MR2 "Ivy Express"-51K/2009 STX sold region USD 15mills (Both rumored sold to Greek Buyers).

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