The week in charts: Floating storage demand facing ‘second wave’
Also, global seaborne container volumes continued to climb in July to a level nearly on par with the past year as transpacific rates reach new historic highs
The number of vessels being hired for floating storage could be about to jump again following reports of some significant charters by oil traders, as prices for crude hit a three-month low. Meanwhile, box lines continue to profit from renewed transpacific demand with freight rates reaching new historic highs
AFTER the price of crude oil sank to new multi-month lows this week, speculation is mounting that a ‘second wave’ of floating storage for oil products is about to hit the tankers market.
Oil traders who reaped massive second-quarter profits amid the pandemic-induced disruption in crude prices have again begun chartering tankers for short-term periods.
BP has reportedly chartered the 2003-built very large crude carrier Gene for a period of up to six months. Earlier in September, commodities trader Trafigura chartered four VLCCs and one suezmax tanker for periods of six months or less.
Some 15 million barrels of crude recently loaded in West Africa alone are heading into floating storage due to a lack of buyers, according to Chris Midgely of pricing agency S&P Global Platts.
Vessel tracking data from Lloyd’s List Intelligence confirmed this observation. The 2012-built very large crude carrier Kondor, which loaded cargoes at Kaombo Sul and CLOV terminals in Angola in early August, is seen floating with no destination indicated at Malaysia’s Sungai Linggi anchorage.
The charters are seen even as spot and futures prices in the oil market do not appear immediately profitable for floating storage.
So-called contango plays occur when current prices are lower than future prices at levels that allow traders to buy crude or refined products in the physical market for storage and take paper positions that allow for later sale at a profit.
The number of tankers storing clean and dirty products for more than 20 days is tracked at 252.75m barrels on 194 vessels for the week ending September 11, according to preliminary Lloyd’s List Intelligence data. That compares with 311.3m barrels on 274 tankers measured in early June.
Congested Chinese discharge ports have distorted the true number of current vessels storing crude for contango purposes.
Container lines continue to fill their boots on the transpacific trade with rates climbing to yet more historical highs over the past week.
The latest Shanghai Containerised Freight Index shows further gains, with spot freight rates to the US west coast and US east coast up by another 3.3% to $3,758 per feu and 7.9% to $4,538 per loaded 40 ft box, respectively, as lines succeeded in pushing through another round of general rate increases.
Cargo space remains extremely tight with utilisation levels close to 100%, while carriers continue to put on extra loaders to meet strong demand and take advantage of the higher yield.
According to Alphaliner, as many as 10 ships of between 3,300-13,800 teu are active on eastbound routes to the North American west coast from the Far East acting as ‘extra sailers’.
The analyst noted that Mediterranean Shipping Co’s recently launched ‘Santana’ service from China, starting with the departure of the 8,819 teu MSC Lily from Shanghai on September 5, will be joined by two additional sailings this week by the seasonal 2M China California ’Sequoia’ service.
Meanwhile. global seaborne container volumes continued to climb in July to a level nearly on par with the past year, in the clearest sign yet that a trade rebound is in motion following the demand downturn at the hands of the coronavirus backdrop.
The latest figures published by Container Trades Statistics show global container demand was down by just 0.1%, or around 20,000 teu, in July against the past year at 14.8m teu, representing the strongest month of 2020 and the highest tally since last July.
CTS said the figure will be subject to fine tuning in the coming weeks, however, it said that it is clear that “as lockdown restrictions are easing, and economies are re-opening, so demand is steadily improving”.
With volumes falling back only slightly, global containerised freight volumes through the first seven months of 2020 of 92.9m teu are down 5.7% on the past year, according to CTS.