- Chairman’s message
As a Baltic Member you are part of a powerful group of companies and individuals. You have an outsized influence on the movement of global trade, something which affects everyone on this planet. Baltic Exchange Members are drawn from every part of the commercial bulk shipping markets. Collectively you are responsible for a huge proportion of the world’s fixtures; you buy and sell around half of the world’s ships and many of you are pioneers in the business of freight derivatives. And I am honoured to be your representative.
The role of Baltic Exchange Chairman is important. Since the acquisition of the Baltic by the Singapore Exchange (SGX), the role has changed. The Chairman of the Baltic is no-longer the voice of the shareholders, but the voice of the Members. Previous Chairmen had to walk a tricky tightrope, trying to balance both the operational needs of Members and the financial needs of the Member shareholders.
My role is more straightforward: I am here to ensure that your voice and your needs are met by the Baltic Exchange.
The Baltic Exchange touches on many aspects of Baltic Exchange Members’ working lives. This includes the independent indices and assessments which so many rely on to settle and benchmark their transactions; the Code of Conduct which underpins the way in which you all do business. We help you do business and we represent your needs to governments. We perform a charitable function, supporting numerous maritime related charities around the world and we have a role to play in education.
I have been in the position for only a few weeks, and already I have seen many of these aspects of the Baltic’s work in play.
Just last week, along with a range of ship operators, I attended a meeting in London with the Egyptian authorities responsible for the Suez Canal. We heard about the plans for the Canal’s continued expansion and expressed our concerns at the difficulties faced by ship masters when making a transit, which was well received.
I have been reviewing the revised Baltic Code which will be sent to all Members soon. The updated Code has been rewritten as a response to the compliance and operational challenges for shipping professionals created by evolving legal, regulatory and policy development in all jurisdictions where Baltic Members operate.
On the charitable side, I attended an event by The Stelios Haji-Ioannou Philanthropic Foundation in London to showcase its support for the RNLI. The connections between the Haji-Ioannou family and the Baltic go back many years, and I am hopeful that our charitable foundations can work closely together in the future.
I also attended the most recent council meeting of the London Chamber of Commerce and Industry (LCCI), a voice not just in the City but for the whole of London. Our speciality in shipping means the LCCI look to the Baltic Exchange for guidance in London on global bulk shipping trade, making the LCCI another place our voice should be heard.
But to do my role as Chairman justice, I need your input and support. If you have any issues you wish to see raised at the Baltic Exchange Council, please contact me. My door is always open.
- Baltic on judging panel for NMCC final round in Singapore
The Baltic Exchange’s Mark Ma was part of the judging panel for the National Maritime Case Competition (NMCC) final round held in Singapore on 21 June.
The competition looks to bridge the knowledge gap between students and the maritime industry in order to heighten awareness and create interest among the next generation.
Entrants are exposed to real-life industry issues and are challenged with producing feasible and innovative solutions.
The finalists presented their deliverables to the judges and audience in attendance. In the end, it was a close fight for the top three positions with all of the entrants impressing, but it was team Sashimi who took home first prize.
Pictures of the event can be found here.
- YBA meet in London
Some impressive bowling was on show as the Young Baltic Association (YBA) met last Thursday (27 June) in London at All Star Lanes, Brick Lane.
The event was well attended, providing an opportunity for younger members to relax and enjoy some informal networking.
The evening ended with a shootout for the coveted YBA Bowling Championship title. Players took turns to hit a strike or a spare to advance to the next round. The Baltic Exchange’s Crispin Eccleston made it to the final, but in the end, it was Clarksons Katerina Kalaitzian who took home the title. Speaking on her win, an extremely humbled Katerina commented:
“First, I would like to thank my mum, my dad and my brothers and of course the YBA for giving me the opportunity to show to the world my secret talent in bowling! I guess if my career in shipping goes wrong, I can be a professional bowler!!!”
Congratulations to Katerina and thank you to all those who attended. Pictures from the event are available here.
- Passing of former Baltic Member, Philip Clarkson
Members will learn with deep regret of the death of Philip Clarkson on 19 June 2019.
Mr Clarkson was first elected a Member of the Baltic Exchange on 11 March 1975 representing Galbraith’s and then Furness-Houlder (Shipbroking) Ltd from 1983-1986.
Funeral details are awaited and will be published in Baltic Briefing when known.
- Member update: 3 July
The following company has applied for Corporate Membership:
Company Individual MC Shipping Ltd (Singapore Branch)
Mr K Hasegawa Mr S Ogawa Ms J Ong Ms Z Q Chua Topsheen Bulk Singapore Pte Ltd
Mr D Zhang Mr F Zhu
The following individuals have applied for membership of an existing member company:
Company Individual BHP Billiton Freight Singapore Pte Ltd
Mr F Eley Ms Y Hao Ms N Quispe Braemar ACM Shipbroking Ltd Mr W Q Thong Drax Power Ltd Mr M Gibbens Embiricos Shipbrokers Limited Mr N J Bowden Heidmar Inc Mr B H Woodbridge McQuilling Partners Inc Miss K Woon Shearwater Shipping & Chartering Ltd Mr J Gliddon
Any comments should be passed to Karen Karanicholas by 10 July 2019.
- Iron ore on route to recovery
This year has not been the easiest of years for iron ore. In January, the collapse of a Vale-owned tailings dam at the Córrego do Feijão iron ore mine near the Brazilian municipality of Brumadinho resulted in over 200 deaths. On top of the tragedy, the disaster has had serious consequences for iron ore supply. However, there’s a growing sense that supply constraints have peaked.
Speaking exclusively to Baltic Briefing, Erik Hedborg, business intelligence company CRU’s senior iron ore analyst, explains: “I think 2019 has been an exceptional year in terms of supply disruptions, but our view is that peak supply tightness in the iron ore market has happened already. That was sort of at the start of Q2, when you had Brazilian suspensions at their peak, when you had extremely poor weather in northern Brazil — where there are no suspensions, actually — and then you had cyclones in Australia.”
He believes that prospects will improve, however perhaps not at the rate that the market would have preferred. “The market was expecting things to improve a little bit faster, but then, of course, the Rio Tinto [mine issues] happened, which is sort of keeping supply relatively low — even though it’s still better than what we saw at the start of Q2.”
Turning to the second half of the year, Mr Hedborg explains that some of the Brazilian suspensions will stay in place for the remainder of the year. However, last month, one mine returned to the market with full production, with the facility poised to return about 30m tonnes to the market. As for northern Brazil, no additional disruptions are anticipated for the rest of 2019, so shipments from this region are set to be “pretty strong” in the second half. Furthermore, Australia is expected to recover from cyclone-related disruptions from March and April this year. Yet, Mr Hedborg notes that Rio Tinto’s quality issue continues to affect shipments from Australia, meaning that the quantity of iron ore shipped will only gradually increase from there in the second half.
2019 has been an exceptional year in terms of supply disruptions
A recent report from the government of Australia predicts that global seaborne iron ore supply looks set to drop in 2019 as a result of the Vale incident. The Department of Industry, Innovation and Science’s Office of the Chief Economist’ Resources and Energy Quarterly: June 2019 claims that the Brazilian supply shock will dampen export growth in the short-term. Driven by events stemming from the dam collapse, world seaborne iron ore supply is forecast to decrease by 4.1%, to about 1.529bn tonnes, in 2019. Trade in iron ore is set to perk up next year, increasing by 2.7% to 1.570bn tonnes. However, in 2021, while still higher than the predictions for 2019, supply is expected to dip to 1.568bn tonnes.
The report also notes Chinese iron ore imports decreased by 4.9% year-over-year in the five months to May — to 425m tonnes — which “reflects both the supply disruptions stemming from Brazil and, to a lesser extent, Australia, but also higher domestic iron ore production and the rising use of scrap material — which is displacing some iron ore use”. Chinese iron ore imports peaked at 1.075bn tonnes in 2017 and are expected to decline over the outlook period to 1.029bn tonnes in 2021 because of an anticipated steel output decline and growing scrap use.
Discussing the dam collapse, the report explains: “Vale’s production is expected to gradually recover over the next three years, steadily moving towards the 400m-tonne target it set before the Brumadinho tailings dam collapse. In the meantime, the supply of high-grade (65% Fe content) iron ore will be limited, only improving with the ramp-up of Vale’s S11D project at the Carajás complex and the restart of its Brucutu operations. The full recovery in Vale’s production hinges upon 60m tonnes of production associated with the use of tailings dams. Of this amount, 30m tonnes is expected to come back online if Vale can successfully convert these mines over from wet processing — which relies on water to remove impurities from run-of-mine ores — to dry processing, which does not require the use of tailings dams.
“Vale will also need to prove to government authorities that the subsequent use of blasting will not impact the stability of associated tailings dams (otherwise it is unlikely they will be granted permission to restart),” says the report. “The other 30m tonnes involves operations which are expected to continue using wet processing and tailings dams. The restart of wet processing — expected to take two to three years — requires Vale to prove to authorities that the tailings dams are safe to operate, and in some cases, undertake various measures to strengthen existing dam structures.”
Looking beyond the Brumadinho dam but still within Brazil, the report notes that Anglo American’s Minas-Rio is edging closer towards its capacity of 26m tonnes, generating 4.9m tonnes of high-grade iron ore in the March quarter of this year. As for Vale’s high-grade Samarco mine, shut since the November 2015 tailings dam burst, the facility is anticipated to return to production by 2020, with output gradually increasing to its 32m-tonne capacity.
Away from the South American country, the report forecasts Indian iron ore production to increase by approximately 4.6% per year, from an estimated 200m tonnes in 2018 to 230m tonnes in 2021, with growing iron ore production set to be driven by rapidly growing demand from the domestic steel sector. Additionally, the country is anticipated to become a small net iron ore importer from next year onwards.
In Africa, two projects in the Democratic Republic of Congo (DRC)are set to ramp up over the outlook period, according to the report. “The Sapro group recently delivered its first shipment of high-grade (65% Fe) iron ore to China and is expected to ramp up to 12m tonnes by 2022, and the Glencore and Zanga joint venture is expected to supply 2m tonnes of high-grade iron ore over 2019 and 2020. Tacora’s Wabush high-grade iron ore mine in Canada is on track to restart in June and gradually ramp up to 6m tonnes.”
But regardless of the supply ruminations of India, the DRC and Canada, CRU’s Mr Hedborg turns the attention back to the iron ore stalwarts of Australia and Brazil for future supply focus: “Together, they’re over 80% of seaborne supply, so those are by far the most important countries to keep an eye on,” he summarises.
- Baltic Exchange Freight Market Risk Forum, Hamburg
The Baltic Exchange will be running a Freight Market Risk Forum in Hamburg on 17 October.
More information to follow.
- Baltic Exchange & Tradewinds Shipbroking Forum
As part of London International Shipping Week 2019, the Baltic Exchange and Tradewinds will be collaborating to present an International Shipbroking Forum.
The forum, relevant to shipbrokers, shipowners, charterers and freight traders, will take place on 11 September and is by invitation only.
More details to follow.