- SGX to run month-long webinar series – ‘Commodities Unplugged’
SGX will be hosting Commodities Unplugged, a month-long webinar series (18 May to 12 June) to share insights into a post-pandemic view of commodity markets, and the macro opportunities offered from an increasingly financialised market.
The series covers insights on how COVID-19 will reshape the macroeconomic landscape. In particular, it will explore the impact on Asia as the largest commodity consumer in the world, and the deep linkages in global supply chain.
The series will comprise over 50 complimentary webinars, connecting an international audience of market participants, investors and physical commodities players with more than 85 speakers and panelists from across the globe. The topics will cover different segments of the commodities industry, and focus on key elements of global macroeconomics and trade – the steel value chain, agriculture, freight, energy, petrochemicals, carbon and the green economy.
The Baltic Exchange will be presenting on the following topics:
- Update on Baltic developments and initiatives (Mark Jackson, Chief Executive): 16:00-16:30 Singapore time (SGT), 1 June 2020
- Recent global turmoil and the implications for shipping (Andy Symonds, Senior Assessor – Freight Market Singapore): 18:30-19:00 SGT, 1 June 2020
- Baltic LNG and LPG freight indices (Nadia Mirza, New Markets): 16:00-16:30 SGT, 2 June 2020
The full agenda and registration are available here.
Loh Boon Chye, CEO of SGX, said, “Commodities form the bedrock of what keeps the world moving. COVID-19 has massively disrupted supply chains and demand on a global scale, causing extreme price volatility across a wide range of commodities, including crude oil, rubber, freight, petrochemicals. The need for price risk management and hedging has never been more pressing. All physical events may have come to a halt, but it is important that we as an industry continue to engage and keep communication channels open.”
The webinar series is open for donation towards SGX Bull Charge, a corporate charity initiative that brings together Singapore’s financial community and listed companies to support the needs of underprivileged children and families, persons with disabilities, as well as the elderly.
This webinar series is supported by Enterprise Singapore.
- Reminder: Baltic assessments publishing arrangements 25 May
Members and subscribers are reminded that due to a public holiday on Monday 25 May, the Baltic Exchange will not be publishing any of its Dry, Tanker or Gas (LNG and LPG) assessments. There will also be no publication of FFA volumes, Dry Option Volume Estimates or Baltic Forward Assessment curves (dry & wet). All indices, FFA volumes and estimates and BFA curves will be published on Tuesday 26 May 2020. However, the Freightos Baltic Global Container Index will be published on 25 May.
- Member Update: 20 May
The following company has applied for Corporate Membership:
Company Individual Ocean Solutions LLC
Mr J Ronan
The following individuals have applied for membership of an existing Member Company:
Individual Company Mr G Pantelidis Allegiant Shipping Ltd
Mr G Pilippou Mr G Skourtis Mr H Wooles Hartree Partners, LP Mr E Bretting J P Morgan Securities plc Mr P Jackson Shell International Trading and Shipping Co Ltd (STASCO)
Mr I Mathews Exxon Mobil Corporation
Any comments should be passed to Karen Karanicholas by 27 May 2020.
- Baltic Academy – revised dates
With the Covid-19 pandemic disrupting schedules and travel, the 2020 Baltic Academy training course dates have been amended.
Please note that the below are subject to the latest government advice and subject to further change.
Freight Derivatives & Shipping Risk Management, Singapore: 7-8 September
Advanced Freight Modelling & Trading, Singapore: 9-10 September
Shipping Economics & Investment, London: 26-27 October
Ship Finance Executive, London: 9-10 November
Freight Derivatives & Shipping Risk Management, Houston (originally NYC): 7-8 December
Advanced Freight Modelling & Trading,Houston (originally NYC): 9-10 December
- Deep recession, but fast snapback?
Drawing parallels between the global financial crisis of 2007/08 and the current economic slump can be, according to MSI’s regional director for Asia, “very constructive”.
While a Covid-19-prompted global recession is expected to be much more acute than the recession sparked by the global financial crisis, there is potential for a faster recovery, says David Jordan.
Mr Jordan was speaking at last week’s joint Baltic Exchange/Institute of Chartered Shipbrokers lunchtime lecture webinar.
There are two reasons for MSI’s forecast of a swifter snapback: firstly, the impact of Covid-19 is centred on the real economy rather than on any financial markets. So, while there is a risk of the situation escalating, there is also greater scope for governments to introduce stimulus packages which would hopefully facilitate a quicker recovery, Mr Jordan said.
Secondly, on the shipping side the markets are in a much better position today than they were in 2007/2008 when the global financial crisis hit. This, he said, largely revolves around the supply side. “You have to remember that shipbuilding capacity isn’t as high and that the supply side overhang that loomed in the 2010s isn’t there – it’s much more under control. All of that really combines to provide an additional promise of a quicker return to normal throughout the second half of this year and into 2021.”
Going forward, the pandemic and ensuing recession is expected to suppress newbuilding activity through to at least 2021. In fact, MSI expects that the next wave of serious newbuilding will not be until after 2025. The upside of this enforced delay to placing orders will be that ship owners will be given some breathing space to assess the feasibility of future fuels.
On the current ship supply front, Mr Jordan expects that the number of bulk carriers in warm and cold layup will continue to rise. This can partly be attributed to the fact that operators are not able to send ships for scrap while the major shipbreaking countries are in lockdown, but also because the dry bulk fleet employment rate has fallen off a cliff.
According to MSI’s Horizon market model, the employment rate will drop below 80% for the first time in over 30 years in 2020.
Further, MSI expects scrapping of dry bulk carriers to reach 17m dwt by the end of this year, but only if scrapyards come back online in the second half of the year.
Meanwhile, it’s a mixed picture for iron ore prospects with the positives of China’s recovery – the world’s largest importer of the commodity – and Australia’s continued ability to supply set against production shutdowns at mines in Canada and South Africa, and Brazilian supply concerns.
“Vale recently slashed their production guidance by 30m-40m tonnes for 2020 largely due to the virus,” said Mr Jordan. And while the Brazilian national and Para state governments have identified mining, processing, commercialisation and shipping as “essential operations” that can continue if there is a lockdown, there is still expected to be a significant hit to business operations if there is a sustained disruption.
Longer term, Mr Jordan expects China’s imports of iron ore to slow as a result of a number of factors, including a reduced need to leverage trade as the share of imports in consumption reaches saturation, an increased use of recycled steel and the approach of peak steel consumption.
The coal sector also raises concerns. Short term, demand has been seriously curtailed in the key regions of India and Europe. While Vietnam offers a “pocket of hope”, China is the ultimate “swing factor”. Dynamics of the coal sector are described as “uncertain” and overall “the negatives outweigh the positives”.
“We don’t expect the seaborne trade in coal to peak soon, but it will slow,” Mr Jordan said.
On the upside, grains trade is seen as a “positive story at the moment”, with production of the main trading grains continuing, uninterrupted by the pandemic. However, Mr Jordan does sound one warning bell: “The Achilles key for grains trade is likely to be inland transport networks and port throughput –– if these are badly affected for major exporters then trade will suffer.”
Longer term, owners of smaller ships should find themselves protected by the growing global population and changing diets – both leading to an increase in grain demand. Added to which, “the geographical structure of the growing Asian economy means more trade has to travel by sea, both domestically and internationally, which will support trade in steel products, forestry, etc. in smaller parcels”, said Mr Jordan.
The Baltic Exchange and Institute of Chartered Shipbrokers lectures series is a longstanding jointly organised lecture programme on key topics. The lectures take place in Shanghai, Singapore, Athens and London and are designed to support and develop those working in chartering and operations roles.