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Global Shipping Confidence Dips on US – China Trade War

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  • Global Shipping Confidence Dips on US – China Trade War

A latest Shipping Confidence Survey has shown a dip in confidence in the shipping industry over the past three months.

Also, respondents to the survey carried out by seatrade-maritime.com have forecast higher freight rates for the container and tanker shipping segments.

The average confidence level in the shipping industry has fallen marginally in the three months to May 2019 to 6.1 out of a possible 10, compared to 6.2 in the three months to February 2019, the survey revealed

The dip in overall confidence was attributed to the ongoing concern over trade wars and increased regulation.

“A small dip in confidence is not surprising given the recent volatility generated by the US-China trade wars, the heightened tension in the Arabian Gulf, the failure to conclude Brexit negotiations, and general political instability in many parts of the world,” said Richard Greiner, partner, shipping & transport at BDO.

“Trade wars certainly formed the over-arching theme for this quarter, but they are not the only recurring topic. The cost and technical implications of complying with existing and incipient regulation was referenced on a number of occasions, typified by the respondent who noted that the high level of regulation ‘makes it extremely difficult to make a profit’,” he added.

On a brighter note, the number of respondents expecting higher freight rates over the next 12 months in the tanker market was up by four percentage points on the previous survey to 55 per cent, with charterers (75%) leading the way. The numbers expecting higher container ship rates rose by nine percentage points to 35 per cent.

In the dry bulk sector, however, expectations of rate increases were down overall from 52 per cent to 48 per cent, with charterers the only category recording an increase in expectation levels.

When asked to estimate the level they expected the Baltic Dry Index (BDI) to reach in 12 months’ time, 50 per cent of respondents anticipated a figure of between 1000 and 1499, while 22 per cent put the likely level at between 1500 and 1999. “One could be more bullish about the BDI if there was less global tension around,” said one respondent.

The quarterly survey also noted that the likelihood of respondents making a major investment or significant development over the coming year was up from 5.3 to 5.4 out of 10.0. Owners’ confidence in this regard was up from 5.4 to 6.3, while the rating for charterers was 5.6 compared to the survey high of 7.3 recorded last time. The confidence of managers and brokers in this category was also down, from 5.6 to 4.8 and from 4.9 to 3.9 respectively.

The overall performance over the next 12 months is most likely to be influenced by demand trends as cited by 26 per cent of respondents, followed by competition by 19 per cent of respondents and finance costs at 13 per cent.

“Despite the challenges the industry is facing, there are a number of positive indicators. New technology is making shipping more attractive to investors, and will moreover act as a trigger to accelerate the pace and extent of recycling. Higher freight rates should logically follow, and those who hold their nerve will ultimately benefit, “Reiner said.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Nigerian Army Seizes 700,000 Liters of Stolen Petroleum in Sweeping Raid Across Four States

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In a series of raids across Rivers, Bayelsa, Akwa Ibom, and Delta states, troops from the 6th Division of the Nigerian Army seized 700,000 liters of stolen petroleum products, sealed 29 illegal refining sites, and arrested 24 suspected oil thieves.

In a statement issued by the Division’s Public Relations Officer, Lt. Col. Danjuma Jonah, it was noted that 14 boats involved in crude oil theft were also destroyed during the operation.

Jonah disclosed that the raids were conducted between October 28 and November 3, 2024.

He revealed that the troops intercepted a large wooden boat carrying over 150,000 liters of stolen crude oil in the Kula area of Akuku-Toru Local Government Area of Rivers State.

Providing a breakdown of the operation, Jonah stated, “Another boat carrying 50,000 liters of crude oil was seized, while three illegal refining sites were dismantled, and cooking pots containing 20,000 liters of stolen diesel were confiscated. Troops also dismantled ten illegal refining sites in Kay and Abesa in Akuku-Toru LGA, seizing 400,000 liters of illegally refined diesel.”

In Bayelsa State, soldiers deactivated two illegal refining sites at Boma Creek in Southern Ijaw LGA, recovering storage tanks holding over 2,500 liters of stolen crude. Similarly, operations in Obughene Creek in Southern Ijaw yielded over 4,500 liters of stolen crude, while another 3,000 liters of illicit product were seized at West Boma Creek.

In Akwa Ibom State, troops intercepted two Toyota Camrys loaded with illegally refined diesel, concealed in nylon bags, totaling 3,000 liters. The vehicles were stopped along the Ikot Abasi-Abak road, and the drivers were detained.

In Delta State, multiple raids were conducted, including the interception of a tricycle in Kwale, Ndokwa West LGA, carrying stolen iron pipes allegedly taken from decommissioned Oando pipelines.

Another raid in Patani town uncovered a storage dump containing 40 jerricans of stolen products, while troops patrolling Uro Community waterways intercepted a wooden boat with 200 sacks of premium motor spirit,” he concluded.

The statement added that suspects arrested during the raids have been handed over to relevant authorities for prosecution.

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Crude Oil

OPEC+ Supply, Trump-Harris Election Face Off Lend Support to Oil Prices

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The decision of the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ to delay plans to increase output for another month and the close call of the presidential elections in the United States triggered a 2 percent rise in oil prices.

Brent futures were up $1.98, or 2.7 percent at $75.08 a barrel while the US West Texas Intermediate (WTI) crude rose $1.98, or 2.85 percent to $71.47.

OPEC+ said it would extend its output cut of 2.2 million barrels per day for another month in December at a meeting on Sunday.

Saudi Arabia and Russia, as well as Algeria, Iraq, Kazakhstan, Kuwait, Oman and the United Arab Emirates (UAE) agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels per day for one month until the end of December 2024.

The move is aimed at boosting oil prices amid uncertain demand and accelerating supply, with an eye on the imminent US presidential election, though analysts predict a limited impact.

Also speaking on Monday, OPEC’s Secretary General, Mr Haitham Al Ghais said on Monday that OPEC remains very positive on demand for oil in both the short and long term.

The market has also shifted focus to the American presidential election between Democratic presidential nominee and current Vice President, Kamala Harris and Republican Donald Trump on Tuesday (November 5).

So far, the outcome has shown that the election is tight as it could take days after voting ends to know the eventual winner.

The market will also be looking at the developments in the Middle East, especially with anticipation that Iran was preparing to attack Israel from Iraq within days.

Markets were also watching a new tropical storm that was forecast to form on Monday in the Caribbean and threaten offshore oil production along the Gulf of Mexico.

Oil companies like Shell have moved its non-essential personnel from six platforms, adding it currently expects no other impacts on its production across the Gulf of Mexico.

There will be anticipation of what the US Federal Reserve will do at the next meeting on Thursday with expectations high that the US central bank will cut interest rates by 25 basis points.

Also, investors will be looking to China where the government is expected to approve additional stimulus to boost the slowing economy in the world’s largest oil importer.

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Agric Industries Take Interest In Unlocking Nigeria’s $10bn Palm Oil Export Potential

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Some agric-focused industries and firms have indicated interest in enhancing Nigeria’s agricultural productivity and competitiveness through the nation’s $10 billion palm oil export potential.

At the launch of a new report by a research and advisory firm, Vestance, significant untapped opportunities within Nigeria’s oil palm sector were revealed.

Discussing how the nation could regain its lost glory in palm oil production and exportation, stakeholders in the sector emphasised the need for government agencies, private sector investors, smallholder farmers, research institutions, and development partners to work together to help change the narratives in the palm oil sector.

Titled “Reclaiming Lost Glory: Nigeria’s Palm Oil Renaissance,” the report, which was unveiled in Lagos disclosed that Nigeria, despite being a major producer historically, currently exports only $1.34 million in palm oil, ranking 78th globally, while importing $372 million annually

Vestance’s Research Lead, Razaq Fatai, said the report illustrates the immense opportunities lying dormant in the country’s underutilised oil palm plantations, noting that by capitalising and rejuvenating these plantations, Nigeria could generate over $10 billion in export revenue alone.

He explained that Nigeria’s palm oil production began to decline during the country’s civil war between 1967 and 1970, saying, it is now time to begin to reverse the decline and put the sector back on track.

Speaking at a panel session on ways to revitalise the oil palm sector, experts proffered means by which challenges confronting the palm oil sector could be tackled.

In his submission, the Managing Director, SWAgCo (O’dua Investment Group), Dr. Adewale Onadeko, said Nigeria should embrace an agro-industrial cluster strategy, adding that essential infrastructure such as seeds, fertilisers, extension services, processing, and storage facilities should be prioritised if the expected gains could be realised.

Another panellist, Dr. Bayo Ogunniyi, Country Programme Analyst for International Fund for Agricultural Development, highlighted the myriad challenges facing smallholder farmers, particularly the lack of access to finance and the prevalence of old, low-yield seeds.

He underscored the urgent need for Nigeria to distribute high-quality seeds to smallholder farmers to enhance production levels.

Ogunniyi also pointed out that the oil extraction rates of smallholder palm oil processors are alarmingly low, often falling below 15 percent, compared to the 25 percent extraction rates achieved by modern processing mills. Improving these extraction rates is crucial for maximising the output from Nigeria’s palm oil sector.

In his own contribution, CEO of BulkDirect, Ramses Najem, emphasised the importance of situating processing facilities closer to the farms to reduce transportation challenges.

Other speakers at the report launch called for a nationwide adoption of high-yield seeds to boost production, investment in modern processing facilities to increase oil extraction rates, and the development of strategic transportation networks to streamline the supply chain.

 

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