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In 2019, prior to the onset of the COVID-19 pandemic, jet fuel contributed an estimated 8% of oil products’ cargo demand. When travel restrictions were imposed during the pandemic, air travel suffered significantly and jet fuel shipments in 2021 were down approximately 33% compared to 2019. Airlines’ capacity has been on a slow recovery path since bottoming out in April 2020 but remains significantly lower than 2019 levels.
In a notice released on 5 May 2022, India’s Ministry of Power instructed all power plants to increase their imports of coal. Specifically, the Ministry demands that power plants designed to run on domestic coal start importing at least 10% of their requirements.
As European Union retail trade stagnates, the question for the Far East to Europe container trade will be whether consumers will buy less or cheaper.
China is the world’s largest importer of crude oil and Russia is the second largest crude exporter. Much of the crude oil trade between the two countries, however, is piped and the short distance from Far East Russia to China also limits the impact on demand for crude oil tankers. Still, a change in the Russia to China dirty trade has the potential to impact tanker tonne miles demand as it could come at the expense of longer trade lanes.
Bauxite shipments arriving in China hit new record levels in the first quarter of 2022 and grew at an average annual rate of 12.8% between 2017 and 2021, significantly outpacing all other commodities which combined grew at an average of just 4.3% per year. So far in 2022, the appetite for bauxite imports has remained high and the price of aluminium has reached its highest level in 14 years.
The container ship orderbook hit a post-financial crisis low just below 2m TEU in October 2020. In the eighteen months since then, liner operators have seen record profits and a large percentage of these have been poured into newbuilding contracts.
The spread between very-low sulphur fuel oil (VLSFO) and high-sulphur fuel oil (HSFO) has widened following Russia's invasion of Ukraine. The HSFO price, however, could rise if Russian volumes coming into the market start declining due to sanctions.
Due to supply concerns at domestic power plants, Indonesian authorities banned coal exports during January 2022, removing around 30% of global coal volumes from the bulk market as a result. This caused Newcastle coal futures to increase by more than a third and added strain on coal inventories across Asia. The ban was lifted in February.
During the pandemic retail sales and personal savings have been increasing in tandem and supported US consumer demand for imports from the Far East. Now, retail sales appear to be receding and the question is whether the past two years’ savings will be enough to support continued high import volumes as consumer sentiment is dropping and the war in Ukraine continues.
Bunker sales in the world’s largest bunkering hub fell to 3.94 million tonnes in September, the lowest level since June 2020 and a 6.7% drop from September 2020.