Ships Bottleneck: China, Australia Ports Clogged as Coal, Iron Ore Demand Soars

0 comments

Ships Bottleneck: China, Australia Ports Clogged as Coal, Iron Ore Demand Soars

ship bottleneck
Illustration photo of an Eikon ship-tracking screen shows dry bulk ships waiting off Hay Point Australia December 15, 2017. REUTERS/Thomas White/Illustration

Reuters

By Keith Wallis SINGAPORE, Dec 20 (Reuters) – More than 300 large dry cargo ships are having to wait outside Chinese and Australian ports in a maritime traffic jam that spotlights bottlenecks in China’s huge and global commodity supply chain as demand peaks this winter.

With some vessels waiting to load coal and iron ore outside Australian ports for over a month, key charter rates have jumped to their highest in more than three years. Placed end-to-end, the total delayed fleet would stretch more than 40 miles, enough to span the English Channel from Dover to Calais and back.

As well as choking supplies to the world’s second-biggest economy, the clog is costing extra in a shipping sector operating on tight margins, just as it recovers from its worst downturn in more than three decades. Charterers of capesize ships – the largest bulk dry cargo carriers – face paying an extra $1 million per vessel, assuming a 45-day wait, according to fixture data on the Reuters Eikon terminal.

“There are some ports in east Australia that have 80 vessels anchored, which translate into 20-25 days of delay and congestion,” said Ziad Nakhleh, managing director of Greek ship owner Teo Shipping.

Shippers and brokers said the delays were typical, especially during the peak demand winter season, as bad weather including fog and strong winds in China and infrastructure issues in Australia exacerbate increased demand for vessels to satisfy China’s soaring minerals appetite.

Australian ports affected include Queensland export terminals at Hay Point and Dalrymple Bay, where there are 76 capesize and panamax vessels – named for being the largest size than can navigate the Panama Canal – waiting to load, according shipping data in Thomson Reuters Eikon.

At Dalrymple Bay, the 93,296 deadweight tonne (DWT) panamax ship Piavia arrived to load coal on Nov. 4. But loading only started on Dec. 17.

“It must be congestion. I don’t think it’s normal to wait six weeks,” said Nicolaus Bunnemann, joint managing director of the ship’s German owner, Atlantic Lloyd.

Delays at Hay Point and Dalrymple Bay were caused by a combination of port maintenance and the ongoing impact and disruption caused by Cyclone Debbie in March, said Ian Macfarlane, chief executive of the Queensland Resources Council.

“It’s business as usual off Hay Point but we’re still seeing queues for Dalrymple, however it’s declining steadily and we’re expecting a return to normal sometime in January,” Macfarlane told Reuters.

PORTS CLOSED

Once finally loaded, most ships will head to China, where some vessels have already waited over two weeks to unload, according to shipping data.

“There have been several incidents where ports in China have been closed for two or three days at a time,” one Singapore-based capesize ship broker told Reuters. “Changjiangkou (or CJK, the anchorage outside Zhoushan-Ningbo) and Bayuquan were all closed at one stage, although CJK was the worst affected.”

Ship owners with ships stuck in the maritime traffic jam miss out twice around: they are unable to hire out their vessels at the higher rates the congestion has caused.

Charter rates for a 180,000 DWT capesize ship from Western Australia to China hit $10 a tonne – equivalent to about $28,000 a day – on Dec. 12, the highest since April 2014.

Adding to the congestion is a coal and iron ore buying spree that kicked in after the National Congress of China’s communist party in October.

“There has been an abundance of cargo in the market since November after import controls were imposed during the 19th National Congress Meeting,” said Ong Choo-Kiat, president of Taiwan’s dry cargo shipper U-Ming Marine Transport.

“Bad weather, substitution of domestic ore with better quality imported ore caused by the anti-pollution policy, and strong steel prices…have all helped to push freight rates up,” Ong said.

SHIPPERS FRAGILE

China’s December coal imports are set to hit 28 million tonnes, the highest since December 2013, according to Ralph Leszczynski, head of research at ship broker Banchero Costa in Singapore.

For all of 2017, China is on course to import 220.2 million tonnes of coal, up 10 percent year-on-year, according to shipping services firm Clarkson.

Iron ore imports are set to hit 1.07 billion tonnes, up 6 percent compared with 2016, Clarkson said.

The strong demand for iron ore and coal adds to already soaring Chinese consumption of oil and natural gas, most of which is also imported. That’s a boon for a shipping industry that is struggling to recover from on of its worst-ever downturns.

Still, shippers say any recovery is fragile, due to an ongoing oversupply in ships.

“The return to permanent profitable freight rates is still way off,” said Peter Sand, chief shipping analyst at shipping industry lobby group, Bimco.

(Reporting by Keith Wallis; Editing by Henning Gloystein and Kenneth Maxwell)

(c) Copyright Thomson Reuters 2017.

Leave a Reply

SSCP   CAS-002   9L0-066   350-050   642-999   220-801   74-678   642-732   400-051   ICGB   c2010-652   70-413   101-400   220-902   350-080   210-260   70-246   1Z0-144   3002   AWS-SYSOPS   70-347   PEGACPBA71V1   220-901   70-534   LX0-104   070-461   HP0-S42   1Z0-061   000-105   70-486   70-177   N10-006   500-260   640-692   70-980   CISM   VCP550   70-532   200-101   000-080   PR000041   2V0-621   70-411   352-001   70-480   70-461   ICBB   000-089   70-410   350-029   1Z0-060   2V0-620   210-065   70-463   70-483   CRISC   MB6-703   1z0-808   220-802   ITILFND   1Z0-804   LX0-103   MB2-704   210-060   101   200-310   640-911   200-120   EX300   300-209   1Z0-803   350-001   400-201   9L0-012   70-488   JN0-102   640-916   70-270   100-101   MB5-705   JK0-022   350-060   300-320   1z0-434   350-018   400-101   350-030   000-106   ADM-201   300-135   300-208   EX200   PMP   NSE4   1Z0-051   c2010-657   C_TFIN52_66   300-115   70-417   9A0-385   70-243   300-075   70-487   NS0-157   MB2-707   70-533   CAP   OG0-093   M70-101   300-070   102-400   JN0-360   SY0-401   000-017   300-206   CCA-500   70-412   2V0-621D   70-178   810-403   70-462   OG0-091   1V0-601   200-355   000-104   700-501   70-346   CISSP   300-101   1Y0-201   200-125  , 200-125  , 100-105  , 100-105  , CISM   NS0-157   350-018  , NS0-157   ICBB  , N10-006 test  , 350-050   70-534   70-178   220-802   102-400   000-106   70-411  , 400-101   100-101  , NS0-157   1Z0-803   200-125  , 210-060   400-201   350-050   C_TFIN52_66  , JN0-102  , 200-355   JN0-360   70-411   350-018  , 70-412   350-030   640-916   000-105   100-105  , 70-270  , 70-462   300-070  , 300-070   642-999   101-400   PR000041   200-101  , 350-030   300-070  , 70-270  , 400-051   200-120   70-178   9L0-012   70-487   LX0-103   100-105  ,