By Ulf Bergman
Macro/Geopolitics
Yesterday, the International Monetary Fund shaved off 0.1 per cent from its projection for the year’s economic growth. The IMF now expects that the global economy will expand by 2.8 per cent this year and 3.0 per cent next year, as financial-sector turmoil adds to the pressures from tighter monetary policy and Russia’s invasion of Ukraine. The fund’s chief economist also highlighted that the risks for the global economy remain on the downside, as banks may become increasingly restrictive in their lending.
Commodity Markets
Crude oil prices advanced yesterday amid continued concerns over supplies from OPEC+. The May Brent futures recorded a daily gain of 1.7 and settled at 85.61 dollars per barrel. The contracts have continued to rise in today’s early trading with gains of around a third of a per cent.
European front-month natural gas prices swung between gains and losses throughout yesterday’s session. The contracts eventually settled at 43.69 euros per megawatt-hour amid a daily gain of 1.3 per cent. While the arrival of milder weather weighed on prices and demand, mounting concerns over supplies during the next heating season contributed to the rising prices. After starting the day in the red, the contracts have staged a recovery in today’s trading with gains of around half a per cent.
The thermal coal futures had a mixed day yesterday, with the Newcastle contracts for delivery in May advancing by 0.9 per cent to settle at 205 dollars per tonne. In contrast, the futures for delivery next month in Rotterdam retreated by 4.2 per cent to 126 dollars per tonne, despite rising natural gas prices.
The risk of supply disruptions as a cyclone approaches Australia’s Port Hedland contributed to rising iron ore prices yesterday. The May futures trading at the Singapore Exchange rose by 1.9 per cent and settled at 119.75 dollars per tonne. However, the contracts have reversed course in today’s session and shed nearly 1.5 per cent.
The base metal futures trading on the London Metal Exchange had a mixed session yesterday. The three-month copper futures advanced by 0.6 per cent, with a weaker dollar lending support, and the nickel contracts gained 2.9 per cent. In contrast, the aluminium and zinc futures ended the day in the red, with the former shedding 1.3 per cent and the latter declining by 0.8 per cent.
The wheat futures for delivery in May listed on the Chicago Board of Trade fell by 0.7 per cent yesterday amid easing supply concerns. However, the positive supply sentiments may prove shortlived, as concerns are mounting over the flows of Ukrainian grain exports. The corn futures for delivery next month retreated by 0.5 per cent, while the soybean futures recorded a daily gain of 0.7 per cent.
Freight and Bunker Markets
The headline Baltic Dry Index retreated by 3.4 per cent on Tuesday. Among the dry bulk freight indices, only the gauge for the Panamaxes remained in the black yesterday, albeit only marginally, with a daily gain of 0.1 per cent. The Capesizes saw their sub-index declining by 6.4 per cent as the cyclone approaching Port Hedland weighed on ordering activities. The indicator for the Supramaxes decreased by 2.6 per cent, while the Handysizes recorded a daily loss of 1.1 per cent.
The output cut by OPEC+ continued to weigh on dirty tanker freight rates, with the Baltic index for the segment retreating by 1.8 per cent on Tuesday. The clean tanker index also remained on its recent downward trend, with a decline of 5.7 per cent. For the gas carriers, yesterday’s session was mixed, with the gauge for the LNG freight rates dropping by two per cent, while the LPG tankers continued higher with a daily gain of 4.7 per cent.
The bunker fuel markets had a mixed session on Tuesday. The trading in VLSFO saw gains of 1.1 per cent in Singapore and 0.7 per cent in Houston, while prices declined by 1.8 per cent in Rotterdam. For MGO, yesterday’s trading was equally mixed. The fuel gained 2.7 per cent in Rotterdam and 0.6 per cent in Houston. In contrast, prices fell by 1,2 per cent in Singapore.
The View from the Shipfix Desk
With the European market remaining off-limits for Russian coal exports, the country’s coal miners have been forced to find other buyers for their output. In the past, the trade in Russian coal from the ports in the Baltic Sea was dominated by short-haul shipments to European ports. However, in the past year, the order volumes for cargoes destined for Asian ports have surged.
Last month saw an increase in cargo volumes loading in the Russian Baltic Sea terminals destined for Asia compared to February. While shipments for China and the Far East remained more or less unchanged, a substantial rise in ordering for cargoes bound for India was behind the month-on-month increase in March.
Data Source: Shipfix