Lightning in the Sky

 Written by：Carlos Santana/Chris Solberg

Lightning in the sky
Thunder on the ground
Man and beast alike
Seeking shelter from the storm
All around there is fear in the air
All around there is fear in the air
(Ukraine & Middle-East)

Burning drops of rain
Flood my thirsty soul
Cold chills to the bone
Glowing eyes filled with pain
All around there's a cry no one hears
All around there's a cry no one hears
(Europe and Latin America)

Always on the run
Never taking time to see
Beauty all around
Nature's dance is just for me
All around, Nature's dance
Just for me
All around, Nature's dance
Just for me
(Asia)

Rainbows glowing high
Evening shadows fall
Don't you wait for me
I won't be back for your call
(The USA)

I am free from your spell, I am free
I am free from your spell, I am free
I am free from your spell, I am free
Free, free, free...

The markets allover are on the run up the hill. A tumble down is in the offing.

Sneeze and Cough Freely Once Again

Finally, the pandemic has been declared over by most of the countries world over & by WHO? Ha, ha!!

That implies :

1. the humans have shaken hands with the virus after the vaccination OR... 

2. the covid19 virus has shaken hands with the humans after a series of mutations

Let’s take the case of a brand new shoe. Sometimes it bites in the beginning. But gradually it adjusts (mutates) itself to the suitable size and shape of the foot and the foot finds itself in its comfort zone. It’s not the foot, but the shoe which has to be benign. 

I guess, same goes with the corona virus. The crossover virus undergoes numerous mutations over the couple of years before it is human friendly.  On the other hand it seems hard to swallow the vaccine shit, how else would one explain humans emerging out of Spanish flu without a vaccine.

Covid19 Eclipse Y2K20

 

2020 was a landmark year when IMO, in order to  acknowledge and  contribute to restrain the  growing  global environmental threat, enforced a new lower  0.5%  global Sulphur cap on bunkers.

However,  the Maritime fraternity’s great sacrifice to adopt to higher fuel standards in order to  cut down toxicity from the face of the earth was smeared by greater toxicity this year.  

The Toxicity came in the form of a novel virus, the Covid19. Believed to have been originated in Wuhan, China, the virus quickly spread around the world, forcing nation after nations to go into lockdown,  grounding airlines, shutting down factories, offices and workplaces across the world. There was huge loss of businesses and employment. The world economy came down on its knees. Shipping  Seafarers suffered the shock as many were left stranded on ships. Printing money was seen as the last resort.

Staying negative was a big positive in the foregone year. Yet, we saw some positivity in this game changer year.  The IT sector, work from home, remote, robotic, online shopping, social media, health sector were among some of the opportunities in disaster last year.

The toxicity has been brewing not only in air but in human hearts too for the past few years. Rightist movement has been gaining momentum and people worldover are more polarized and divided than ever before on grounds of race, colour, religion, caste and nation. Free trade and environment have been a casualty of the constricted thought process. However, with Joe Biden replacing Capt. Trump, we may be seeing some of the blocked trade routes opening up in coming years and the environmental efforts be restored to RFA.  

Year 2021 is gonna be a fallout year of 2020. Now that the vaccines have been rolled out, the effect is to be seen. A lot of liquidity was pumped in the financial markets last year, which will need to be mopped out gradually. The stock markets are at all time high. We will need to see a meaningful growth in world trade this year to sustain optimism in futures.

Learn from yesterday, live for today, hope for tomorrow. The important thing is not to stop questioning. – Albert Einstein.

No Sulphur - Lead me out of the Dark Climate Change

So finally, Y2K20 is here, and for the new year's resolution merchant ships vow to cut down on smoking sulphur.

 

In deed its gonna be a landmark year in the history of fuels. Before this, 1996 was another such year when another element lead(Pb) was eliminated from gasoline for use in on-road vehicles. 

 

Notwithstanding the great challenges in compliance and implementation of the use of low sulphur fuels in marine industry, the things are expected to fall in place after teething problems.  One thing is for sure to start with, use of sulphur deficient fuels will hike up the logistics cost per ton, which will be paid by the end user as usual. But then, preservation of climate has a cost attached to it. You can eat your cake and have it too, provided you have means to replenish it. Cutting down on sulphur at sea is one such move. A move to make sure, when it falls from the sky, its not just an acid rain.

 

I thank the maritime fraternity to have taken this bold step in the right, oops left direction. Ha ha...

 

Climate has been screaming for the past few decades and trying to tell greed driven people to slow down in their pursuit of mirage and not to treat it with impunity. With extreme weather getting better of people worldwide, the climate activists are being taken more seriously lately. And in 2019, TIME actually stopped and chose Greta Thunberg as its face of the year to highlight the issue. There are some effective steps being taken by governments and organisations to moon walk over the carbon foot prints.

 

Led by hate and greed, the last decade saw an outright rise of communalism, racism and nationalism worldwide. I sincerely hope, 2020 proves to be a tipping point for the right movement to be impeached and stalled.  

Bye 2018 - Hello 2019

The year 2018 began with fear of nuclear war as USA and North Korean presidents claimed they had the nuclear launch buttons on their table. The WW III question was, whose button was bigger and more powerful than the other's.

But, by the grace of God, prudence prevailed and by the middle of the year both presidents were seen shaking hands, rather than pressing buttons.

However, one earth one family dance has gone horribly out of sync.  Nations and people have forgotten Pink Floyd's number and have started to build walls around them once again. Globalisation of trade and economics are victims of left-right politics. Erased trade barriers are seen being re-built by the governments.

What has not changed is advent of technology. The www  is growing without boundaries. Be it alibaba, amazon or flipKart, all are seeing growing consumer base in multifolds. On the otherhand, robotization of processes is at acme. Driven by economy of scale, mammoth is achieving extended dimensions.  The motto stands; Citius, Altius, Fortius.

This year, we saw a huge swing in Oil Futures briefly as a scary reminder of how vulnerable we are to energy crunch.

Nature kept reminding us that we were on an overdrive in our usage of resources. Consumerism is OK but not at the cost of the basic necessities like fresh air and water. The environment needs attention. The year 2019 is the penultimate year before IMO fuel regulation kicks-in in 2020. Chaos as usual will herald opportunity.

Wish you all a happy new year, 2019!!

Y2K20

So finally it seems IMO will go ahead with its Sulphur Cap Compliance regulation whereby, ship's would have to be fed on LSFO with sulphur contents less than 0.5% from existing HSFO having 3.5%. In layman's lingo hyenas of energy jungle would be asked to consume fresh flesh instead of rotting carcass.

As per EIA data, half of the 8mbbld high sulphur fuel oil produced by the worldwide downstream refineries is consumed by the ships. Come 2020, 70% of the demand for this product will fall which would bring a great imbalance in demand, supply and prices of this product. The impact would be severe and felt by the entire sphere of producers and consumers.

Impact on Upstream: Demand for Sweeter crude will be higher and thus the price differential between sweet and sour crude will widen. MEG producers stand to lose more than the western producer of sweeter crude.

Impact on Downstream: Refineries without Coker/ hydrocracker unit producing higher amount of HSFO will see shrinking profits and building inventories of the lower grade fuel. US refiners are less vulnerable than the rest.

Impact on Bunker prices: There will be huge differential between the prices of  HSFO and LSFO/MGO.

Impact on Ship Owners/ Shipping market: The operating cost will increase tremendously due to high priced bunkers. Thereby hitting the profitability. Small owners will be at potential risk of not bearing the operating cost so they will prefer timechartering their units instead of performing Voyage charters. Timecharter rates will drop. Freight rates will be much higher. 

Impact on Charterers: Obviously the cost of fuel will be passed on to the charterers of ships or receivers of the goods.

Impact on world economy: This premium on bunkers will in turn kick up the commodity prices in general and a wide spread inflation. Higher rate of inflation will inspire higher interest rates which in turn will subdue demand, stock markets and world economy.

Apart from shifting to higher grades of bunkers there are two more alternatives given to the ship-owners/operators for compliance of the rule. First is to install scrubber system onboard while using baser grade and the second is to use alternative marine fuels like LNG or methanol etc.

Whereas, the alternative fuels fail on accessibility and availability issues, I find installing scrubbers onboard as the best solution for the tramp ships. It is logical to upgrade the digestive system rather than limiting your dietary choices. However, it has not found favours with majority of owners as it is expensive and results in layoff days in a repair yard.

Disaster for some means opportunity for some. Sweet crude producers, full conversion refineries with high complexity rating, advanced engineering and technology companies making scrubbers etc are all set to gain out of misery of ship operators. Besides these, the defaulters and cheaters will make a killing as always.

However, severity of the impact is subject to the sincerity or strictness with which the regulation is complied with. In present scenario, the authority to enforce IMO 2020 rests solely with the flag state. Flag states neither do have adequate infrastructure, resources or will to enforce the law. Most of the ship owners, specially the small, have chosen to remain inertial banking on the fact. But winds of change are already blowing. All players in the game will have to evolve or else get exhausted.

Need to protect our environment for a better future at any cost.  

Coal Ahoy!

Pres. Trump has trumped another of Obama's high cards. After Obama Care Mr Trump has rolled back Obama climate action plan. The core idea is to reinstate cheap coal as the main source of energy. Save and create jobs for the coal miners. Obviously, coal lobby was at work during elections. Mr. Trump is a businessman and he, like anyone of his clan, believes money could buy everything, even immortality.

Unfortunately, Mr. Trump's act is spontaneous, prejudiced and political.

Until recently, USA has been leading the fight against Global warming, which is more of a proven fact than a myth. A step back by USA may unleash China & India, the two leading aggressors and violators. However, the renewable energy technology has now gathered enough momentum and has become potential competitor of the fossil fuels by virtue of low prices. Slacking of regulations on the production and use of dirty sources of energy would put downward pressure on their prices thus making them less profitable and the mine workers less prosperous.

Moreover, it wont be a smooth drive to furnace for Mr. Trump and the lobbyists. Environmentalists will be major road block and the diggers will have to go through lengthy law suits before they could get permission to smoke the world.

Nevertheless, in short run, its a good news for dry bulk shipping markets, a sector which turned lifeless after Obama climate action plan came in force. Now we will see more coal on water and the dry bulkers cranking to life once again.

On the macro screen, the movie would continue as scripted after a minor glitch because only the technology holds the trump card to future.