What's a "QANON?"
Two familiar names, Cargill and Glencore
Commodity Traders: Secretive, Crafty And Utterly Necessary
Barry Parker April 28, 2022
Movements of commodities by entities often shrouded in mystery and secrecy drive shipping demand, which, in turn, is tied to economic activity and also geopolitics.
A recent seminar (both in person and live-streamed) hosted by the Climate School at Columbia University, was highly informative. Indeed, shipping industry participants who are trying to understand the current situation in the world’s energy and agricultural trades would do well to listen to the replay. Spoiler alert, the shipping guys will be around for quite awhile, albeit facing trade flows which may shift—sometimes unpredictably.
The hour-long discussion, moderated by Dr. Jason Bordoff, the Climate School’s Dean and also a Founder of Columbia’s Energy Policy Center, featured two Bloomberg journalists covering energy and commodities, Javier Blas and Jack Farchy, along with Maria Jelescu Dreyfus, an investment executive with close ties to Columbia.
Mr. Blas and Mr. Farchy are the authors of a must-read book, The World For Sale, all about the commodity traders whose cargoes have increasingly been filling up those bulk carriers and tankers. “The traders that we write about in the book continue to be heavily involved in moving Russian commodities,” Mr. Blas said.
Though the tankers and bulk carriers garner much of the public attention, interesting tidbits concern container vessels. During the conversation, it was explained that Russian metal exports (think about nickel, aluminum, lithium and cobalt) had been containerized, and now “very few of the world’s container shipping lines are still calling at Russian ports. Shipping stuff out of Russia has become much harder.”
Grain trades (Cargill and Bunge were mentioned) are the subject of increasing concern, with one questioner late in the session noting that food shortages can lead to civil insurrections (and one panelist wondering out loud whether another “Arab Spring” might be in the offing). Ukraine is a large source of wheat (and also palm oil), much of it sent to importers in African countries.
Mr. Blas, in talking about the Black Sea, suggested that floating explosive mines could be found as far down as the Bosphorus. Fertilizer, big exports for Russia and the Ukraine, were also mentioned; cutbacks due to the war have reduced supplies, causing prices to double.
There was a maritime angle to discussions of how to better regulate the movements and movers of commodities amid lack of knowledge by regulators. Indeed, both authors had indicated that “policy makers” had come to them with questions. While shipping is an important lynchpin for movements, the physical side of shipping (like that of spot and term physical commodities markets) is not subject to much economic regulation.
Mr. Farchy said: “The first step is for governments and regulators to understand the physical commodity markets [in contrast to commodity and derivative markets]… nobody is paying any attention to physical markets.” He continued, “It’s hard to do. A lot of this is happening in cargo trades of oil that are changing hands in the high seas, outside the reach of any national regulator, in ships that are flagged with Liberian flags, owned by a Swiss company or a Singaporean company… it’s not very clear how you would draw up a regulation that would touch it.”
The subject of ESG (Environmental-Social-Governance) also came up, with Mr. Blas noting that trading companies now seem to be responding to social pressure (unlike their previous behavior driven purely by profit considerations) by “self sanctioning”- notably in the case of Russian energy exports. On the morning of the webinar, the large trader Trafigura had announced that it will be terminating purchases from Rosneft (a Russian state-owned energy producer, mainly shipping oil blends out of Baltic ports) in several weeks’ time.
Talking about the companies’ voluntary restraint on purchasing Russian oil and products, Mr. Blas said: “it’s surprising… they are taking a step back.” In discussing Glencore, one of the few traders with a public share listing, he pointed with amusement to a large contradiction (“interestingly schizophrenic” were his words) between the company’s extensive ESG department (and public espousing of sustainability) contrasted with the company’s leadership role in the seaborne movement of coal, a dirty fossil fuel.
More:
https://gcaptain.com/commodity-traders-secretive-crafty-and-utterly-necessary/
Russian Black Sea Oil Exports Double, Are Sanctions Still Working?
Bloomberg April 26, 2022
The volume of crude leaving the Black Sea port of Novorossiysk more than doubled but where is it going?
By Julian Lee (Bloomberg) Asia is still snapping up cheap Russian oil that European buyers don’t want.
Seaborne exports of the nation’s crude rebounded in the seven days to April 22. One-fifth of the volume shipped from ports on the Black Sea, Baltic and Arctic coasts is on tankers showing no final destination, with most expected to end up in Asia.
A total of 40 tankers loaded about 28 million barrels from Russian export terminals, according to vessel-tracking data and port agent reports collated by Bloomberg. That put average seaborne crude flows at 4 million barrels a day, up by 25% against the week ended April 15. The weather played a big part.
The jump in oil exports means a boost to revenues for Moscow as President Vladimir Putin steps up his war in Ukraine, while the U.S. and EU discuss options to wean Europe off Russian oil. At current rates of crude oil export duty, the week’s shipments will have earned the Kremlin about $232 million; that’s $46 million more than the previous week.
Russia exports crude from four main areas: the Baltic Sea in northwest Europe, the Black Sea, the Arctic, and terminals on its Pacific Coast. From three of the four areas, flows to Asia or unknown destinations rose.
The weekly shipment figures can swing depending on the timing of when tankers depart, which is also heavily influenced by the weather at ports — as has been the case for the past several weeks.
The past week saw higher aggregate volumes from all four regions. Flows of Urals and Siberian Light crude from terminals in the Baltic and Black Sea rose by 663,000 barrels a day, or 36%. The volume of crude leaving the Black Sea port of Novorossiysk more than doubled as a backlog of ships that built up during the previous week’s bad weather started to clear.
Meanwhile, shipments from the country’s three eastern terminals on its Pacific Ocean coast were up by 105,000 barrels a day, or 10%. Cargoes from Murmansk, which handles crude produced along Russia’s Arctic coastline were also up, increasing by 29,000 barrels a day, or 9%.
This month, Russia’s seaborne crude shipments up to April 22 averaged 3.2 million barrels a day. In full year 2021, they averaged 2.88 million a day.
There has been little impact on Moscow’s earnings from crude exports so far. The rebound in crude flows from Russia’s export terminals in the eighth week after the invasion boosted the Kremlin’s export duty revenues by 25% week-on-week.
Crude oil export duty is set at $61.20 a ton in April, equivalent to about $8.30 a barrel. That’s up from $58.30 a ton, $7.95 a barrel, in March and is calculated from an average Urals price over the period from Feb. 15 to March 14. Export duty will fall to $49.60 a ton, $6.81 a barrel, in May.
A gale warning for the Novorossiysk area issued on April 12 halted flows from the terminal for the latter part of that week, with no tankers mooring at the crude oil jetty between April 12 and April 15. The backlog of tankers that built up was slowly being reduced last week, but loadings were still running about six days behind schedule by the end of the week.
Full article with some nice bar charts:
https://gcaptain.com/russian-black-sea-oil-exports-double-are-sanctions-still-working/