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What to watch

Tanker owners are betting on rising demand for floating storage and increased Chinese purchases of cheap crude to offset contracting oil demand while plunging marine fuel prices help maintain earnings momentum. Brent crude slumped as much as 35% in weekend trading after OPEC oil producers failed to rein in the coronavirus-led oversupply weighing on prices. The contango structure, when the front-month price is lower than future prices, can lead to traders buying and storing oil on tankers for later sale at a profit.

Global oil demand is set to drop in 2020 for the first time since 2009 due to coronavirus, the International Energy Agency has forecast, as its chief accused countries of playing “Russian roulette” to try to drive down oil prices against the backdrop of a global health crisis. The IEA announced on Monday that it expects a 90,000 barrels per day drop in global oil demand year on year for 2020, a downward revision of about 1m barrels per day from its previous forecast.

Terminals appear to be axing shore leave as coronavirus alarm mounts. Two terminals in the UK and Germany have placed blanket bans on seafarers coming ashore and denied access to vessels for chaplains, with seafarer charities fearful that restrictions may soon be widespread.

Analysis

Rodolphe Saadé has mounted a robust defence of CMA CGM’s CEVA Logistics acquisition and played down the group’s debt levels as he presented an upbeat assessment of the outlook for container shipping in the wake of the coronavirus outbreak. While acknowledging that he was concerned about the impact of coronavirus on the European and US economies, the CMA CGM chairman and chief executive said the fact that China trades are rebounding was a positive sign. Freight rates are expected to pick up in the second quarter and thereby absorb the negative impact of the virus outbreak on first-quarter financials.

Opinion

CMA CGM’s Rodolphe Saadé expects cargo volumes to be back to normal by the end of the month, thereby taking pressure off stretched supply chains. Will this be enough, though, to prevent a worldwide recession as the coronavirus spreads to Europe and the US, the two main drivers of the global economy? asks Janet Porter.

Markets

World boxship fleet update: Return of idle vessels could upset market balance. The number of idle ships potentially returning to active service would outweigh all new deliveries in 2018 and 2019, according to our latest analysis. Carriers will need to keep a tight control on capacity as demand returns.

Early indications from China are that the impact of coronavirus on the supply chain is beginning to be eased as factories return to work, but questions remain over whether the demand side will now have an even more important impact on carriers’ operations in the months ahead.

Russia and Saudi Arabia have begun a race to the bottom for oil market share as crude oil demand contracts for the first time in a decade. Oil prices have slumped 35% following the failure of Opec+ talks to rein in production, sending shockwaves through global markets already reeling from coronavirus and dwindling demand due to warm winter conditions.

In other news

Aon will reclaim its title as the world’s biggest insurance broking firm after buying rival Willis Towers Watson for $30bn. The two brokers are big in the hull and P&I markets.

The industry’s biggest groups have united yet again to push governments to introduce mandatory licensing schemes for bunker suppliers operating in their jurisdictions.

London-listed shipbroker and financial services provider Clarksons has warned that coronavirus will likely hurt its bottom line during the first half of the year, but remains confident about the future for the shipping market.

The port of Oakland was due to receive some 3,000 passengers from the coronavirus-infected cruiseship Grand Princess on Monday in an effort by federal and state officials to provide needed medical attention while insulating the local population from the virus.

CSSC (HK) Shipping has sealed a $102.8m sale and leaseback deal for four feeder containerships with regional South Korean player Sinokor.

A US judge has found a federal jury’s award of $93.6m in damages against the International Longshore and Warehouse Union and its Local 8 unwarranted and reduced the figure to just over $19m instead.