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We are an independent shipbroker with an approach focused on expertise rather than scale.

Affinity Policy Comment 18 october 2021

No easy way out

China's power woes look set to intensify as coal prices rose to a record on Monday following data showing supply falling in September, thus adding to concerns that domestic output may be unable to meet surging electric generation demand.

This might threaten a domino effect, which could exacerbate disruptions in already strained global supply chains, with the pressure intensifying as we approach peak demand season ahead of Christmas. In fact, shortages of domestic coal have driven fuel prices for Chinese power generators higher, causing unprofitable companies to ration power to industrial users. That has forced some factories in the world's largest economy to suspend production.

Power shortages, supply bottlenecks, sporadic Covid-19 outbreaks and debt problems in China’s property sector have already weakened growth in the world’s second-largest economy. GDP grew by 4.9 per cent in the July-September quarter from a year earlier, its weakest pace since the third quarter of 2020.

Overall industrial output rose just 3.1 per cent in September from a year earlier, marking the slowest growth since March 2020, during the first wave of the pandemic.

China has already enacted measures to increase the output of coal, which fuels nearly 60 per cent of its power plants, but government data on Monday showed that those steps will take time even as power demand surges to meet post-Covid-19 industrial needs.

In fact, coal output fell in September due to weather, safety and logistics challenges. And recent price liberalisation for coal power utilities and industrial end-users is a signal that the government is not confident that it can control coal prices in the near-future

Wood Mackenzie expects higher coal prices will mean a 25 per cent or more increase in end-user power prices, but it is unclear if higher power prices would reduce demand growth.

China's economy is also facing unprecedented factory gate inflation, adding to manufacturers’, exporters’ and retailers’ concerns. The producer price index rose by 10.7 per cent from a year earlier in September, the biggest rise since the NBS started compiling the data in 1996. But Chinese businesses have been reluctant to pass on the higher costs to local customers due to already soft orders.

On the other hand, consumer inflation eased last month, weighed down by weak demand for goods from clothing to household appliances, as well as a decline in volatile food prices.

This mixed inflation picture is posing a dilemma for the country's monetary authorities, forcing policymakers to walk a tight rope between supporting the economy and further stoking producer prices.

Overall, the chances of an interest rate cut or a reduction in banks' reserve requirements this year are relatively low, as authorities would likely keep interbank liquidity reasonably ample through structural adjustments instead.

On Sunday, People's Bank of China governor Yi Gang said the economy is expected to grow 8 per cent this year, but the market doesn’t seem to be as upbeat, with Barclays cutting the Q4 forecast by 1.2 percentage points to 3.5 per cent.

Elsewhere, the inflation outlook has also prompted expectations of earlier tightening of global monetary policy, with Danske Bank expecting as much as two rate hikes from the Fed in the second half of next year. As a result, US Treasury yields firmed on Monday, extending a trend in recent weeks with five-year bond yields rising to their highest levels since February 2020

The US dollar headed back on Monday towards a one-year high hit last week as rising inflation expectations and higher bond yields boosted its appeal against its rivals.


Affinity Research LLP

what we do

  • Carbon

    Carbon

    Using tailored analytics platforms, we offer client-specific advisory and trading services across the global carbon markets. Contributing to hedging strategies, sustainability reporting and financing requirements, our aim is to assist clients in managing their financial exposure to the approaching energy transition.

    Contact: Hugo Wilson
    [email protected]
    +44(0)20 3142 0121

    Dry Cargo

    Dry Cargo

    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Buenos Aires, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.
    For Atlantic business please contact Hans Bredrup
    For Pacific business please contact David Oakley

    Contact: Hans Bredrup
    [email protected]
    Contact: David Oakley
    [email protected]

    LNG

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]
    +47 2109 8210

    Research

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Sevita Kondyliou
    [email protected]
    +44(0)20 3142 0182

    S & P

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Tom Morrison
    [email protected]
    +44(0) 20 3142 0128

    Tankers

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Contact: Ben Pusey
    [email protected]hip.com
    +44(0)20 3142 0125

    Carbon

    Using tailored analytics platforms, we offer client-specific advisory and trading services across the global carbon markets. Contributing to hedging strategies, sustainability reporting and financing requirements, our aim is to assist clients in managing their financial exposure to the approaching energy transition.

    Contact: Hugo Wilson
    [email protected]
    +44(0)20 3142 0121

    Dry Cargo

    Our dry bulk chartering teams in Sydney, Melbourne, Perth, Santiago, Lima, Montevideo, Buenos Aires, Singapore and London are cargo-focussed and they fix voyage, COA and time charter business on behalf of their clients with a wide range of ship owners.
    For Atlantic business please contact Hans Bredrup
    For Pacific business please contact David Oakley

    Contact: Hans Bredrup
    [email protected]
    +56 99 887 3036
    Contact: David Oakley
    [email protected]
    +61 2 9937 8806

    LNG

    Our young and dynamic LNG team possess wide-ranging experience of spot and term charters working with all major LNG shipowners and charterers. The LNG team has close interaction with the Newbuilding and Sale & Purchase divisions with an unrivalled track record of contracting LNG newbuildings and in the sale and purchase of LNG assets.
    We maintain up-to-date knowledge and an understanding of new technologies within the LNG sector to ensure that our clients can make the most suitable and cost-effective decisions on shipping solutions.

    Contact: Joni Mackay
    [email protected]
    +44(0)20 3142 0133

    Newbuilding

    Our Newbuilding team has concluded over 500 newbuildings of all types, including LNGCs, FSRUs, drillships, crude tankers, product tankers and dry cargo vessels. We have contracted in all major newbuilding centres globally, with particular focus on the Korean Shipyards.

    Contact: Nick Wood
    [email protected]
    +44(0)20 3142 0111

    Offshore

    Affinity Offshore is based out of our Oslo and Houston offices. The Team focuses on world-wide sale & purchase of offshore support vessels, as well as chartering – particularly in the Americas and Mediterranean/MENA regions.

    Contact: Tor-Øyvind Bjørkli
    [email protected]
    +47 2109 8210

    Research

    Our research department combines real time market information with econometric modelling and the latest technology. 

    Contact: Sevita Kondyliou
    [email protected]
    +44(0)20 3142 0182

    S & P

    Our Sale & Purchase team has extensive experience of working with private clients, national shipping companies, major corporates, oil companies, grain houses and institutional investors. We provide a cradle to grave services across all shipping sectors. We operate from London, Singapore and Seoul to give 24-hour coverage of the markets, working for both newbuilding and second-hand buyers.

    Contact: Tom Morrison
    [email protected]
    +44(0) 20 3142 0128

    Tankers

    Our established tanker chartering teams serve the industry from London, Houston and Santiago delivering a highly proficient spot chartering service with a prime position in the fuel oil market. The team has close relationships with oil majors, national oil companies, oil traders and major ship owners and operators. 
    Our ethos for operations and post-fixture is simple: these roles are as important to us as the chartering/commercial function, and we continue to apply those same principles of professional ship broking throughout the life of each fixture.

    Contact: Tim Gurdon
    [email protected]
    +44(0)20 3142 0142

    Valuations

    We provide transparent, objective ship valuation service to major owners, banks and other financial institutions at short notice and a daily basis. We provide a retainer service for regular fleet valuations.

    Contact: Ben Pusey
    [email protected]
    +44(0)20 3142 0125

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Our locations


  • Floor 44
    The Leadenhall Building
    122 Leadenhall Street
    London EC3A 8EE

    T +44 (0)203 142 0100

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    LONDON

    Carbon Dry Cargo Finance LNG Newbuilding Research S & P Tankers Valuations


    Floor 44
    The Leadenhall Building
    122 Leadenhall Street
    London EC3A 8EE

    T +44 (0)203 142 0100

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  • 72 Anson Road
    #13–03 Anson House
    Singapore
    079911

    T +65 6805 8760

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    SINGAPORE

    Dry Cargo LNG S & P Tankers


    72 Anson Road
    #13–03 Anson House
    Singapore
    079911

    T +65 6805 8760

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  • Suite 5, Level 1
    200 Toorak Road
    South Yarra
    VIC 3141
    Australia

    T +61 398 671 466

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    MELBOURNE

    Dry Cargo


    Suite 5, Level 1
    200 Toorak Road
    South Yarra
    VIC 3141
    Australia

    T +61 398 671 466

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  • 8/38 Colin Street
    West Perth
    WA 6005
    Australia

    T +61 892 260 618

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    PERTH

    Dry Cargo


    8/38 Colin Street
    West Perth
    WA 6005
    Australia

    T +61 892 260 618

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  • 1st Floor
    64 Alexander Street
    Crows Nest, NSW 2065
    Australia

    T +61 299 378 800

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    SYDNEY

    Dry Cargo


    1st Floor
    64 Alexander Street
    Crows Nest, NSW 2065
    Australia

    T +61 299 378 800

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  • #703, Shin-A Building
    50 Seosomun-ro 11gil
    Jung-gu, Seoul
    South Korea
    100-752

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    SEOUL

    LNG Newbuilding S & P


    #703, Shin-A Building
    50 Seosomun-ro 11gil
    Jung-gu, Seoul
    South Korea
    100-752

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  • 6/F Kimberley Plaza
    45-47 Kimberley Road
    Tsim Sha Tsui. Kowloon
    Hong Kong

    T +852 2154 2237

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    HONG KONG

    Tankers


    6/F Kimberley Plaza
    45-47 Kimberley Road
    Tsim Sha Tsui. Kowloon
    Hong Kong

    T +852 2154 2237

    View full office info


  • 1301 McKinney Street
    Suite 2975
    Houston, Texas
    77010, USA

    T +1 832 925 7500

    View full office info

    HOUSTON

    Tankers


    1301 McKinney Street
    Suite 2975
    Houston, Texas
    77010, USA

    T +1 832 925 7500

    View full office info


  • Marco Polo Parkside Building 1204,
    Anli Road No. 80,
    Chaoyang District,
    Beijing, China, 100101

    View full office info

    BEIJING

    LNG Tankers


    Marco Polo Parkside Building 1204,
    Anli Road No. 80,
    Chaoyang District,
    Beijing, China, 100101

    View full office info


  • Jirón Cruz del Sur 140, of. 1712,
    Santiago de Surco, Lima,
    Perú

    View full office info

    LIMA

    Containers Dry Cargo


    Jirón Cruz del Sur 140, of. 1712,
    Santiago de Surco, Lima,
    Perú

    View full office info


  • Room 04, 10/F, 500
    Yan'an West Road,
    Shanghai,
    People's Republic of China


    View full office info

    SHANGHAI

    Dry Cargo


    Room 04, 10/F, 500
    Yan'an West Road,
    Shanghai,
    People's Republic of China


    View full office info


  • Augusto Leguia Norte 100
    Office 710
    Las Condes
    7550155 Santiago
    Chile

    T +56 22 352 7100

    View full office info

    SANTIAGO

    Dry Cargo


    Augusto Leguia Norte 100
    Office 710
    Las Condes
    7550155 Santiago
    Chile

    T +56 22 352 7100

    View full office info


  • Misiones St. 1372,
    1st Floor "De Los Patricios" Building,
    11000 Montevideo, Uruguay

    View full office info

    MONTEVIDEO

    Dry Cargo


    Misiones St. 1372,
    1st Floor "De Los Patricios" Building,
    11000 Montevideo, Uruguay

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  • Viamonte 174, 4 to B,
    C1053ABD Buenos Aires,
    Argentina

    View full office info

    BUENOS AIRES

    Dry Cargo


    Viamonte 174, 4 to B,
    C1053ABD Buenos Aires,
    Argentina

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  • Rua Barão de Cotegipe, 443, room 1310
    Porto de Gale Business Center
    Rio Grande
    Brazil


    View full office info

    RIO GRANDE

    Dry Cargo


    Rua Barão de Cotegipe, 443, room 1310
    Porto de Gale Business Center
    Rio Grande
    Brazil


    View full office info


  • Fascinatio Boulevard 742
    2909 VA Capelle aan den IJssel
    The Netherlands


    View full office info

    ROTTERDAM

    Dry Cargo


    Fascinatio Boulevard 742
    2909 VA Capelle aan den IJssel
    The Netherlands


    View full office info


  • Inkognitogaten 35,
    0256 Oslo
    Norway

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    OSLO

    Offshore


    Inkognitogaten 35,
    0256 Oslo
    Norway

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