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

Affinity Policy Comment 26 april 2021

Steel weighing down the wallet

The Federal Reserve convenes for a two-day policy meeting on Tuesday against the backdrop of a rapidly accelerating economic recovery.

Ten-year yields have stabilised and the inflation rebound to 2.6 per cent, well above target, is likely to be short-lived. Still, swaps show that market expectations of future inflation are rising and that means Treasury volatility may not be over yet.

While Fed chair Jay Powell acknowledged this month that the US economy was at an “inflection point”, he has not strayed from his stance that monetary policy will remain ultra-accommodative until the central bank’s goals of a more inclusive recovery are realised.

Powell has also reiterated the Fed’s willingness to see inflation run above its longstanding 2 per cent target to make up for the prolonged period of undershooting it.

Investors will be watching closely at Powell’s press conference on Wednesday for any indication about the Fed’s thinking on the looming rise in inflationary pressures that could compel it to reduce its USD 120 Bn monthly asset purchase programme as policy rates remain tethered at close to zero.

For now, the likelihood of any reduction of the buyback programme is rather low, and so are expectations of any raise in policy rates, as tightening seems to be more important than tapering criteria.

This is expected to keep the dollar relatively tamed, which in turn could add fuel to the commodity boom expected later this year, as a weaker US dollar enhances the buying power of buyers using other currencies.

In other news, HBIS, China’s second-biggest steelmaker, recently has shut its plants in Tangshan, the steelmaking hub of Hebei province, as local governments are under intense pressure to help Beijing satisfy plans for long-term carbon neutrality, the FT reported.

The Tangshan authorities have reportedly ordered production cuts of 30-to-50 per cent of capacity by the end of 2021. A similar reduction in crude steel output for the rest of China would mean a cutback of up to 550 Mn T, based on 2020 levels of production of 1.1 Bn T.

With China accounting for about 60 per cent of global steel production, it is not too difficult to guess the impact of these measures on steel prices.

Adding fuel to the fire, stimulus spending on infrastructure projects has already put upwards pressure on steel futures. On Monday, Chinese futures on rebar peaked to a record high amid expectations of increased demand and drastically reduced supply.

While it is difficult for low-margin steelmakers, many of which are in Tangshan, to switch to pricier higher-quality ore supplies or to research lower-carbon production, we could see the focus shifting to higher-quality, “greener” South Korean and Japanese producers.

At the same time, currently there doesn’t seem to be any escape valve for the pressure building up, as scrap levels are likely to be constrained. This at a time when India is literally gasping for oxygen, which could deprive scrapyards from the oxygen supplies needed to break down vessels, potentially forcing them to close down altogether, as happened last year in a bid to contain Covid-19 infections.

The impact on the shipping industry could be immense, especially as the drive towards decarbonisation is pushing the newbuilding market towards an inflexion point, at which the old fleet starts to be replaced by newer, more efficient vessels. And, while today all the eyes are on the container and liner markets, tomorrow it will be the turn of tankers and bulkers. Of course, using “green” steel will boost the ESG credentials of many shipowners, but will the price to pay be worth it?


Affinity Research LLP

what we do

  • 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: Toby English
    [email protected]
    +44(0)20 3142 0123

    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]
    +44(0)20 3142 0125

    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: Toby English
    [email protected]
    +44(0)20 3142 0123

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

    T +44 (0)203 142 0100

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    LONDON

    Dry Cargo LNG Research S & P Tankers Newbuilding Finance Valuations


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

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    #13–03 Anson House
    Singapore
    079911

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    SINGAPORE

    Dry Cargo LNG S & P Tankers


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    #13–03 Anson House
    Singapore
    079911

    T +65 6805 8760

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    200 Toorak Road
    South Yarra
    VIC 3141
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    MELBOURNE

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    200 Toorak Road
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    VIC 3141
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    WA 6005
    Australia

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    Crows Nest, NSW 2065
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    SYDNEY

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    Crows Nest, NSW 2065
    Australia

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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

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

    T +1 832 925 7500

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    HOUSTON

    Tankers


    1301 McKinney Street
    Suite 2975
    Houston, Texas
    77010, USA

    T +1 832 925 7500

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

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    BEIJING

    LNG Tankers


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

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

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    LIMA

    Containers Dry Cargo


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

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


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    SHANGHAI

    Dry Cargo


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


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

    T +56 22 352 7100

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    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

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    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

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    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


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    RIO GRANDE

    Dry Cargo


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


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  • Address to be reconfirmed

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    ROTTERDAM

    Dry Cargo


    Address to be reconfirmed

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  • Inkognitogaten 35,
    0256 Oslo
    Norway

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    OSLO

    Offshore


    Inkognitogaten 35,
    0256 Oslo
    Norway

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