Credit Suisse macro guru Zoltan Pozsar is even more bullish #tankers than the tanker bros here on twitter. His latest report makes the same macro call on tanker ton miles that I have been making
And although Zoltan goes into gory detail about tankers, his thesis extends to all seaborne commodities and the ships that transport them.
If he is right about additional bottlenecks, shipping rates across sectors will explode along with underlying ship asset values.
Ship values benefit when both the values of the commodities they transport and the steel they are made of increase.
Shipowning companies are levered long expressions of a high inflation macro thesis and could end up being the best performing real asset class this decade.
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2/ With inventories at bottom of 5 year averages, it seems unlikely that inventories decline meaningfully from here. Just returning to flat inventories adds back the +30 VLCCs of demand. Adding the expected 1mm b/d supply/demand growth in 2025 requires another +30 VLCCs.
3/ Therefore my base case for 2025 sees +60 VLCC equivalents employed vs levels seen since June.
This is vs a fleet of ~900 VLCCS so +7% utilization relative to recent months.
1/ Buried under all of the Middle East and port strike chaos headlines, a very important debate about a carbon tax on shipping is ongoing at IMO meetings this week.
2/ Support for a carbon tax is gathering momentum as it would be one of the most simple, economic, and effective ways to lower carbon emissions in the shipping industry. On the other side of the debate are middle income countries responsible for the lion's share of world trade
3/ These major exporters oppose it because it will increase the cost of traded goods which is partially borne by the producer and partially borne by the consumer.
What few vessels the US has sanctioned due to Russian oil prior to Sovcomflot have been mostly stranded due to the sanctions.
I never trade after hours but felt compelled to today. Picked up a good chunk of $IMPP (had already been buying this dip earlier this week) and $TNK at fair prices. Tried for some $TNP as well but only got a bit.
I count 42x aframax and 15x suezmax in the sovcomflot fleet. If all of these are sidelined, I expect midsize rates to benefit the most which is why I bought the above. $NAT also a good option but already bid up much higher after hours.
1/ Just like with the Russia/Ukraine conflict #tankers are likely to be the #1 beneficiary of renewed enforcement on Iran oil sanctions and associated changing trade patterns 🧵:
2/ The Biden Admin is in a tough spot. If Iran orchestrated the latest conflict in Israel, they will have to respond. How to do this without impacting oil prices? After all, turning a blind eye to existing sanctions has allowed Iran to increase exports by a huge ~500kb/d over the past year keeping a lid on prices.
3/ Just like Russia/Ukraine, the strategic objective of the Biden admin will be to keep the oil flowing but limit the economic benefit gained from it by Russia/Iran as attempted with the price cap. Now that we know that price caps don’t work, what better way to do this than to drive up the cost to ship it?
1/ Even if Biden succeeds at forgiving up to $20k of student loan debt and the Supreme court rules it as legal, it only eliminates $430B of the $1.6T of student loan balances currently in forbearance and scheduled to begin repayment by the end of August.
2/ Even though 71% of borrowers will still have a balance after $10k-$20k forgiveness or will not receive any forgiveness due to income, ALL eligible federal student loans currently remain in forbearance until this is resolved.
3/ Are those that know that they do not qualify or will have a remaining balance after forgiveness still making payments?
🚨🚨 NO 🚨🚨
Just 1.16% of borrowers continued making payments when 71% will still owe EVEN IF forgiveness goes through.
In prior years which saw abnormally large % increases in coal production like 2011 and 2015, the following year tended to be flat to down. Meanwhile China just approved the most new coal fired power gen capacity since 2015.
Similarly India, the world's second largest producer and consumer of coal, managed a highly unusual and completely unsustainable increase in coal production last year to keep up with demand: reuters.com/markets/commod…