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On March 25, the rescue ship was operating at the site where a heavy freighter ran aground in Egypt’s Suez Canal. Xinhua News Agency
A few days ago there was a “traffic congestion” in the Suez Canal, which for a time seemed to choke the “gorge” of the world’s busiest shipping channel. Almost 100 passing ships were blocked in navigation and international oil prices rose sharply on the 24th, attracting global attention.
Egypt’s Suez Canal Authority issued an official statement on the 24th, stating that it is rescuing a large container ship that was stranded in the Suez Canal on the morning of the 23rd. Usama Rabbi, president of the Suez Canal Authority, revealed that the accident occurred in the new canal of the Suez Canal and that the transport through the original canal of the canal was proceeding normally, and emphasized that the Egyptian government is doing everything possible to guarantee the navigation of ships to ensure the normal passage of the Suez Canal.
According to the real-time shipping data from the China Natural Gas Information Terminal (E-gas system), as of 16:00 on March 25, a total of 6 LNG carriers were affected by the jam in the Suez Canal and are currently waiting. for the restoration of canal traffic.
What is the situation at the scene recorded by the satellite images? What impact will the accident have on the international shipping industry and the international oil market? Let’s take a look.
This satellite photo taken on March 23 shows Egypt’s Suez Canal blocked by a huge stranded ship. Xinhua News Agency
Giant 400-meter ship “blocks” dead channel at 45-degree angle
Egypt’s Suez Canal Authority issued a statement on the 24th that a Panamanian-flagged heavy freighter ran aground in the new Suez Canal on the 23rd. The beached freighter was about 400 meters long and 59 meters wide, and headed the port of Rotterdam in the Netherlands.
The real-time position of the ship’s website data shows that the huge ship is stuck not far north of the southern end of the Suez Canal, with the bow to the northeast and the stern to the southwest at an angle of about 45 degrees.
It is also reported that the grounding of this freighter caused congestion in the canal, and at least 100 passing ships were blocked.
Relevant information shows that the heavy freighter that “blocked” the Suez Canal is called “Long Ci”, which is one of the largest and most advanced container ships in the world.
Egyptian media reported that the stranded ship may have been hit by a sudden strong wind, causing the ship to veer off course. Other media reported that the cause of the accident was that the ship suddenly lost power and was unable to control its direction.
On March 25, Egypt’s Suez Canal Authority staff inspected the trapped heavy freighter. Xinhua News Agency
The person in charge of the technical direction of the boat said that there were no victims or water contamination in the accident, the cause of the accident is still being investigated.
The Suez Canal connects the Mediterranean Sea and the Red Sea. It is located at the key point of the intersection of Europe, Asia and Africa. Approximately 12% of world trade is transported through this channel. It is known as the “life line at sea” in the world. According to data from the Suez Canal Authority, almost 19,000 ships will pass through the canal in 2020, an average of 51.5 per day. Canal revenues are one of the main sources of Egyptian national tax revenue and foreign exchange reserves.
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The key throat to curb global oil exports
The “blockade” of the Suez Canal has raised widespread concern and its impact on the world economy can be viewed from three perspectives.
First, add another problem to the international shipping market in the “bottleneck period”.
Market participants believe that the global container shipping industry is currently in a severe bottleneck period. The accident can have a ripple effect on the supply chain of the shipping industry, and prices in the shipping market can rise sharply.
The Nikkei website reported that since the beginning of this year, as the world economy is gradually recovering, shipping prices have risen sharply. The new disruption of the Suez Canal may make the global maritime market more unstable.
Second, the price of crude oil fluctuates.
At the close of business on March 24, the price of light crude oil futures for delivery in May 2021 on the New York Mercantile Exchange rose 3.42 US dollars to close at 61.18 US dollars per barrel, an increase of 5.92%. The price of London Brent crude oil futures for delivery in May 2021 rose 3.62 US dollars to close at 64.41 US dollars per barrel, an increase of 5.95%.
Former president of the Egyptian Petroleum Corporation and international energy expert Maizat Youssef said in an exclusive interview with Xinhua News Agency reporters that the Suez Canal is particularly important for the world’s oil supply, and that the rapid reopening of the Suez Canal can prevent oil price fluctuations.
Phil Flynn, senior market analyst at US Price Futures Group, said on the 24th that blocking the Suez Canal traffic will curb the critical throat of global oil exports.
If the situation cannot be resolved quickly, given that around 10% of offshore oil passes through the Suez Canal, this will have a major impact on oil prices.
Third, new risk factors may overlap or affect the recovery of the world economy.
Ken Koyama, principal investigator at Japan’s Institute for Energy Economics Research, said the accident once again demonstrated that the global economy is highly dependent on the smooth transportation of important materials. If the Suez Canal, the Strait of Hormuz, the Strait of Malacca, the Panama Canal and other key places can guarantee smooth navigation, it will become an important factor related to the stability of the world economy.
Analysts noted that the global economic recovery was originally being affected by the tight semiconductor supply chain. Toyota Motor Corporation recently announced that its Czech plant will suspend production for 14 days from March 22. Ford Motor Company of the United States said the shutdown caused by the disruption of the semiconductor supply chain may reduce the company’s operating profit by US $ 2.5 billion. If the Suez Canal, as a major commercial artery, “gets its neck stuck” for too long, multiple risk factors will add to the uncertainty of the global economic recovery.
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Sudden congestion may have limited impact on the global LNG market
The analysis believes that this canal congestion mainly affects LNG transport between Asia and Europe. Due to the recent reduction in the arbitration space for LNG trade between Asia and Europe, the total number of LNG carriers passing through the canal in the last two to three days is limited. Superimposed that the current peak of natural gas consumption has passed, the The general market supply and demand pattern is weak The LNG market has limited influence.
On the north side of the Suez Canal, two LNG ships carrying cargo in the United States and Egypt are currently waiting to be sailed south, with a total of approximately 190,000 tons of cargo carried by the two ships; on the south side of the canal, three LNG freighters from the port of Ras Laffan, Qatar. The transport ship is waiting to sail north, and the three ships are carrying a total of approximately 310,000 tons of cargo.
On March 25, construction machinery was operating at the site where a heavy cargo ship ran aground in Egypt’s Suez Canal. Xinhua News Agency
The Suez Canal is the shortest sea route connecting Asia and Europe, and is the main route for the global shipment of commodities. According to data from the Suez Canal Authority, in 2019, the Suez Canal carried more than 1 billion tons of cargo, including approximately 107 million tons of crude oil and approximately 31.43 million tons of LNG.
However, as the temperature rises in the Northern Hemisphere, the current peak season for natural gas consumption has passed and the pattern of supply and demand tends to be relaxed. This has reduced the impact of the Suez Canal traffic congestion on the global LNG market to some extent.
From Europe’s perspective, after experiencing peak winter gas consumption, the current European natural gas inventory has fallen to a low level. Data from the e-gas system shows that, as of March 23, European natural gas inventories fell to 334.27 terawatt hours (TWh). A new round of gas injection cycle for gas storage is about to start. Recently, a large quantity of LNG has arrived in Europe and the LNG inventory level of the receiving stations is high. In addition, gas supply through the Norwegian pipeline has recently returned to normal, and the European pattern of supply and demand for natural gas is generally weak.
From the perspective of the Asian region, with the end of the heating season, the demand for natural gas in Asia has declined, the spot demand for LNG has weakened, and the overall supply and demand pattern has tended to be weak. Data from the E-gas system shows that in the last month (February 25 to March 25), China, Japan and South Korea received a total of 244 LNG vessels, a monthly decrease of 89 vessels and a month to month. month decrease of 6.04 million tons of LNG imports.
In the context of the flexible structure of the market, the arbitration space for LNG trade in Europe and Asia has been reduced. At present, excluding shipping, the difference between the spot price of LNG in Northeast Asia and the spot price in Europe is already less than $ 1 per million British thermal units, and traders have little profit margin.
Judging from the current situation, the rescue speed of freighters stranded in the Suez Canal has been significantly faster than previously expected. The stranded ships have been transferred and partially docked. Some of the traffic through the Suez Canal may resume in the near future.
Cover stories Wang Meng joined the Xinhua News Agency, CCTV, “Global Times”, etc.
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