In a sign of things to come, China made a rather significant move last week, when it finally took the first step towards its willingness to break the domestic oil market monopoly, which at the moment is dominated by state companies. A private company, Xinjiang Guanghui Petroleum, which is a wholly owned subsidiary of Guanghui Energy, was granted a crude oil import license. According to the latest weekly report from shipbroker Intermodal, the license is for an annual quota of 200,000 metric tons of crude oil for 2014, “making it the first private company to obtain such a license, mainly because of its overseas oil assets. As news hit the stock exchange, Guanghui’s share soared and sent an important message to the industry regarding the dominance of giants such as PetroChina and Sinopec”, the Piraeus-based shipbroker noted.

It added that “whilst the 4,000 barrels a day quota granted to Guanghui is just a drop in the ocean for the world’s second largest oil consumer and its oil refineries (China imported over 282 million tonnes of crude in 2013 while companies with an import quota based licenses were allocated only 10pct of that) it is still an important step forward for the country’s energy industry reform”.

Intermodal’s SnP broker, Mr. Christos Trageas, raised the question of “what does this mean in the short-to-medium term for the world’s largest coal importer and consumer as far as its implied oil demand is concerned? Although crude and refined product import figures point to the right direction, analysts remain cautious about the broad economic outlook, noting that faster-than-expected growth in the second quarter was driven more by government support than by genuine momentum” he said.

The broker also noted that “last month, China posted record-high refinery throughputs but didn’t manage to convince analysts of an economic recovery within sight, since it is China’s car drivers that keep the demand growing. CNOOC (China National Oil and Offshore Company), the country’s largest domestic offshore oil/gas producer and PetroChina, the country’s largest oil/gas explorer, posted disappointing 1st Half net results last week at the back of weak demand for refined oil and gas over the same period and “prospects for the mild recovery of the economy remain highly uncertain as global oil prices will face downward pressure” according to a public statement by Petrochina’s officials”, Trageas said.

Concluding the summary of these latest developments in China’s energy market, Trageas mentioned that “the energy issue in China also took center stage, albeit for different reasons, in the 4th APEC Ocean-related Ministerial Meeting in Xiamen last week. Its declaration stood as a testament towards developing a blue economy –a model that shifts society from scarcity to abundance by tackling environmental issues — in the region by establishing a green agenda in order to ensure the sustainable exploitation of the oceans”, he concluded.

Meanwhile, in the newbuilding markets this week, Intermodal said that “this past week has without a doubt been the slowest in terms of activity in the newbuilding market since the beginning of the year. The very limited number of orders that has been reported, reveals that heading to the yards, is most probably the last thing in the mind of owners right now, while the correction that has taken place in prices, especially on the dry bulker side, has not been enough to ignite renewed interest. The behaviour of the freight market still remains the key catalyst here though. Irrespective of how much more there is to the bottom of prices in this mini cycle witnessed during the last twelve moths, this time round it will be more up to the performance of rates to breath life into the newbuilding front and less to another wave of speculation similar to that witnessed during 2013, which was solely attributed to the attractive lows witnessed back then. In terms of recently reported deals, Greek owner, StealthGas, has exercised an option for two LPG carriers (22,000cbm) at Hyundai Mipo, in S. Korea, for a price of US $ 52.0m each and with delivery set in 2017″.

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