URSABLOG: Fanning The Flames

I woke up this morning, and after exchanging my usual greetings with the cat, opened the door of the balcony to let her out and was immediately assailed by the smell of woodsmoke in the air. The woods and forests to the north of Athens, on the slopes of Mount Parnitha, had been burning overnight, and the smoke had settled in the hollow bowl of Athens as the air cooled – only marginally it has to be said – towards the dawn. It depressed me as I looked out over the tops of the building out towards Perama, but there was nothing really to be seen apart from the brown smudged light in the early morning, blurring the otherwise sharp edges of the buildings around. Light in Attica is something special and precious – clear, bright, illuminating, dazzling – but the absence of it, or worse, the despoilation of it, is heart-breaking.

The first major fire started on Tuesday, and wasn’t under control until much later on Wednesday. Yesterday afternoon’s fire is still burning as I look out of the office window in Piraeus up to a smudgy Parnitha. The wind is picking up too, which may help to blow away the smoke, but also fans the flames further and hinders the firefighting activity from both land and air. And it’s not just around Athens of course – in Evia, the northern forests have been burning for days now.

Humans can try and prevent the fires from starting. Yesterday evening everyone with a mobile heard a sharp alarm and received a text message prohibiting them from entering forest land, and urging them to report any fires anywhere as soon as possible. But the tinderbox is dry and is just waiting for the spark.

There has been a heatwave here for the last ten days with the official temperatures reaching the low/mid 40s, but in certain places – lacking trees and vegetation, and trapping the heat between the concrete – it is much higher making life deeply unpleasant. Here in the office, the lights are flicking on and off, punctuated by brokers swearing as the computers flicker on and off as well with intermittent electricity supply; two major electricity distribution centres for the whole of the Attica region are in the direct line of the fires. Smoke, heat, pestilence, fire: it’s all a bit Dante’s inferno.

During a heatwave, the air conditioners are on full, draining the electricity. Electricity needs to be kept going. It is not only Athens that suffers. China is suffering too: they have had their worst power shortage for a decade, and electricity has been rationed, leading to a slow-down in industrial activity. China is mostly too humid for wildfires to catch hold, but they are storing problems up for themselves, and for everyone else for that matter.

China relies on coal as its largest electricity generation source, but the push for carbon neutrality by 2060 has resulted in sharp cuts in colliery production, pushing prices higher. Add to this the diplomatic ban on Australian coal, recent heatwaves – which have disrupted domestic production and transportation by land – are exacerbating supply shortages and price increases. The FT reports that domestic coal prices have risen by 75% this year, and coal futures are near all time highs.

However electricity prices are set by the Chinese government, and alternative sources for coal are hard to come by. Consumers want electricity to keep cool. If you want one more reason for the fantastic freight rates for smaller dry bulk carriers in the Far East, then this is pretty significant.

And it’s not just thermal coal: Coronado Global Resources Inc. in the US have just ?loaded the capesize Frontier Unity with metallurgical coal at Newport News bound for steel makers in China. Coronado – a slightly unfortunate name considering the current circumstances – also mine and make coking coal in Australia, but it is the largest shipment they have ever made out of the US.

Expect more to follow as Beijing loosens its own rules on carbon emissions. They want to stop “campaign-style” reduction plans tightening heavy industrial output, in particular steel which accounts for 15% of national carbon emissions. As a consequence steel prices are falling, but those of us in shipping have nothing to worry about for now: the commodity super cycle was always about pricing and not about volumes shipped. Quantities of raw materials – iron ore, coal (coking or thermal) – will still be needed in greater numbers over longer distances. The output will not grow out of control – annual production will be only up by 4-5% compared with last year, but will add to demand for iron ore. Iron ore shipments from Brazil, Australia (still to be banned by China) and South Africa are expected to be 10% more in the second half of 2021 than the first half, an increase of 55 million tonnes: 305 extra capesize voyages, or 138 VLOC voyages, take your pick.

The demand for iron ore, and the tying up of ships to move it, is likely to increase, especially as the major miners, BHP, Rio Tinto and Vale all struggling to increase output significantly. As we shift to a more sustainable economy, copper and nickel, needed for electricity distribution and storage are in strong demand. Steel will certainly be needed too. Greening the world requires energy, raw materials and industry. These are usually not all in the same place.

When natural disasters strike, whether fires or floods, too much or too little rain, too much heat or too much cold, climate change is blamed as the cause, or to put it another way, natural disasters and extreme weather are being presented as evidence of climate change. This leads to legislation because we have to do something, anything, even if it is to beat the providers of transportation, metals, electricity, food, clothing, whatever with a stick to punish them for providing the things we want. Because there’s always someone else to blame except us.

Or is there? I am sure that the feeling I had when I saw and smelt the smoke was sadness, that even though the burning of the trees was not my fault – I did not start the blaze, or fan the flames – nonetheless I still felt somehow responsible. I feel an inappropriate nostalgia for a more pristine world I have never lived in. It is no wonder that politicians use our uncertain world as a means to pay attention to the policies they want to enact, whether or not those policies are sensible, practical or honourable. We are burning down our neighbourhood, our world, and are waiting for someone else to stop the fires, even as the flames approach. Anyone will do apparently.

This sadness, combined with a feeling of powerlessness to change anything is, I know, dangerous because on one hand I am waiting for the feeling to go away so I can carry on as normal, and on the other I want to contribute something which actually does make the world a better place, without making other people morally superior, or richer, or more powerful. And how much of this is just me I don’t know either. Why shouldn’t someone else get richer or more powerful if the world is a better place? Do I have a case of existential envy? Can the world only be made better on my terms alone?

What are the answers to all this? I don’t know, of course, and in any case I would always be suspicious of the simple and easy answer. I will go home, read a book, have glass of wine, stroke my cat, and hope for a safer and better world for all those that come behind me. Any other plan would just end going up in smoke.?

Simon Ward

www.ursashipbrokers.gr