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Saturday, 22 February 14
POTEN RAISES THE QUESTION OF ACCURACY IN CALCULATING TANKER FREIGHT RATES - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
As the tanker market has grown in complexity over the course of the past few years, the question of whether the traditional methods of assessing rates is still valid. In a recent report, Poten & Partners noted that "the market landscape for crude oil and refined product trades has an inherent element of shifting sand, presenting an organization like the Baltic Exchange with certain challenges. The Baltic Exchange is a centuries-old institution that, among other services, oversees a collective of member shipbrokers who contribute daily freight rate assessments for the wet and dry bulk shipping markets. The freight rates that are collected by the Baltic Exchange are in turn used by both charterers and shipowners, as well as other market participants, as a reliable metric of freight pricing for internal and external financial calculations. Although the birth and death of trade lanes is a natural market evolution, such developments pose questions of relevancy to the Baltic Exchange’s data collection efforts. While the decision to discontinue a certain set of assessments due to perceived obsolescence is objectively simple, it could have broader implications for commercial market participants that have freight contracts dependent on these rates", Poten said.
According to the analyst, the Baltic Dirty Tanker Index. This index is currently comprised of 12 benchmark tanker routes, covering all trade routes and vessel sizes. The BDTI serves as an often cited reference of general health of the tanker market freight rate environment. The Baltic Exchange International Tanker Routes (BITR) are quoted on individual trades for specific cargo sizes for clean and dirty cargoes. For example, the tanker trade with the largest volume worldwide is often referred to as “TD3” or “Tanker Dirty” route number “3” – the voyage basis is from Ras Tanura, Saudi Arabia to Chiba, Japan for 265,000 metric tons of cargo".
In the report, Poten cited an announcement issued on February 5, 2014, which indicated that the Baltic Exchange was suspending their assessments of the routes “TC3_38” and “TD10D”, Aruba – New York for 38,000 metric tons of clean products and Aruba – New York for 50,000 metric tons of fuel oil, respectively. The removal of TD10D would leave the market without a Baltic Exchange instrument for quoting Panamax freight rates.
Poten noted that "in early 2012, Valero shut down their 235,000 bpd Aruba refinery, effectively rendering the voyage basis irrelevant. Historically, the Aruba refinery yielded significant volumes of fuel oil that were exported and often utilized as feedstock in Valero’s Paulsboro, N.J. refinery or for power generation on the US East Coast. The Aruba refinery eventually became structurally disadvantaged compared to US Gulf Coast refineries due to a higher operational cost base; it, like other Caribbean refineries, did not have access to cheap natural gas for power supply. Using reported spot market activity for Panamaxes loading in the Caribbean as a proxy for total market activity, trade volumes from the Caribbean to the US Atlantic Coast have become insignificant. Although still a relatively small market, fixture activity has increased for the Caribbean to US Gulf trade".
It added that "it stands to reason that the Baltic Exchange should continue to assess at least one dirty Panamax trade route. Contracts of Affreightment, or COAs, whereby shipowners and oil companies pre-arrange transportation volumes over a specified period of time, often incorporate some kind of discount to prevailing spot market rates. In exchange for a guaranteed volume of business from an oil company, a shipowner or pool will typically offer a discount to market rates. The Baltic Exchange rate assessments are often referenced in contract language accordingly. The same logic applies for time charters that involve profit sharing elements; shipowners and charterers agree how the profit share will be determined based on independent freight rate assessments.
In the case of TD10D, the Baltic Exchange might consider changing the voyage basis in order to prevent commerical disruption. Load ports for crude export in countries such as Venezuela, Colombia or Trinidad are viable options and the destination should, undoubtedly, be in the US Gulf. The question of what to do with the Aruba to New York (TC3) benchmark for clean products is more black and white. The sizeable increase in refined products exports from the US Gulf to the Caribbean and Latin American countries has displaced imports from the Caribbean. With strong refining economics in the US Gulf, it is difficult to see any reversal in this trend anytime soon", Poten concluded.
source: Nikos Roussanoglou, Hellenic Shipping News
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Wednesday, 12 March 14
DRY BULK VESSELS STILL THE CREAM OF THE CROP FOR SHIP OWNERS
Dry bulk carriers have remained the most popular vessel type among ship owners as proven by the sheer number of second hand vessel sales and new ...
Tuesday, 11 March 14
HOLD HARMLESS CLAUSES ARE NOT ALWAYS MUTUAL! - ITIC
KNOWLEDGE TO ELEVATE
ITIC provides an insurance related contract review service to all of its members. As the leading professional indemnity i ...
Tuesday, 11 March 14
NEWCASTLE SHIPPED 6.98% LESS COAL WEEK ON WEEK
COALspot.com: In the week ended 10 March 2014, power plant and semi-soft coking coal shipments from the port of Newcastle in Queensland, total 2 ...
Tuesday, 11 March 14
INDONESIAN SUB-BITUMINOUS COAL SWAPS CONTINUES TO FALL
COALspot.com – Indonesia, the world’s largest exporter of the thermal coal's swaps for delivery April - June 2014 slip again thi ...
Monday, 10 March 14
API 8 CFR SOUTH CHINA COAL SWAPS LOST 4.28 PERCENT MONTH ON MONTH FOR Q2 DELIVERY
COALspot.com: API 8 CFR South China Coal swaps for average Q2 14 deliveries lost 4.28 percent month on month and closed at US$ 73.97 per mt as on Fr ...
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- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
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- Samtan Co., Ltd - South Korea
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- IEA Clean Coal Centre - UK
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- PowerSource Philippines DevCo
- McConnell Dowell - Australia
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- Baramulti Group, Indonesia
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- Metalloyd Limited - United Kingdom
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- Coal and Oil Company - UAE
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- The University of Queensland
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- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
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- Anglo American - United Kingdom
- Thiess Contractors Indonesia
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- Latin American Coal - Colombia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
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- Kalimantan Lumbung Energi - Indonesia
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- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Price Waterhouse Coopers - Russia
- The State Trading Corporation of India Ltd
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- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- Lanco Infratech Ltd - India
- CNBM International Corporation - China
- Jindal Steel & Power Ltd - India
- Edison Trading Spa - Italy
- Madhucon Powers Ltd - India
- Bhatia International Limited - India
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
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- Chettinad Cement Corporation Ltd - India
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- Bahari Cakrawala Sebuku - Indonesia
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- Standard Chartered Bank - UAE
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- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
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- Barasentosa Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
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- Ministry of Transport, Egypt
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- Miang Besar Coal Terminal - Indonesia
- Romanian Commodities Exchange
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- Videocon Industries ltd - India
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- TNB Fuel Sdn Bhd - Malaysia
- Bukit Makmur.PT - Indonesia
- Holcim Trading Pte Ltd - Singapore
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- Parliament of New Zealand
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- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Energy Development Corp, Philippines
- Minerals Council of Australia
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- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
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- Economic Council, Georgia
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- Medco Energi Mining Internasional
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
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- Cement Manufacturers Association - India
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- The Treasury - Australian Government
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- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
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- Coalindo Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
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