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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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Monday, 03 February 14
API 8 CFR SOUTH CHINA COAL SWAP CONTRACTS FALL
COALspot.com: API 8 CFR South China Coal swaps for average Q1 14 delivery lost 4.71 percent month on month and closed at US$ 78.87 per mt as on Frid ...
Monday, 03 February 14
COAL FREIGHT RATES REMAIN UNDER PRESSURE
COALspot.com: The BDI is fell 50 pct over last one month which seems to be one of the lowest fall in last few years.
The BDI was down by 11 ...
Friday, 31 January 14
U.S. COAL PRODUCTION TOTALED APPROXIMATELY 19.2 MMST W-O-W
COALspot.com – United States the world’s second largest coal producer, produced approximately 19.2 million short tons (mmst) of coal in ...
Friday, 31 January 14
DRY BULK MARKET STILL ON A FALL, EXPECTED TO WORSEN - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The dry bulk market is definitely in the doldrums since the start of the year, in what could only be described as a "lost" month for indus ...
Thursday, 30 January 14
JPU SETTLEMENT PRICE AS A BENCHMARK WILL DECLINE IN IMPORTANCE BUT REMAIN RELEVANT, SAYS WOOD MACKENZIE
JPU price will remain above spot, trending closer to spot till 2015 then increasing to 2035.
Japanese Power Utilities (JPU) are approaching a cru ...
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- Altura Mining Limited, Indonesia
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- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Thai Mozambique Logistica
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Minerals Council of Australia
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- Bank of Tokyo Mitsubishi UFJ Ltd
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- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
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- The State Trading Corporation of India Ltd
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- Orica Australia Pty. Ltd.
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- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- New Zealand Coal & Carbon
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- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
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- Economic Council, Georgia
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- Thiess Contractors Indonesia
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- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
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- Chettinad Cement Corporation Ltd - India
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- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
- White Energy Company Limited
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- Barasentosa Lestari - Indonesia
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- Planning Commission, India
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- AsiaOL BioFuels Corp., Philippines
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- Mercator Lines Limited - India
- McConnell Dowell - Australia
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- IHS Mccloskey Coal Group - USA
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- Holcim Trading Pte Ltd - Singapore
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- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Renaissance Capital - South Africa
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Siam City Cement - Thailand
- Australian Coal Association
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
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- Uttam Galva Steels Limited - India
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- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
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- Chamber of Mines of South Africa
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
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- Wilmar Investment Holdings
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- Electricity Generating Authority of Thailand
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