We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Saturday, 06 December 14
TANKER FLOATING STORAGE PLAYS COULD COME INTO PLAY IF VLCC RATES STAY AT CURRENT LEVEL - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Contango: A phenomenon in commodities futures price curves where the delivery price of a futures contract is greater than the current price. With that definition out of the way, it’s worth taking a look at potential tanker storage plays in the light of the latest demise of oil prices, one not seen after the super-contango on both the Brent and West Texas Intermediate (WTI) forward curves of the 2008 markets’ crash. According to a recent report from Mcquilling Services, “ubiquitous bullish sentiment developed as the price bottom was established and the contango steepened. Both onshore and offshore storage plays were profitable during the super-contango of 2009 as the depth of the curve left plenty of profit potential”.
Mcquilling had looked into contango plays at the end of September. As it states, “when the first note was released, the Brent front month futures contract was trading at US $97.63 and WTI was trading at US $91.70, in the upper range of a multi-year rally. During this time, the Brent curve had moved into contango producing a flurry of speculation about the formation’s bullish effect, which led crude oil stakeholders to scrutinize the market for storage opportunities. Since the release of the first note, both Brent and WTI have experienced steep price declines. Comparing the 2009 and September 2014 contangos illustrates a couple of key conditions that were absent in the September contango. The first and most important consideration is the depth of the contango. In 2009, the forward curve was steep enough to cover associated storage and carrying costs. A storage play could have been implemented in 2009 based purely off the market contango regardless of future price direction. Crude oil could have been purchased in the spot market and simultaneously sold in the futures market at a profit. The September 2014 contango did not provide enough future premiums to hedge the exposure at a profit”, said Mcquilling.
It added that “second, the price level at which a contango forms is a critical consideration. In 2009, the contango took shape after a meaningful sell-off as markets recovered from the 2008 economic collapse. As the global economy recovered, so did crude oil demand. From the bottom of the collapse, abundant upside potential encouraged traders to consider storage plays. In contrast, the September 2014 contango formed towards the top of a multi-year price range amidst a period of oversupply and decreasing demand. As global crude oil production outpaced demand, crude oil surpluses amassed and Brent and WTI prices fell. An unhedged storage play implemented in September would have yielded extremely poor results. Both Brent and WTI have continued to weaken since September as a result of the global oversupply of crude oil. On November 27, 2014, the Organization of Petroleum Exporting Countries (OPEC) members met to debate whether to cut production to steady prices or to maintain production output to marginalize US shale production. OPEC decided to maintain its production ceiling for 2015 forcing Brent and WTI to the lowest price levels since July 2009. Both Brent and WTI are now in contango and, if history repeats itself, traders will be looking for storage opportunities. By applying the lessons learned from the September contango, we evaluate the current contangos to determine if floating storage plays make sense under current market conditions”, it noted.
Carrying Cost Assumptions
European Interest Rate Blend: 1.88%/yr
VLCC Capacity: 2,000,000 barrels
VLCC One-year Time Charter: US $31,500/day
Price of Crude: US $70.00/barrel
Total Carrying Cost One-year Time Charter: US $0.58 per barrel month
According to Mcquilling’s analysis “neither Brent nor WTI are presently showing enough of a future premium to front month prices to justify implementing a floating storage play. We assume the average blended cost per VLCC on a one-year time charter at US $31,500/day. The cost of carry per barrel per month utilizing a one-year time charter amounts to US $0.58 per barrel month. WTI has been trading at a sharp discount to Brent this year because of increased North American production and decreasing foreign imports. Less US reliance on foreign crudes has created a price polarity between the two benchmarks. December 2016 Brent is trading at a US $8.61 premium to January 2015 while WTI is producing only a US $5.17 premium through the same period. We have been monitoring the Brent/WTI spread since the beginning of the price decline in July and have identified a strong correlation between falling prices and a tightening Brent/WTI Benchmark spread. From a high near US $11 in July, the spread traded down to US $3.11 on November 11, 2014. Regression analysis on the price data yields an 80% correlation between falling prices and a tightening spread”.
Mcquilling concluded that “the relative price level at which these current contangos exist does fit the criteria for considering storage plays. In the 2009 super-contango, the curve first flattened before moving into steep contango. Once the bottom was put in 1Q 2009, the back of the curve strengthened and storage plays moved in-the-money. Over the past five months, both benchmarks have lost approximately 35% of their value. If demand is perceived to improve after the bottom of the sell-off is put in, a similar strengthening of the back of the curve may emerge making floating storage plays feasible again. While floating storage is not economically feasible based on the current contangos in Brent and WTI, floating storage may be in play if one-year VLCC time charter rates remain at current levels and the Brent curve stiffens as a result of perceived future demand growth or supply constraints. It is unlikely that the WTI contango will yield a strong case for floating storage due to the isolationist nature of the US crude oil supply market. The price polarity between Brent and WTI further proves the point that not all contangos are created equal”, the analysis concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Monday, 15 December 14
INDONESIAN COAL PRICE REFERENCE CRASHES THROUGH $65
COALspot.com - The Ministry of Energy & Mineral Resources of Indonesia revised down the coal bench mark price once again in December. HBA for t ...
Monday, 15 December 14
CFR SOUTH CHINA COAL SWAP LOST $3.37 M-O-M
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2015 delivery has decreased by US$ 3,37 (-5.33%) month over month and US$ 1.58 (-2.57%) ...
Monday, 15 December 14
Q1' 15 FOB NEWCASTLE COAL SWAP CLOSED AT $ 51.45 ON 12 DEC
COALspot.com: API 5 FOB Newcastle Coal swap for Q1’ 2015 delivery lost US$ 1.45 per MT (-2.74%) closed at US$ 51.45 on 12 December month over ...
Sunday, 14 December 14
FREIGHT RATES ARE EXPECTED TO BE SOFT NEXT WEEK
COALspot.com: The Baltic Dry Index (BDI), a measure of commodity-shipping costs, fell 12.12 pct to 863 points week ending 12 December 2014.
Th ...
Friday, 12 December 14
LIMITED TRADING AND AN OVERSUPPLY OF TONNAGE PUSHED HANDY SIZE SHIPS TO DOWN IN USG
Handy
We have seen the TA spot market come down this week lead by limited trading and an oversupply of tonnage in the USG, Fearnleys said in its ...
|
|
|
Showing 3311 to 3315 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- Vedanta Resources Plc - India
- Romanian Commodities Exchange
- Globalindo Alam Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- MS Steel International - UAE
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Meralco Power Generation, Philippines
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Trasteel International SA, Italy
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Edison Trading Spa - Italy
- SMG Consultants - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Transport, Egypt
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- Maheswari Brothers Coal Limited - India
- Indonesian Coal Mining Association
- Energy Development Corp, Philippines
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Neyveli Lignite Corporation Ltd, - India
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- PTC India Limited - India
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Rashtriya Ispat Nigam Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jaiprakash Power Ventures ltd
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Interocean Group of Companies - India
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Renaissance Capital - South Africa
- Timah Investasi Mineral - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Parliament of New Zealand
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Savvy Resources Ltd - HongKong
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Star Paper Mills Limited - India
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Straits Asia Resources Limited - Singapore
- Samtan Co., Ltd - South Korea
- Indika Energy - Indonesia
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Chamber of Mines of South Africa
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Karaikal Port Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Metalloyd Limited - United Kingdom
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Independent Power Producers Association of India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Thiess Contractors Indonesia
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Planning Commission, India
- Agrawal Coal Company - India
- Bangladesh Power Developement Board
- Tata Chemicals Ltd - India
- Orica Mining Services - Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Kideco Jaya Agung - Indonesia
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Minerals Council of Australia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Energy - Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Lanco Infratech Ltd - India
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Goldman Sachs - Singapore
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- Pendopo Energi Batubara - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- San Jose City I Power Corp, Philippines
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Petron Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Sree Jayajothi Cements Limited - India
- Standard Chartered Bank - UAE
- Sarangani Energy Corporation, Philippines
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Australian Coal Association
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
|
| |
| |
|
