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Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
 Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil prices from mid-2014 created strength on both sides. Freight rates started to take off in October 2014 for all types and sizes. The combination of an early start to the fourth-quarter seasonal strength heading into winter and the fact that the oil prices continued to slide became a catalyst.
Throughout 2015, the global refinery throughput has been on a rise. The normal seasonal lower throughput in the first half of the year with widespread maintenance did not occur. Owing to rising and already elevated refinery margins from East to West, refineries simply wanted all the crude oil they could get. This development still provides strong demand and solid freight rates for the tanker industry. In India, we saw a record of 4.74 million barrels per day (mb/d) of crude throughput in June, marking a truly global trend, whereas Middle Eastern refineries also hit a record throughput because of increased runs in Saudi Arabia.
October is traditionally another month of lower throughput as refineries get ready for the winter season when crude runs normally peak. Moreover, the American “Labor Day” on 7 September marks the end of the US driving season which started on Memorial Day, 25 May. This means that the recent 10mb/d production of gasoline will come down.
Some of that weakness may already have caused freight rates to come down sharply, in combination with the global financial uncertainties originating from China. Very large crude Carriers (VLCCs), Suezmax and Aframax have seen freight rates cut in two since mid-June, while Handysize has been the one to drop the most among oil product tankers.
In a rush of excitement, it’s easily forgotten that such high refinery crude runs can only go on for so long, if end consumption supports it. End consumption has supported it some of the way but not all the way. Swollen stocks of crude oil and oil products are now seen everywhere. Preliminary OECD total industry stock change in second-quarter was 1.1mb/d. All stocks but gasoline increased, US crude oil stocks too. In comparison global oil demand dropped by 0.1mb/d over the same period of time and is expected to see an increase of 1.6mb/d to be consumed for the full year over 2014.
Supply:
Contrary to what happens too often, the strong freight markets for oil product tankers have not resulted in a knee-jerk run to the shipyard to order a massive amount of new ships. This stands in opposition to the crude oil tanker orders seen in 2015, as if the lid has come off finally after several years of resisting the temptation.
By end-August 2015, 56 product tankers with a total capacity of 4.8 million DWT, predominantly LR2 (20) and LR1 (21), have been ordered and will be delivered in 2016-17. They are aiming to get a share of the market for longer-haul trades out of Middle East refineries, predominantly into the Western markets. This ordering trend has been on for two years now.
Among the crude oil tanker segments, we have already seen more orders for both Aframax and VLCCs than we did in the whole of 2014. Aframax in particular has been popular with investors this year; after six years with one order a month on average, 2015 has seen 29 new contracts in the first eight months. For the VLCCs, the orders with delivery in particular 2017 (21) and in 2018 (14) have been favoured by investors. In 2015, 50 new VLCC contracts in total have been signed.
One of the launchers which has lifted the freight rates into orbit is two years of very slow fleet growth. Today the fleet holds 648 VLCCs, whereas 628 VLCCs were active by mid-2013. That’s a growth of just 3% in 26 months. Looking forward into the future inflow of crude oil tankers, we can see the delivery pace is picking up and the demolition potential is vanishing with just 14 VLCCs being more than 20 years old and another 16 getting inside the window of the fourth special survey in 2016.
On order for a scheduled delivery during the next 16 months are 71 VLCCs. This means a double-paced inflow as it has taken 34 months for the latest 71 VLCCs to be put into active service.
The change in supply-side conditions will slowly tighten the freight market, and as we look into 2016, the tide could turn fundamentally as a fleet growth of 4.4% is likely to outstrip demand growth. As the coming two years are now “full” in terms of remaining in control of supply-side growth, any additional crude oil tanker orders should be placed for 2018 delivery.
BIMCO forecasts the present and next year supply growth for oil product tankers to be at 5.4% and 5.7% respectively, meaning two “full” years too for that segment.
Outlook:
Looking forward, the winter markets are expected to soften, as the eventual lower refinery crude oil throughput when no more stocks can be filled and margins begin to crumble as demand slips. Until then BIMCO expects earnings for both crude oil and oil product tankers to remain strong. Our expectations are primarily supported by low fleet growth for crude oil tankers and long-haul trades for oil product tankers.
High volatility in freight rates can be expected in the coming half year half a year, when it may also be prudent to look at the time charter market, where one- and three-year time charter rates are both at their highest level since 2009. At USD 48,000 per day and USD 43,500 per day, time charters will make positive returns after all costs inclusive of capital cost and depreciations are deducted.
In the longer run, an eventual repeal of the US crude oil export ban will likely have some impact on the tanker trading lanes. The US congress is set to vote on the issues during this autumn. For the supporters the case is clear: US refineries are saturated with light sweet crude which is produced abundantly. For those in favour of keeping the crude oil export ban still in place there is “national interest”, which currently seems to hold the upper hand. Currently, the only crude oil exports today go to Canada (0.5mb/d).
Moreover, the eventual lifting of international sanctions on Iran is likely to see a steady increase in crude oil, both sweet and sour, into the market over the coming one to three years, depending on much-needed investments to boost production and time to regain market shares. BIMCO expects the re-entry of Iranian crude oil into the market will change trade patterns as other suppliers will be squeezed on their market share. The key will be West African produced sweet crude now going to Europe and East Asia. The latter is the vital one and a stronghold behind the current upturn. The overall impact on the tanker earnings from these changes holds the potential to become both negative and positive.
Source: BIMCO | Hellenic Shipping News
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Saturday, 31 October 15
ADARO ENERGY'S CORE EARNINGS DECLINE 21 PER CENT FOR THE NINE MONTHS PERIOD TO SEPTEMBER 2015
COALspot.com: Adaro Energy's core earnings decline 21% to US$228 Million for first 9months of this year compared to the same period last year. ...
Friday, 30 October 15
INDONESIA'S COAL EXPORTS DROP ON LOW PRICES - THE JAKARTA POST
Indonesia's coal exports significantly dropped in the first nine months of the year as coal companies continued to suffer from low prices in ad ...
Friday, 30 October 15
CHINESE MINERAL IMPORTS: MOVING ON FROM INDONESIA? - CLARKSONS
China has accounted for almost 90% of global imports of nickel ore and bauxite in recent years and was therefore heavily hit by the Indonesian mine ...
Friday, 30 October 15
COAL PRODUCTION IN THE UNITED STATES INCREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
Thursday, 29 October 15
IRAN'S RETURN TO OIL MARKETS WILL HAVE TEMPERED IMPACT FOR THE TANKER SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While many analysts appear to be fearful of a potential incremental rise in tanker ships’ supply, as a result of the imminent return of Iran ...
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- Siam City Cement - Thailand
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Electricity Generating Authority of Thailand
- Formosa Plastics Group - Taiwan
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Chamber of Mines of South Africa
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Latin American Coal - Colombia
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Independent Power Producers Association of India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- Edison Trading Spa - Italy
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- MS Steel International - UAE
- Billiton Holdings Pty Ltd - Australia
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Carbofer General Trading SA - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Lanco Infratech Ltd - India
- Mercuria Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- New Zealand Coal & Carbon
- Oldendorff Carriers - Singapore
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Parliament of New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Dalmia Cement Bharat India
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Chettinad Cement Corporation Ltd - India
- Wilmar Investment Holdings
- Planning Commission, India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Therma Luzon, Inc, Philippines
- White Energy Company Limited
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Singapore Mercantile Exchange
- London Commodity Brokers - England
- Cement Manufacturers Association - India
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Mercator Lines Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Indian Oil Corporation Limited
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- GVK Power & Infra Limited - India
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Uttam Galva Steels Limited - India
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Grasim Industreis Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Australian Commodity Traders Exchange
- Karaikal Port Pvt Ltd - India
- CNBM International Corporation - China
- Sindya Power Generating Company Private Ltd
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Trasteel International SA, Italy
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Intertek Mineral Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Videocon Industries ltd - India
- Thiess Contractors Indonesia
- Posco Energy - South Korea
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Riau Bara Harum - Indonesia
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Coal and Oil Company - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Tamil Nadu electricity Board
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Malabar Cements Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Sinarmas Energy and Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- Maharashtra Electricity Regulatory Commission - India
- Bangladesh Power Developement Board
- The University of Queensland
- Star Paper Mills Limited - India
- AsiaOL BioFuels Corp., Philippines
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Sarangani Energy Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Power Finance Corporation Ltd., India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
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