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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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Monday, 26 October 15
CFR SOUTH CHINA COAL SWAPS CLOSE DOWN 4.3% AS DEMAND CONCERNS WEIGH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US$ 1.48 (3.02 %) per ton month over month.
A commodity sw ...
Sunday, 25 October 15
ANOTHER DISAPPOINTING WEEK FOR PANAMAX; INDEX FELL 5.4 PERCENT W-W
COALspot.com: The BDI was slightly up by 2.65 pct closing at 774 points mainly because of Cape index which was up by 10.85 pct closing at 1461 poin ...
Sunday, 25 October 15
DRY BULK SHIP OWNERS ARE LOOKING TO CHINA'S POLICIES FOR CUES ON FUTURE MARKET DEMAND - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s hard or softer landing is a thing which has troubled dry bulk shipping for a couple of years now, as owners have been hit by the coun ...
Friday, 23 October 15
WILL INDIAN DOMESTIC COAL PRICES BE ABLE TO COMPETE IMPORTED COAL PRICES IF THE CURRENT TREND CONTINUES?
COALspot.com: The Most of the Indian end-users are waiting for last minute purchase to enjoy every drop in price. Coal procurement managers are als ...
Friday, 23 October 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING OCTOBER 17 DECLINED FOR THE SECOND STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
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- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- Dalmia Cement Bharat India
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
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- Samtan Co., Ltd - South Korea
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Gujarat Mineral Development Corp Ltd - India
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Economic Council, Georgia
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
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- Directorate General of MIneral and Coal - Indonesia
- Semirara Mining Corp, Philippines
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- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Timah Investasi Mineral - Indoneisa
- Port Waratah Coal Services - Australia
- Planning Commission, India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Carbofer General Trading SA - India
- Standard Chartered Bank - UAE
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
- Kumho Petrochemical, South Korea
- Sakthi Sugars Limited - India
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- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Simpson Spence & Young - Indonesia
- Iligan Light & Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
- Petron Corporation, Philippines
- Electricity Generating Authority of Thailand
- Indogreen Group - Indonesia
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Tamil Nadu electricity Board
- PowerSource Philippines DevCo
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
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- Romanian Commodities Exchange
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- TeaM Sual Corporation - Philippines
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- Edison Trading Spa - Italy
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
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- Sical Logistics Limited - India
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- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- Agrawal Coal Company - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Commonwealth Bank - Australia
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- Indonesian Coal Mining Association
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Kartika Selabumi Mining - Indonesia
- Savvy Resources Ltd - HongKong
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- India Bulls Power Limited - India
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- Parliament of New Zealand
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- Chettinad Cement Corporation Ltd - India
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Global Coal Blending Company Limited - Australia
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- CNBM International Corporation - China
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Indika Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Marubeni Corporation - India
- Bahari Cakrawala Sebuku - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Aditya Birla Group - India
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- Madhucon Powers Ltd - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Kapuas Tunggal Persada - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
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- Barasentosa Lestari - Indonesia
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