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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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Wednesday, 21 October 15
RUSSIA'S CARBO ONE COAL SALES TO HIT 50 MLN T/YR - JACQUELINE HOLMES
COALspot.com: Russia's Carbo One has become one of the world's leading physical coal traders with an annual volume approaching 50 million t ...
Wednesday, 21 October 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In today’s dry bulk market, both freight rates and asset prices are creating mixed feelings to seasoned ship owners, who tend to instinctivel ...
Wednesday, 21 October 15
INDONESIAN COAL MINER BUKIT ASAM POSTS POSITIVE PERFORMANCE DURING FIRST THREE QUARTERS OF 2015
COALspot.com: Indonesian publicly listed and state controlled coal miner PT. Bukit Asam has announced that, the company’s coal sales up 8 per ...
Wednesday, 21 October 15
LOWER DEMAND HIT Q1' 16 INDONESIA COAL SWAPS
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 1.88 (-4.71%) per t ...
Tuesday, 20 October 15
SHIPBROKER SEES CAPESIZE RATES EASILY REACHING $25,000/DAY BY YEAR-END : NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future course of the dry bulk market has been troubling market participants for quite some time now, as the “elusive” freight rate ...
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- CNBM International Corporation - China
- Petrochimia International Co. Ltd.- Taiwan
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Ambuja Cements Ltd - India
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Port Waratah Coal Services - Australia
- Vizag Seaport Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Bulk Trading Sa - Switzerland
- Marubeni Corporation - India
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- TeaM Sual Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bhushan Steel Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Jaiprakash Power Ventures ltd
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Indonesian Coal Mining Association
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Maheswari Brothers Coal Limited - India
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Mjunction Services Limited - India
- Meralco Power Generation, Philippines
- Eastern Energy - Thailand
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Intertek Mineral Services - Indonesia
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Formosa Plastics Group - Taiwan
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- International Coal Ventures Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Agrawal Coal Company - India
- IHS Mccloskey Coal Group - USA
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Planning Commission, India
- Sical Logistics Limited - India
- Indian Oil Corporation Limited
- Australian Commodity Traders Exchange
- The University of Queensland
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Energy Link Ltd, New Zealand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Commonwealth Bank - Australia
- Miang Besar Coal Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Bukit Makmur.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Ministry of Transport, Egypt
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Timah Investasi Mineral - Indoneisa
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Bharathi Cement Corporation - India
- Renaissance Capital - South Africa
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Energy Development Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- AsiaOL BioFuels Corp., Philippines
- Africa Commodities Group - South Africa
- Australian Coal Association
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Gujarat Sidhee Cement - India
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- Binh Thuan Hamico - Vietnam
- Indo Tambangraya Megah - Indonesia
- Independent Power Producers Association of India
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Kumho Petrochemical, South Korea
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Latin American Coal - Colombia
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Toyota Tsusho Corporation, Japan
- Ceylon Electricity Board - Sri Lanka
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Price Waterhouse Coopers - Russia
- Leighton Contractors Pty Ltd - Australia
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