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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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- Banpu Public Company Limited - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Sakthi Sugars Limited - India
- Central Electricity Authority - India
- Neyveli Lignite Corporation Ltd, - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Transport, Egypt
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Tata Chemicals Ltd - India
- San Jose City I Power Corp, Philippines
- GMR Energy Limited - India
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Bank of Tokyo Mitsubishi UFJ Ltd
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Electricity Authority, New Zealand
- Karaikal Port Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- ICICI Bank Limited - India
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Posco Energy - South Korea
- Singapore Mercantile Exchange
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thai Mozambique Logistica
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- Deloitte Consulting - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Indo Tambangraya Megah - Indonesia
- Riau Bara Harum - Indonesia
- ASAPP Information Group - India
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- The State Trading Corporation of India Ltd
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- SN Aboitiz Power Inc, Philippines
- Jaiprakash Power Ventures ltd
- Chettinad Cement Corporation Ltd - India
- Thiess Contractors Indonesia
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Australian Commodity Traders Exchange
- Kapuas Tunggal Persada - Indonesia
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- CIMB Investment Bank - Malaysia
- SMG Consultants - Indonesia
- Gujarat Sidhee Cement - India
- Orica Mining Services - Indonesia
- Australian Coal Association
- Salva Resources Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Power Finance Corporation Ltd., India
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Simpson Spence & Young - Indonesia
- PNOC Exploration Corporation - Philippines
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Directorate Of Revenue Intelligence - India
- South Luzon Thermal Energy Corporation
- Meenaskhi Energy Private Limited - India
- Malabar Cements Ltd - India
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Heidelberg Cement - Germany
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Planning Commission, India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Toyota Tsusho Corporation, Japan
- Kumho Petrochemical, South Korea
- Eastern Energy - Thailand
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- Coalindo Energy - Indonesia
- Edison Trading Spa - Italy
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- Larsen & Toubro Limited - India
- Georgia Ports Authority, United States
- Essar Steel Hazira Ltd - India
- Attock Cement Pakistan Limited
- Formosa Plastics Group - Taiwan
- European Bulk Services B.V. - Netherlands
- Cigading International Bulk Terminal - Indonesia
- White Energy Company Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
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