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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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Tuesday, 20 October 15
FOB RICHARDS BAY COAL SWAPS SINK INTO RED THIS PAST WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Tuesday, 20 October 15
API 5 FOB NEWCASTLE COAL SWAP CLOSED NEGATIVE
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $1.23 per ton (2.86%) month over month to US$ 41.80 per ton. The ...
Monday, 19 October 15
RUSSIA MAJOR COAL MINER KRU CUTS 4.5 MLN T/YR "UNPROFITABLE" EURO SALES - JACQUELINE HOLMES
COALspot.com: Kuzbassrazrezugol (KRU), one of Russia's largest producers of high-quality coal, plans to cut its coal exports in 2016 by about 4 ...
Monday, 19 October 15
CFR SOUTH CHINA COAL SWAP CLOSED AT $48.68 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 55 (1.12 %) per ton month over month.
A commodity ...
Monday, 19 October 15
KOMIPO SEEKS 1.28 MILLION T/Y COAL FOR DEC 2015 - Q2 2016
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 1,280,000 Metric Tons (MT) of minimum 4,600 kc ...
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- CIMB Investment Bank - Malaysia
- Bukit Makmur.PT - Indonesia
- Coastal Gujarat Power Limited - India
- Meenaskhi Energy Private Limited - India
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Central Java Power - Indonesia
- The Treasury - Australian Government
- The State Trading Corporation of India Ltd
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- South Luzon Thermal Energy Corporation
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Trasteel International SA, Italy
- Essar Steel Hazira Ltd - India
- Larsen & Toubro Limited - India
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- GVK Power & Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- Chettinad Cement Corporation Ltd - India
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- CNBM International Corporation - China
- White Energy Company Limited
- Cement Manufacturers Association - India
- Mercuria Energy - Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Thiess Contractors Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Videocon Industries ltd - India
- Bukit Baiduri Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Price Waterhouse Coopers - Russia
- Baramulti Group, Indonesia
- Energy Development Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Indo Tambangraya Megah - Indonesia
- Bangladesh Power Developement Board
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- Gujarat Sidhee Cement - India
- Romanian Commodities Exchange
- Maharashtra Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Orica Australia Pty. Ltd.
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Kepco SPC Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- IHS Mccloskey Coal Group - USA
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Binh Thuan Hamico - Vietnam
- International Coal Ventures Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Mintek Dendrill Indonesia
- Parliament of New Zealand
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- London Commodity Brokers - England
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Cigading International Bulk Terminal - Indonesia
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Electricity Authority, New Zealand
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Therma Luzon, Inc, Philippines
- Sakthi Sugars Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Makarim & Taira - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Australian Coal Association
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- GMR Energy Limited - India
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- The University of Queensland
- Central Electricity Authority - India
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
- Chamber of Mines of South Africa
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- Deloitte Consulting - India
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Bayan Resources Tbk. - Indonesia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Iligan Light & Power Inc, Philippines
- Indogreen Group - Indonesia
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Planning Commission, India
- Alfred C Toepfer International GmbH - Germany
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- Posco Energy - South Korea
- Edison Trading Spa - Italy
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Ministry of Mines - Canada
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
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