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