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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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Thursday, 15 October 15
INDONESIA COAL PRICE REFERENCE FALLS FOR SEVEN STRAIGHT MONTH IN OCTOBER
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price this month.
The ...
Thursday, 15 October 15
Q1' 16 FOB RICHARDS BAY COAL SWAP ADVANCED 2 PER CENT WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gain week over week and declined month over month.
The Q4 swap was dow ...
Tuesday, 13 October 15
DRY BULK SHIPPING FLEET NET EXPANSION WAS 1.3% DURING THIRD QUARTER, BUT ORDERBOOK REDUCED TO 17% OF THE TRADING FLEET
If the dry bulk market is to rebound on a sustainable level, it needs to limit the tonnage expansion, at least until demand picks up again, as Chin ...
Tuesday, 13 October 15
FOB NEWCASTLE COAL SWAP DECLINED 2 PER CENT MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.46 per ton (1.08%) month over month to US$ 42.17 per ton. The ...
Monday, 12 October 15
CFR SOUTH CHINA COAL SWAPS GAIN W-W; SLIGHTLY DOWN M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 3 (0.06 %) per ton month over month.
A commodity ...
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- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- Indika Energy - Indonesia
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Sakthi Sugars Limited - India
- Indian Energy Exchange, India
- Aditya Birla Group - India
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Grasim Industreis Ltd - India
- Power Finance Corporation Ltd., India
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Dalmia Cement Bharat India
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- Eastern Coal Council - USA
- Independent Power Producers Association of India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Bhushan Steel Limited - India
- Iligan Light & Power Inc, Philippines
- ICICI Bank Limited - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- CIMB Investment Bank - Malaysia
- San Jose City I Power Corp, Philippines
- Minerals Council of Australia
- Latin American Coal - Colombia
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Binh Thuan Hamico - Vietnam
- MS Steel International - UAE
- Metalloyd Limited - United Kingdom
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Marubeni Corporation - India
- Barasentosa Lestari - Indonesia
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Economic Council, Georgia
- Miang Besar Coal Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Cement Manufacturers Association - India
- SMG Consultants - Indonesia
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Gujarat Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Georgia Ports Authority, United States
- Gujarat Mineral Development Corp Ltd - India
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Central Java Power - Indonesia
- Sindya Power Generating Company Private Ltd
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- London Commodity Brokers - England
- Tamil Nadu electricity Board
- Jaiprakash Power Ventures ltd
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- ASAPP Information Group - India
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement - Thailand
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Bulk Trading Sa - Switzerland
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Intertek Mineral Services - Indonesia
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Electricity Authority, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- IHS Mccloskey Coal Group - USA
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Tata Chemicals Ltd - India
- New Zealand Coal & Carbon
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ministry of Transport, Egypt
- Mercator Lines Limited - India
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Heidelberg Cement - Germany
- Ind-Barath Power Infra Limited - India
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhatia International Limited - India
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- Australian Coal Association
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Neyveli Lignite Corporation Ltd, - India
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Chamber of Mines of South Africa
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Australian Commodity Traders Exchange
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Mjunction Services Limited - India
- Sinarmas Energy and Mining - Indonesia
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Kalimantan Lumbung Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Sree Jayajothi Cements Limited - India
- Mercuria Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Rio Tinto Coal - Australia
- Leighton Contractors Pty Ltd - Australia
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