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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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Monday, 05 October 15
Q1' 16 CFR SOUTH CHINA COAL SWAP CLOSED US$ 48.05 PER TON
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down US$ 0.47 (0.96 %) per ton month over month.
A commodity swap is ...
Monday, 05 October 15
SMALL DECLINE IN 2014 SHIP OPERATING COSTS - MOORE STEPHENS
Total annual operating costs in the shipping industry fell by an average of 0.8% in 2014. This compares with the 0.3% average fall in costs recorde ...
Sunday, 04 October 15
THE INDO-INDIA FREIGHT MARKET REMAINS UNDER PRESSURE
COALspot.com: The BDI closed on Friday (2 Oct 2015) at 889 points, down by 54 points compared to previous Friday's closing ( 24 Sept 2015) of 9 ...
Friday, 02 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
Thursday, 01 October 15
SOUTH KOREA'S KOMIPO SEEKS SPOT BITUMINOUS COAL SUPPLIES
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 265,000 Metric Tons (MT) of minimum 4,600 kcal ...
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- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Metalloyd Limited - United Kingdom
- Australian Coal Association
- Xindia Steels Limited - India
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Vedanta Resources Plc - India
- Karaikal Port Pvt Ltd - India
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Manunggal Multi Energi - Indonesia
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Sical Logistics Limited - India
- The University of Queensland
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Commonwealth Bank - Australia
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
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- Makarim & Taira - Indonesia
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Grasim Industreis Ltd - India
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Kartika Selabumi Mining - Indonesia
- Africa Commodities Group - South Africa
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- London Commodity Brokers - England
- Merrill Lynch Commodities Europe
- Sakthi Sugars Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aditya Birla Group - India
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Australia Pty. Ltd.
- Global Business Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Carbofer General Trading SA - India
- Economic Council, Georgia
- McConnell Dowell - Australia
- Timah Investasi Mineral - Indoneisa
- Borneo Indobara - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Heidelberg Cement - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Port Waratah Coal Services - Australia
- Mintek Dendrill Indonesia
- Interocean Group of Companies - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- SN Aboitiz Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- PNOC Exploration Corporation - Philippines
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Simpson Spence & Young - Indonesia
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Wilmar Investment Holdings
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Central Java Power - Indonesia
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Posco Energy - South Korea
- SMC Global Power, Philippines
- Bharathi Cement Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Petron Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- GMR Energy Limited - India
- Siam City Cement - Thailand
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Indian Oil Corporation Limited
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Central Electricity Authority - India
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Ind-Barath Power Infra Limited - India
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Chettinad Cement Corporation Ltd - India
- Georgia Ports Authority, United States
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- White Energy Company Limited
- Vizag Seaport Private Limited - India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Bukit Makmur.PT - Indonesia
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- Indian Energy Exchange, India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
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- Marubeni Corporation - India
- GN Power Mariveles Coal Plant, Philippines
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kumho Petrochemical, South Korea
- Sarangani Energy Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- India Bulls Power Limited - India
- ASAPP Information Group - India
- MS Steel International - UAE
- Rio Tinto Coal - Australia
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