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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, 28 September 15
Q1'16 CFR SOUTH CHINA COAL SWAP ROSE 2.73 PER CENT M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery moved upward US$ 1.45 (3.04 %) per ton month over month.
A commodity ...
Sunday, 27 September 15
THE PANAMAX INDEX FELL 1.19 PCT WEEK OVER WEEK
COALspot.com: The BDI closed Friday (25/09/2015) at 943 points, down by 17 points compared to previous Friday closing (18/09/2015). The BDI wa ...
Friday, 25 September 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING SEPTEMBER 19 ROSE 2.5% PER CENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.8 million shor ...
Wednesday, 23 September 15
CAPESIZE: SPOT RATES HAVE INCREASED MORE THAN 70 PER CENT DURING LAST WEEK
Dry Bulk owners, always look at September as the time that the market “signals” what lies ahead for the remainder of the year. The Chin ...
Wednesday, 23 September 15
INDONESIA: NEW REGULATION APPLIES FINAL INCOME TAX TO MINERAL AND COAL SALES - FLORENCE GRACIA SANTOSO
To increase state revenue from the mining sector, the Government of Indonesia has imposed a new final income tax on any sale of mineral and coal, a ...
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- Carbofer General Trading SA - India
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Kobexindo Tractors - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Orica Australia Pty. Ltd.
- Madhucon Powers Ltd - India
- Xindia Steels Limited - India
- Barasentosa Lestari - Indonesia
- McConnell Dowell - Australia
- Neyveli Lignite Corporation Ltd, - India
- Sree Jayajothi Cements Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Leighton Contractors Pty Ltd - Australia
- Alfred C Toepfer International GmbH - Germany
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- London Commodity Brokers - England
- Coastal Gujarat Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Metalloyd Limited - United Kingdom
- Ministry of Finance - Indonesia
- PNOC Exploration Corporation - Philippines
- Malabar Cements Ltd - India
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- AsiaOL BioFuels Corp., Philippines
- GN Power Mariveles Coal Plant, Philippines
- Aditya Birla Group - India
- Planning Commission, India
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Maheswari Brothers Coal Limited - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Goldman Sachs - Singapore
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Mercator Lines Limited - India
- Larsen & Toubro Limited - India
- Jaiprakash Power Ventures ltd
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Cement Manufacturers Association - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Anglo American - United Kingdom
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Iligan Light & Power Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Indonesian Coal Mining Association
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement - Thailand
- Global Green Power PLC Corporation, Philippines
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Gujarat Sidhee Cement - India
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement PLC, Thailand
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Videocon Industries ltd - India
- Singapore Mercantile Exchange
- PTC India Limited - India
- Parry Sugars Refinery, India
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- The University of Queensland
- MS Steel International - UAE
- Karaikal Port Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Manunggal Multi Energi - Indonesia
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Cigading International Bulk Terminal - Indonesia
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- IEA Clean Coal Centre - UK
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- OPG Power Generation Pvt Ltd - India
- India Bulls Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Holcim Trading Pte Ltd - Singapore
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Parliament of New Zealand
- LBH Netherlands Bv - Netherlands
- Dalmia Cement Bharat India
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- Electricity Generating Authority of Thailand
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- CIMB Investment Bank - Malaysia
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Kumho Petrochemical, South Korea
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- CNBM International Corporation - China
- Lanco Infratech Ltd - India
- Power Finance Corporation Ltd., India
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