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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, 22 September 15
1Q16 FOB INDONESIA COAL SWAP DECLINED 6.49 PER CENT M-M
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week.
The 4Q swap declined $ 2.29 (-5.42%) per t ...
Tuesday, 22 September 15
FOB RICHARDS BAY COAL SWAPS FALL CONTINUES
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined week over week and month over month.
The 4Q swap was down US$ ...
Monday, 21 September 15
Q4' 15 FOB NEWCASTLE COAL SWAP CLOSED HIGHER THAN Q2' 16 SWAP
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery increased $0.43 per ton (1.01%) month over month to US$ 42.95 per ton. The ...
Monday, 21 September 15
CFR SOUTH CHINA COAL SWAP GAINED WEEK OVER WEEK
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US$ 0.45 (0.90 %) per ton month over month.
A commodit ...
Monday, 21 September 15
KOMIPO OF KOREA INVITES BIDS FOR BITUMINOUS COAL
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 390,000 Metric Tons (MT) of minimum 4,600 kcal ...
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- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Mercuria Energy - Indonesia
- Energy Link Ltd, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- GMR Energy Limited - India
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- Sarangani Energy Corporation, Philippines
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Dalmia Cement Bharat India
- Merrill Lynch Commodities Europe
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- Central Electricity Authority - India
- Tamil Nadu electricity Board
- Mintek Dendrill Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
- Indian Energy Exchange, India
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- MS Steel International - UAE
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- TNB Fuel Sdn Bhd - Malaysia
- Samtan Co., Ltd - South Korea
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- Africa Commodities Group - South Africa
- Kobexindo Tractors - Indoneisa
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Iligan Light & Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Vizag Seaport Private Limited - India
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Krishnapatnam Port Company Ltd. - India
- Global Green Power PLC Corporation, Philippines
- Attock Cement Pakistan Limited
- San Jose City I Power Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Bangladesh Power Developement Board
- Chettinad Cement Corporation Ltd - India
- Posco Energy - South Korea
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Altura Mining Limited, Indonesia
- Star Paper Mills Limited - India
- India Bulls Power Limited - India
- GVK Power & Infra Limited - India
- Parry Sugars Refinery, India
- Ind-Barath Power Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Indogreen Group - Indonesia
- Makarim & Taira - Indonesia
- Lanco Infratech Ltd - India
- Energy Development Corp, Philippines
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- Meralco Power Generation, Philippines
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Central Java Power - Indonesia
- Oldendorff Carriers - Singapore
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Bhushan Steel Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Bukit Makmur.PT - Indonesia
- Bhoruka Overseas - Indonesia
- Siam City Cement - Thailand
- Parliament of New Zealand
- ASAPP Information Group - India
- Price Waterhouse Coopers - Russia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- PTC India Limited - India
- CNBM International Corporation - China
- Sical Logistics Limited - India
- Medco Energi Mining Internasional
- AsiaOL BioFuels Corp., Philippines
- Thai Mozambique Logistica
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Bulk Trading Sa - Switzerland
- Heidelberg Cement - Germany
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Kapuas Tunggal Persada - Indonesia
- Therma Luzon, Inc, Philippines
- Australian Coal Association
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Power Finance Corporation Ltd., India
- Petron Corporation, Philippines
- Singapore Mercantile Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Alfred C Toepfer International GmbH - Germany
- Manunggal Multi Energi - Indonesia
- Siam City Cement PLC, Thailand
- Maheswari Brothers Coal Limited - India
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- Essar Steel Hazira Ltd - India
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Ministry of Finance - Indonesia
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- The Treasury - Australian Government
- Marubeni Corporation - India
- Indonesian Coal Mining Association
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