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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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Friday, 11 September 15
U.S'S WEEKLY COAL PRODUCTION WAS ALMOST FLAT PAST WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.6 million shor ...
Thursday, 10 September 15
U.S. H1' 15 STEAM COAL EXPORTS FELL BY 21 PER CENT Y-Y: EIA
Coal Trade
Slower growth in world coal demand, lower international coal prices, and higher coal output in other coal-exporting countries have all ...
Thursday, 10 September 15
INDONESIAN COAL BENCHMARK PRICE HITS A NEW LOW OF $58.21 PER TON
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price to US$ 58.21 per MT ...
Thursday, 10 September 15
IF NOT NOW, WHEN? - GIANNIS ANDRITSOPOULOS
Our industry is well known to be cyclical with some cycles lasting longer than others. Despite the fact that these shifts in the behavior of the fr ...
Wednesday, 09 September 15
FOB INDONESIA COAL SWAP LOSE GROUND ON SLOWING DEMAND
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week.
The 4Q swap declined $ 1.92 (-4.52%) per t ...
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- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Indian Oil Corporation Limited
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- Medco Energi Mining Internasional
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- ICICI Bank Limited - India
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- AsiaOL BioFuels Corp., Philippines
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Central Electricity Authority - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Standard Chartered Bank - UAE
- Sakthi Sugars Limited - India
- Mjunction Services Limited - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
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- Attock Cement Pakistan Limited
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- Trasteel International SA, Italy
- Wilmar Investment Holdings
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- Kapuas Tunggal Persada - Indonesia
- Madhucon Powers Ltd - India
- Indonesian Coal Mining Association
- India Bulls Power Limited - India
- Bhushan Steel Limited - India
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Gujarat Mineral Development Corp Ltd - India
- Merrill Lynch Commodities Europe
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Wood Mackenzie - Singapore
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Directorate General of MIneral and Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Tamil Nadu electricity Board
- Australian Commodity Traders Exchange
- Marubeni Corporation - India
- Latin American Coal - Colombia
- Toyota Tsusho Corporation, Japan
- Timah Investasi Mineral - Indoneisa
- Samtan Co., Ltd - South Korea
- Sindya Power Generating Company Private Ltd
- Maheswari Brothers Coal Limited - India
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- GN Power Mariveles Coal Plant, Philippines
- Electricity Authority, New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Energy Development Corp, Philippines
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Bhoruka Overseas - Indonesia
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Oldendorff Carriers - Singapore
- Kobexindo Tractors - Indoneisa
- Romanian Commodities Exchange
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Thai Mozambique Logistica
- Videocon Industries ltd - India
- Siam City Cement - Thailand
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
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- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Global Green Power PLC Corporation, Philippines
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Karaikal Port Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Gujarat Electricity Regulatory Commission - India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Port Waratah Coal Services - Australia
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- The University of Queensland
- Sical Logistics Limited - India
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Borneo Indobara - Indonesia
- Manunggal Multi Energi - Indonesia
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Parliament of New Zealand
- Energy Link Ltd, New Zealand
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Minerals Council of Australia
- Ministry of Finance - Indonesia
- Sojitz Corporation - Japan
- Posco Energy - South Korea
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