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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, 03 September 15
MINISTRY OF ENERGY AND MINERAL RESOURCES OF INDONESIA TO REVISE HBA METHODOLOGY
COALspot.com: Ministry of Energy and Mineral Resources (ESDM) in process to revise Indonesian Coal Price Reference (HBA) and expected to complete b ...
Thursday, 03 September 15
THE CHINESE STOCK MARKET AND THE CHINESE ECONOMY CONTINUE TO SUBSTANTIALLY AFFECT TRADING - INTERMODAL
The last week of the summer season saw the BDI dipping further on the back of another significant drop in rates for Capes, which brought the market ...
Wednesday, 02 September 15
PORT OF NEWCASTLE SHIPPED 13.46 MMT OF COAL IN JULY; UP 0.66 PER CENT M-O-M
COALspot.com: The Port of Newcastle, Australia’s major trading ports and the world’s largest coal export port, has shipped $1.224 billi ...
Wednesday, 02 September 15
SHIPPING MARKET INSIGHT - GEORGE ILIOPOULOS
In the beginning of the summer period SnP activity was firm with numerous buyers, coming mainly from Greece and the Far East, inspecting ships and ...
Tuesday, 01 September 15
FOB INDONESIA COAL SWAPS FURTHER SLIDE TO US$ 40.62 PMT; DECLINE 5.34 PERCENT M-O-M
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and slightly dropped week over week.
The 4Q swap was declined ...
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Showing 2836 to 2840 news of total 6871 |
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- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
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- Manunggal Multi Energi - Indonesia
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Toyota Tsusho Corporation, Japan
- Petrochimia International Co. Ltd.- Taiwan
- Sakthi Sugars Limited - India
- Attock Cement Pakistan Limited
- MS Steel International - UAE
- Renaissance Capital - South Africa
- Karbindo Abesyapradhi - Indoneisa
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- GMR Energy Limited - India
- PTC India Limited - India
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- Global Coal Blending Company Limited - Australia
- Parry Sugars Refinery, India
- Lanco Infratech Ltd - India
- Straits Asia Resources Limited - Singapore
- Mercuria Energy - Indonesia
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- Romanian Commodities Exchange
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- International Coal Ventures Pvt Ltd - India
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Energy Link Ltd, New Zealand
- Sree Jayajothi Cements Limited - India
- Kepco SPC Power Corporation, Philippines
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- White Energy Company Limited
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- Indian Oil Corporation Limited
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- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Edison Trading Spa - Italy
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- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Parliament of New Zealand
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- CIMB Investment Bank - Malaysia
- Price Waterhouse Coopers - Russia
- Standard Chartered Bank - UAE
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Africa Commodities Group - South Africa
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Siam City Cement - Thailand
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- SMG Consultants - Indonesia
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- VISA Power Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Coal and Oil Company - UAE
- Ministry of Mines - Canada
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Kumho Petrochemical, South Korea
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
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- GN Power Mariveles Coal Plant, Philippines
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- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
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- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- McConnell Dowell - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Tamil Nadu electricity Board
- Simpson Spence & Young - Indonesia
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Madhucon Powers Ltd - India
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- Petron Corporation, Philippines
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- ASAPP Information Group - India
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- Central Electricity Authority - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- LBH Netherlands Bv - Netherlands
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Kohat Cement Company Ltd. - Pakistan
- GAC Shipping (India) Pvt Ltd
- Indonesian Coal Mining Association
- Formosa Plastics Group - Taiwan
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Vedanta Resources Plc - India
- Bukit Baiduri Energy - Indonesia
- Neyveli Lignite Corporation Ltd, - India
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