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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, 17 August 15
CFR SOUTH CHINA COAL SWAPS CONTINUE TO HEAD SOUTH
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US cents 40 (1.05%) per MT month over month.
A commodi ...
Sunday, 16 August 15
INDONESIA TO INDIA FREIGHT RATES ARE EXPECTED TO STEADY NEXT WEEK
COALspot.com: The BDI softened 12.08 per cent to 1055 points this week due to weakening of cape index which was fell 25 per cent week over week to ...
Friday, 14 August 15
FOB INDONESIA COAL SWAP SHOWING NO MOVEMENT THIS PAST WEEK
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and week over week, this past week.
The 4Q swap was declined $ ...
Friday, 14 August 15
U.S. COAL PRODUCTION UP 2.9 PER CENT THIS WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.2 million shor ...
Friday, 14 August 15
CONDITIONS AND COMPLEXITIES IN A TRIPARTITE AGREEMENT: BE SPECIFIC! - INCE & CO
KNOWLEDGE TO ELEVATE
A tripartite agreement reached between the Owners, the Shippers and the Receivers provided that demurrage be paid to the ...
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- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Ministry of Finance - Indonesia
- Kobexindo Tractors - Indoneisa
- Sinarmas Energy and Mining - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Rio Tinto Coal - Australia
- Intertek Mineral Services - Indonesia
- Therma Luzon, Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- SMG Consultants - Indonesia
- Chettinad Cement Corporation Ltd - India
- Independent Power Producers Association of India
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Xindia Steels Limited - India
- Sakthi Sugars Limited - India
- Maheswari Brothers Coal Limited - India
- Leighton Contractors Pty Ltd - Australia
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Timah Investasi Mineral - Indoneisa
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- International Coal Ventures Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Parliament of New Zealand
- Australian Coal Association
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Sojitz Corporation - Japan
- Manunggal Multi Energi - Indonesia
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Mineral Development Corp Ltd - India
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Bhatia International Limited - India
- Economic Council, Georgia
- TeaM Sual Corporation - Philippines
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Samtan Co., Ltd - South Korea
- MS Steel International - UAE
- Interocean Group of Companies - India
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Vizag Seaport Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- PowerSource Philippines DevCo
- PNOC Exploration Corporation - Philippines
- Thai Mozambique Logistica
- Petron Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Straits Asia Resources Limited - Singapore
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Bharathi Cement Corporation - India
- Carbofer General Trading SA - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Latin American Coal - Colombia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Romanian Commodities Exchange
- Eastern Energy - Thailand
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- India Bulls Power Limited - India
- Aditya Birla Group - India
- Planning Commission, India
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- Jaiprakash Power Ventures ltd
- Iligan Light & Power Inc, Philippines
- Ambuja Cements Ltd - India
- Grasim Industreis Ltd - India
- Meralco Power Generation, Philippines
- Uttam Galva Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- AsiaOL BioFuels Corp., Philippines
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- IHS Mccloskey Coal Group - USA
- Semirara Mining and Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Miang Besar Coal Terminal - Indonesia
- Wilmar Investment Holdings
- Medco Energi Mining Internasional
- The University of Queensland
- South Luzon Thermal Energy Corporation
- Semirara Mining Corp, Philippines
- Eastern Coal Council - USA
- Altura Mining Limited, Indonesia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Baramulti Group, Indonesia
- Riau Bara Harum - Indonesia
- Tata Chemicals Ltd - India
- White Energy Company Limited
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Mercuria Energy - Indonesia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Binh Thuan Hamico - Vietnam
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- Coalindo Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- VISA Power Limited - India
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- McConnell Dowell - Australia
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