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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, 11 August 15
GLOBAL PRODUCTION OF CRUDE STEEL REACHED A NEW ALL-TIME HIGH OF 1,661M TONNES IN 2014 - VDKI
COALpot.com: Global production of crude steel reached a new all-time high of 1,661m tonnes in 2014, said German Coal Importer Association, in its l ...
Tuesday, 11 August 15
2016 CFR S.CHINA COAL SWAPS CLOSED SLIGHTLY HIGHER THAN 4Q 2015 CLOSING PRICES; BUT NOT SIGNIFICANT
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined just US cents 10 (0.20%) per MT month over month.
A commodi ...
Monday, 10 August 15
SOUTH KOREAN UTILITY KOMIPO INVITES BITUMINOUS COAL BIDS FOR BORYEONG POWER PLANT
COALspot.com: South Korean state-owned utility Korea Midland Power (KOMIPO) issued an new tender for 560,000 Metric Tons (MT) of 4,600kcal/kg NAR c ...
Sunday, 09 August 15
THE PANAMAX MARKET HAS REMAINED WEAK THIS WEEK
COALspot.com: The freight market continued to be buoyant with cape index pushing the BDI.
The BDI was up 10.49% and closed at 1200 points on 7 ...
Friday, 07 August 15
COAL PRICE DEVELOPMENTS CAN ONLY BE DESCRIBED, SUCCINCTLY AS "OVERSUPPLY MEETS SUBDUED DEMAND" - VDKI
Coal Outlook 2015 – International
Regarding the outlook for global coal trading, two questions arise: firstly, “ whether the years of ...
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- Billiton Holdings Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- Semirara Mining Corp, Philippines
- Mercator Lines Limited - India
- Vedanta Resources Plc - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
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- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
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- Energy Link Ltd, New Zealand
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- Planning Commission, India
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- Videocon Industries ltd - India
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- Parliament of New Zealand
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- Altura Mining Limited, Indonesia
- Eastern Coal Council - USA
- White Energy Company Limited
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- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- ASAPP Information Group - India
- Mjunction Services Limited - India
- Central Java Power - Indonesia
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- Anglo American - United Kingdom
- Holcim Trading Pte Ltd - Singapore
- Port Waratah Coal Services - Australia
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Metalloyd Limited - United Kingdom
- Agrawal Coal Company - India
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
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- Commonwealth Bank - Australia
- Oldendorff Carriers - Singapore
- Kideco Jaya Agung - Indonesia
- Uttam Galva Steels Limited - India
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Gujarat Sidhee Cement - India
- Energy Development Corp, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Lanco Infratech Ltd - India
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Banpu Public Company Limited - Thailand
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
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- Coalindo Energy - Indonesia
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- Minerals Council of Australia
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- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement PLC, Thailand
- Global Business Power Corporation, Philippines
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- Renaissance Capital - South Africa
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- Dalmia Cement Bharat India
- India Bulls Power Limited - India
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- Sical Logistics Limited - India
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- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Madhucon Powers Ltd - India
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- Sojitz Corporation - Japan
- Gujarat Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Malabar Cements Ltd - India
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- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Meralco Power Generation, Philippines
- MS Steel International - UAE
- Singapore Mercantile Exchange
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- Vijayanagar Sugar Pvt Ltd - India
- Wood Mackenzie - Singapore
- Pendopo Energi Batubara - Indonesia
- Tamil Nadu electricity Board
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- PNOC Exploration Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Economic Council, Georgia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Bhushan Steel Limited - India
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Attock Cement Pakistan Limited
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Medco Energi Mining Internasional
- Toyota Tsusho Corporation, Japan
- Goldman Sachs - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Ind-Barath Power Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Indika Energy - Indonesia
- CIMB Investment Bank - Malaysia
- IEA Clean Coal Centre - UK
- Jaiprakash Power Ventures ltd
- Posco Energy - South Korea
- Indonesian Coal Mining Association
- Indo Tambangraya Megah - Indonesia
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Salva Resources Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Indian Energy Exchange, India
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