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Wednesday, 03 October 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
 The bunker fuel supply and availability landscape is close to its transformation with the enforcement of the IMO’s global 0.5% fuel Sulphur content cap regulation from 1st of January, 2020. Shipowners will have to choose between available options for them to comply with the regulation, while refiners will have to make suitable changes to refinery configuration and production in response to market demand. Thus far all parties will have to decide on the most efficient and appropriate solution that will suit their operations and allow them to remain commercially sustainable in the long run.
The swipe from the present 3.5% to 0.5% Sulphur content marine fuel will practically be an overnight shift as refineries would need to continue production and supply of up to 3.5% marine fuel until the day regulation requirement kicks in. Global refining will face enormous logistics, storage and delivery issues, while ships will have to clean out fuel systems to avoid Sulphur contamination. Thus, there is a risk such quick swing to lead to a period of product shortages and inflated marine oil prices. According to data reported on average up to 2017, the shipping industry was consuming approximately 3.2m barrels p/d of HFO and 800k p/d of MGO. Accordingly, from 2020 onwards it is estimated that proportion will alter to 700k p/d of HFO to 3.4m barrels p/d of MGO. Obviously, the use of compliant Sulphur oil products will be the expensive solution for ship-owners that will either absorb the cost or possibly operators will try to pass the cost to Charterers via increased freight rates.
Simple refineries that produce a substantial share of their crude oil into HFO may face margin pressures, while complex refineries with greater infrastructures may potentially boost margins with larger production of low Sulphur products. IEA has stated that if refiners ran at similar utilization rates as of today, it would be unlikely to produce the essential volumes of gas oil. Particularly, if quantity rises to meet the required gas oil volumes, margins would be inevitably affected by shrinking profits.
Overall, oil majors and refineries will try to back up the bunker fuel demand ascending from the new regulation through several ways. Refiners may elevate ULSFO production by extracting low Sulphur fuel streams that are currently blended into LSFO or HSFO will be made available to the market as ULS FO. ExxonMobil, for example has introduced a product, Heavy Distillate Marine ECA 50 that can be consumed onboard like HFO and has only 0.1% Sulphur content. Furthermore, refiners have an issue of handling their surplus residue as this option comes with higher risk on returns of investment. This is due to the fact that oil demand is founded on shippers’ uptake of alternative options such as scrubber installation and LNG bunkering. Refiners can raise LNG bunker supplies in major bunkering hubs. In Singapore, Shell and ExxonMobil are working with Maritime and Port Authority of Singapore to supply LNG as fuel.
To sum up, in the scenario that refineries restrict the availability of HFO on expected higher margins from selling MGO, then vessels fitted with scrubbers might face challenges in relation to adequate supply of HFO. On the other hand, refineries worry that any surge in the use of MGO would head to excess quantity of HFO. For sure refineries are not rushing to big investments to change production set ups while ship-owners are still considering their options. It’s a dilemma for all parties and a puzzle to be solved.
By Katerina Restis
Tanker Chartering
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 17 October 18
SHIPPING MARKET INSIGHT - TIMOS PAPADIMITRIOU
In the last three months approximately 72 tankers changed hands involving ships larger than 33kdwt up to VLCC. 43 of those vessels had to do ...
Tuesday, 16 October 18
A PRACTICAL OVERVIEW OF THE IMO 2020 SULPHUR CAP - CLYDE&CO
KNOWLEDGE TO ELEVATE
With less than eighteen months before Regulation 14.1.3 of Annex VI of the MARPOL Convention comes into effect, there are ...
Saturday, 13 October 18
SUPRAMAX: SIGNIFICANT ACTIVITY IN THE INDIAN OCEAN WAS EVIDENT AND RATES JUMPED - BALTIC BRIEFING
Capesize
A sharp reversal of fortunes for the big ships as the week closed after a depressed beginning. To start with drops were sudden, with t ...
Wednesday, 10 October 18
SHIPPING MARKET INSIGHT - ILIAS M. LALAOUNIS
During the end of last month the BHSI was hovering around 630 points, while the last observed sale on a 10-yr old Japanese Handy was the M/V Van Im ...
Monday, 08 October 18
INDONESIAN THERMAL COAL PRICE REFERENCE FELL 3.74% IN OCTOBER 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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- OPG Power Generation Pvt Ltd - India
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Rio Tinto Coal - Australia
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Tata Chemicals Ltd - India
- VISA Power Limited - India
- Thai Mozambique Logistica
- TNB Fuel Sdn Bhd - Malaysia
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
- Global Business Power Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Medco Energi Mining Internasional
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- Thiess Contractors Indonesia
- Straits Asia Resources Limited - Singapore
- Indian Energy Exchange, India
- Riau Bara Harum - Indonesia
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Petron Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Dalmia Cement Bharat India
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- TeaM Sual Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Kartika Selabumi Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Bhatia International Limited - India
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- India Bulls Power Limited - India
- Metalloyd Limited - United Kingdom
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Directorate General of MIneral and Coal - Indonesia
- PowerSource Philippines DevCo
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Aboitiz Power Corporation - Philippines
- Siam City Cement - Thailand
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Planning Commission, India
- Leighton Contractors Pty Ltd - Australia
- Port Waratah Coal Services - Australia
- PetroVietnam Power Coal Import and Supply Company
- Orica Mining Services - Indonesia
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- GMR Energy Limited - India
- Kobexindo Tractors - Indoneisa
- Xindia Steels Limited - India
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- Indogreen Group - Indonesia
- Trasteel International SA, Italy
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Aditya Birla Group - India
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- PTC India Limited - India
- Baramulti Group, Indonesia
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Tamil Nadu electricity Board
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Wood Mackenzie - Singapore
- Deloitte Consulting - India
- Asmin Koalindo Tuhup - Indonesia
- Malabar Cements Ltd - India
- Makarim & Taira - Indonesia
- The State Trading Corporation of India Ltd
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Madhucon Powers Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Miang Besar Coal Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Kalimantan Lumbung Energi - Indonesia
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- The University of Queensland
- Renaissance Capital - South Africa
- Kumho Petrochemical, South Korea
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Bangladesh Power Developement Board
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Barasentosa Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Salva Resources Pvt Ltd - India
- Australian Commodity Traders Exchange
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