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Saturday, 22 February 20
THE SURPRISING MOVE IN MARINE FUEL SPREADS - ING
Middle distillates tank
One of the biggest surprises since the implementation of new International Maritime Organization (IMO) sulphur regulations is the weakness we have seen in the middle distillate market. Expectations were that we would see a large share of the shipping industry shift to marine gasoil, which would be a bullish scenario for middle distillate cracks. Instead, gasoil cracks are trading at levels last seen in 2017, falling by more than 50% from their October 2019 highs. A milder than usual winter, and the outbreak of the COVID-19 virus are just two factors adding further pressure on middle distillates.
However, from a shipping perspective, one of the key reasons why we have not seen strength in the market is the fact that demand for very low sulphur fuel oil (VLSFO) has been stronger than expected. As a result, the pick-up in marine gasoil demand has not been as much as anticipated. This has happened despite several reports of off-spec VLSFO. There also appears to be an element of hesitancy to more towards marine gasoil, with concerns over viscosity. This is evident in Asia, where we have seen VLSFO actually trading at a premium to marine gasoil.
Fuel oil cracks rally
While we have seen weakness in middle of the barrel products, fuel oil has strengthened, defying market expectations. The prompt crack in NW Europe has traded from around a US$30/bbl discount late last year to less than a US$15/bbl discount currently. There are several reasons behind this strength.
Firstly, refiners would have made any adjustments they could, be it through refinery upgrades, or adjusting feedstock accordingly to minimise HSFO yields as we moved into 2020.
Secondly, there has been increased interest from US refiners to process HSFO and, looking at fuel oil imports into the US over the last few months, particularly towards the end of 2019, volumes did increase. This move does also appear to reflect the limited availability of heavier crude grades for refiners in the US Gulf, given US sanctions against Venezuela.
Thirdly, and this certainly shouldn’t come as too much of a surprise, we see more ships with scrubbers installed coming online. This would provide some additional support to the demand picture for HSFO. The coronavirus could even have an impact here, with a potential delay in scrubber installations.
Finally, a factor which was more of a risk than a reality was the potential for the US not to extend waivers which allow Iraq to import natural gas and electricity from Iran. If this were to happen, it would likely mean that Iraqi domestic fuel oil consumption would increase for power generation needs, so reducing export availability of fuel oil from the country. The risk of this happening has eased, however, with the US recently extending waivers by another 45 days.
China VLSFO supply set to rise
The VLSFO market was performing well until news that China would provide tax waivers to refiners in the country for lower sulphur fuel oil production, which has set the path for VLSFO output in China to grow. Already there are reports that PetroChina has delivered volumes of VLSFO into bonded storage, where it will likely be retailed to ships. The idea is that China wants to build its capabilities as a bunkering hub, rather than wholesale exports of VLSFO.
What has this all meant for spreads?
The above dynamics have had an impact on marine fuel spreads. The more bearish environment we have seen in the middle distillate market, along with a more constructive HSFO market, has meant that the spot NW Europe gasoil-HSFO spread has narrowed from around US$400/t at certain stages last year to around US$235/t currently. Meanwhile, pressure from potential Chinese VLSFO supply has had a similar impact on the spot VLSFO-HSFO spread, with it falling from a high of US$290/t late last year to around US$165/t currently. Obviously, these narrower spreads increase the payback period for a scrubber, making the economics of an installation not as attractive as it looked last year.
As we see more scrubber fitted ships coming online, it will increasingly eat into the advantage of burning HSFO. Therefore, we believe the spreads are unlikely to trade back out to the highs seen last year.
Source: ING
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Friday, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
Friday, 13 March 20
TOP 4 ACCOUNTING CONSIDERATIONS AFTER THE IMPLEMENTATION OF IMO 2020 - PWC
To install or not to install?
Following the IMO 2020 global low sulphur cap for marine fuel effective since 1 January 2020, many shi ...
Friday, 13 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 13 March 20
KOREA SOUTH-EAST POWER INVITED BIDS FOR 390,000 MT OF THERMAL COAL FOR MAY-JUNE 2020 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), has issued an international tender for total 390,000 Metric Tons of coal for May & June ...
Thursday, 12 March 20
INDIA 2019 THERMAL COAL IMPORTS RISE 12.6% TO NEARLY 200 MILLION TONNES - REUTERS
India’s thermal coal imports rose 12.6% to nearly 200 million tonnes in 2019, government data reviewed by Reuters showed, reflecting the seco ...
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- Australian Coal Association
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
- Jaiprakash Power Ventures ltd
- Sojitz Corporation - Japan
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Essar Steel Hazira Ltd - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- Savvy Resources Ltd - HongKong
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Central Java Power - Indonesia
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- OPG Power Generation Pvt Ltd - India
- MS Steel International - UAE
- Electricity Authority, New Zealand
- PTC India Limited - India
- Deloitte Consulting - India
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Vedanta Resources Plc - India
- Ministry of Mines - Canada
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Australian Commodity Traders Exchange
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Ceylon Electricity Board - Sri Lanka
- Semirara Mining Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- CNBM International Corporation - China
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Timah Investasi Mineral - Indoneisa
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Price Waterhouse Coopers - Russia
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Mercuria Energy - Indonesia
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Sical Logistics Limited - India
- Africa Commodities Group - South Africa
- Coal and Oil Company - UAE
- Global Coal Blending Company Limited - Australia
- Neyveli Lignite Corporation Ltd, - India
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Cement Manufacturers Association - India
- Merrill Lynch Commodities Europe
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Meralco Power Generation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- Orica Mining Services - Indonesia
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Karaikal Port Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Indogreen Group - Indonesia
- Energy Link Ltd, New Zealand
- Samtan Co., Ltd - South Korea
- Georgia Ports Authority, United States
- Straits Asia Resources Limited - Singapore
- Romanian Commodities Exchange
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- SMG Consultants - Indonesia
- McConnell Dowell - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Trasteel International SA, Italy
- Aboitiz Power Corporation - Philippines
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- The University of Queensland
- Borneo Indobara - Indonesia
- Salva Resources Pvt Ltd - India
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Heidelberg Cement - Germany
- Standard Chartered Bank - UAE
- India Bulls Power Limited - India
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Leighton Contractors Pty Ltd - Australia
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Indika Energy - Indonesia
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Port Waratah Coal Services - Australia
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Jindal Steel & Power Ltd - India
- Commonwealth Bank - Australia
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
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