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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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Tuesday, 10 March 20
CHINA'S COAL-RICH PROVINCE ENSURES ENERGY SUPPLY AMID EPIDEMIC - XINHUA
China’s coal-rich province of Shanxi has seen more than 500 coal mines resume production in February, which ensured energy supply amid the ou ...
Monday, 09 March 20
OPEC+ 'NO DEAL' A BLOW TO THE MARKET - WOOD MACKENZIE
Speaking after today’s OPEC+ meeting broke up, Ann-Louise Hittle, vice president, Macro Oils, at Wood Mackenzie, said: “Today’s o ...
Monday, 09 March 20
KOREA EAST-WEST POWER INVITED BIDS FOR 150,000 MT OF MIN 4,400 - MAX 5,499 NAR COAL
COALspot.com: KOREA EAST-WEST POWER CO. LTD. of South Korea has issued an international tender for total 150,000 MT of LCV coal for May – Jun ...
Sunday, 08 March 20
SUPRAMAX: A 55,000DWT VESSEL FIXING DELIVERY FROM EAST KALIMANTAN FOR A TRIP TO VIETNAM AT $9,100 - BALTIC BRIEFING
SUPRAMAX/ULTRAMAX - A 56,000DWT VESSEL FIXED DELIVERY SOUTH CHINA TRIP VIA INDONESIA, REDELIVERY EAST COAST INDIA, IN THE $6,000S
SUPRAMAX/U ...
Friday, 06 March 20
CHINA RESUMES 83.4 PCT COAL PRODUCTION CAPACITY AMID EPIDEMIC - XINHUA
China has resumed 83.4 percent of its coal production capacity amid the fight against the novel coronavirus outbreak, the National Energy Administr ...
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- Samtan Co., Ltd - South Korea
- ASAPP Information Group - India
- Planning Commission, India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- The State Trading Corporation of India Ltd
- Jorong Barutama Greston.PT - Indonesia
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- TeaM Sual Corporation - Philippines
- Kumho Petrochemical, South Korea
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Chamber of Mines of South Africa
- Semirara Mining and Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- McConnell Dowell - Australia
- Goldman Sachs - Singapore
- VISA Power Limited - India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kartika Selabumi Mining - Indonesia
- Sojitz Corporation - Japan
- Economic Council, Georgia
- Holcim Trading Pte Ltd - Singapore
- Dalmia Cement Bharat India
- Billiton Holdings Pty Ltd - Australia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Aditya Birla Group - India
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- Australian Coal Association
- Borneo Indobara - Indonesia
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Vizag Seaport Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Mjunction Services Limited - India
- Bhushan Steel Limited - India
- Petron Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Marubeni Corporation - India
- Edison Trading Spa - Italy
- Aboitiz Power Corporation - Philippines
- Maheswari Brothers Coal Limited - India
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Vedanta Resources Plc - India
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Kepco SPC Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Meralco Power Generation, Philippines
- Energy Link Ltd, New Zealand
- Global Coal Blending Company Limited - Australia
- Maharashtra Electricity Regulatory Commission - India
- Parry Sugars Refinery, India
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Bhoruka Overseas - Indonesia
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Larsen & Toubro Limited - India
- Tata Chemicals Ltd - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Formosa Plastics Group - Taiwan
- GVK Power & Infra Limited - India
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- Orica Australia Pty. Ltd.
- Renaissance Capital - South Africa
- Coastal Gujarat Power Limited - India
- MS Steel International - UAE
- IHS Mccloskey Coal Group - USA
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Wilmar Investment Holdings
- PTC India Limited - India
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- India Bulls Power Limited - India
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Malabar Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Miang Besar Coal Terminal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Indogreen Group - Indonesia
- OPG Power Generation Pvt Ltd - India
- Africa Commodities Group - South Africa
- Videocon Industries ltd - India
- Carbofer General Trading SA - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Parliament of New Zealand
- Star Paper Mills Limited - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Timah Investasi Mineral - Indoneisa
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Antam Resourcindo - Indonesia
- Ministry of Mines - Canada
- Romanian Commodities Exchange
- CIMB Investment Bank - Malaysia
- Kideco Jaya Agung - Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- GMR Energy Limited - India
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Thiess Contractors Indonesia
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