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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, 03 March 20
IMPORTANCE OF MASTER'S CARGO CHECKS - BALTIC EXCHANGE
KNOWLEDGE TO ELEVATE
Adecision in recent High Court case has made it clear that there is no implied indemnity from a charterer to their counte ...
Tuesday, 03 March 20
COAL'S SHARE OF CHINA ENERGY MIX FALLS IN 2019 BUT CONSUMPTION STILL RISING - REUTERS
Coal accounted for 57.7% of China’s primary energy consumption in 2019, the National Bureau of Statistics said on Friday, down 1.5 percentage ...
Monday, 02 March 20
SHIPOWNERS AND OPERATORS COULD FACE DETENTION OF SHIPS FROM 1ST MARCH UNDER IMO RULE - ICS
Port state control authorities will begin to enforce the IMO’s Sulphur 2020 from 1st March, making it an offense for ships to carry fuel that ...
Saturday, 29 February 20
SUPRAMAX SENTIMENT WAS UP IN A FEW KEY AREAS OVER THE LAST WEEK - BALTIC BRIEFING
Capesize
The Capesize market woes related to Coronavirus have now spread through the wider global markets like wildfire. The wider supply and d ...
Thursday, 27 February 20
FOREIGN COMPANIES LIKELY TO SKIP COMMERCIAL COAL BLOCK AUCTIONS - ECONOMIC TIMES
The Centre is in the process of inviting global players for commercial mining, following 100% foreign direct investment in the sector. However, giv ...
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- Australian Commodity Traders Exchange
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Minerals Council of Australia
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Coastal Gujarat Power Limited - India
- Baramulti Group, Indonesia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Merrill Lynch Commodities Europe
- India Bulls Power Limited - India
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Bukit Makmur.PT - Indonesia
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- The State Trading Corporation of India Ltd
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Central Electricity Authority - India
- AsiaOL BioFuels Corp., Philippines
- Wood Mackenzie - Singapore
- SN Aboitiz Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Mercator Lines Limited - India
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- SMG Consultants - Indonesia
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Anglo American - United Kingdom
- SMC Global Power, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Timah Investasi Mineral - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karaikal Port Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- Straits Asia Resources Limited - Singapore
- Global Coal Blending Company Limited - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- PowerSource Philippines DevCo
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Indian Oil Corporation Limited
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Interocean Group of Companies - India
- Bukit Baiduri Energy - Indonesia
- Ambuja Cements Ltd - India
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Neyveli Lignite Corporation Ltd, - India
- Vijayanagar Sugar Pvt Ltd - India
- Sojitz Corporation - Japan
- International Coal Ventures Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- McConnell Dowell - Australia
- Kideco Jaya Agung - Indonesia
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Leighton Contractors Pty Ltd - Australia
- Simpson Spence & Young - Indonesia
- Maheswari Brothers Coal Limited - India
- Sical Logistics Limited - India
- Indonesian Coal Mining Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chettinad Cement Corporation Ltd - India
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- PTC India Limited - India
- European Bulk Services B.V. - Netherlands
- Kapuas Tunggal Persada - Indonesia
- White Energy Company Limited
- Tata Chemicals Ltd - India
- Carbofer General Trading SA - India
- Price Waterhouse Coopers - Russia
- Indo Tambangraya Megah - Indonesia
- The Treasury - Australian Government
- Alfred C Toepfer International GmbH - Germany
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Kumho Petrochemical, South Korea
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Intertek Mineral Services - Indonesia
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Renaissance Capital - South Africa
- Attock Cement Pakistan Limited
- Dalmia Cement Bharat India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Jorong Barutama Greston.PT - Indonesia
- Tamil Nadu electricity Board
- Posco Energy - South Korea
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Banpu Public Company Limited - Thailand
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coal and Oil Company - UAE
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Ministry of Finance - Indonesia
- IHS Mccloskey Coal Group - USA
- Indika Energy - Indonesia
- Petron Corporation, Philippines
- Vizag Seaport Private Limited - India
- Jindal Steel & Power Ltd - India
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Coalindo Energy - Indonesia
- The University of Queensland
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Siam City Cement - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Aditya Birla Group - India
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Borneo Indobara - Indonesia
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
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