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Friday, 20 March 20
VOLATILITY TO INCREASE IN TANKER MARKET FOLLOWING OIL PRICE WAR - DREWRY
Crude oil prices plunged by more than a third in the past week after OPEC+ failed to agree on production cut as demand softened in the aftermath of coronavirus (COVID-19). In its recent report, the IEA estimates global oil demand at 99.9 mbpd in 2020, which is around 90,000 bpd lower than in 2019 and a sharp downgrade from the agency’s forecast in February, which predicted global oil demand will grow 825,000 bpd in 2020.
The market expected OPEC+ to cut supply as the COVID-19 epidemic has spread from China to Europe, the Americas and Middle East. However, the negotiations failed due to strong resistance from Russia, which is of the view that the policy of capping production by OPEC+ producers to support the oil price is facilitating the development of US shale oil, with Russia losing its market share to increasing exports from the US.
After the failure of production cut talks in Vienna, Saudi Arabia started a price war by slashing the official selling prices for crude for key buyers in the international market and hinted at raising crude oil production to full capacity of 12.3 mbpd from April 2020. The ‘shock and awe’ tactics of Saudi Arabia could be a move to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to renegotiate the proposed production cut and then quickly reverse the production surge and thereafter implement the production cut if a deal is reached.
However, the recent move by Saudi Arabia could lead to:
a) Renegotiation on a production cut between OPEC and Russia
b) Prolonged price war between OPEC, Russia and US producers
If there are fresh negotiations to implement a production cut by OPEC+ producers to accommodate the effect of declining oil demand, crude oil prices are expected to normalise.
But if there is a prolonged price war between Saudi Arabia, Russia and US shale oil producers, lower crude oil prices will lead to some improvement in global oil demand and refinery runs. At the same time, onshore stocking activity will also increase, especially in countries such as China as they build their Strategic Petroleum Reserve. A global supply glut is also likely to lead to an increase in floating storage especially among oil producers.
At the same time, sustained weakness in oil prices will eventually hurt US shale oil producers because of their relatively higher cost of production. In such circumstances, the market share of Middle Eastern crude will increase at the expense of US crude.
Meanwhile, tanker rates surged due to a sudden increase in VLCC chartering from Bahri, Saudi Arabia’s national shipping arm. Bahri fixed at least 18 VLCCs since the Kingdom aims to pump more crude into the market as its price war with Russia escalates. The VLCC earnings on Middle East–China (TD3C) route skyrocketed to $166,000pd on 11 March from $30,300pd on 06 March.
If Saudi Arabia manages to strike a deal with Russia to cut production in the short term, tanker rates will plummet to the pre-price war levels because of the ongoing weakness in crude oil trade on account of the spread of COVID-19 globally. On the other hand, if there is a prolonged price war, tonnage demand will rise initially with the increase in oil demand and stocking activity, which in turn will keep freight rates above pre-price war levels.
However, once sustained weakness in oil prices starts hurting US crude production, Middle Eastern crude will start displacing US crude in Asia. This in turn will squeeze tonne-mile demand for tankers as the distance between the US to Asia is almost double the distance between the Middle East to Asia. Thus we estimate that every barrel per day of annual decline in US exports to Asia at the expense of the Middle East will lead to about a 2.5% decline in overall tonne-mile demand for tankers. Freight rates in such a situation will plunge below the pre-price war levels.
Source: Drewry
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Wednesday, 31 January 24
CHINA'S INNER MONGOLIA COAL OUTPUT HIT 1.21B TONS IN 2023 - XINHUA
North China’s Inner Mongolia autonomous region churned out 1.21 billion tons of coal in 2023 as it strives to guarantee the country’s e ...
Wednesday, 31 January 24
GAS EXPORTS COST U.S. CONSUMERS MORE THAN $100 BILLION OVER 16-MONTH PERIOD - IEEFA
Limited Demand Growth Could Dampen the Dry Bulk Market in the Coming Months BIMCOStarting in late 2021—before its invasion of Ukraine—R ...
Tuesday, 30 January 24
LIMITED DEMAND GROWTH COULD DAMPEN THE DRY BULK MARKET IN THE COMING MONTHS - BIMCO
Demand
In our base scenario, we expect cargo demand to grow by 0-1% in 2024 and 0.5-1.5% in 2025. This is a 0.5 percentage point reduction for ...
Friday, 26 January 24
RED SEA DIVERSIONS ADD NEARLY A MILLION DOLLARS PER VOYAGE TO SHIPPING COSTS WHILE DOUBLING TRANSIT TIME - LSEG
The incremental costs of diverting a tanker from Asia to NW Europe via the Cape of Good Hope is accounting for an extra $932,905 USD per voyage whi ...
Friday, 26 January 24
HARD COAL GUARDIAN ANGEL OF THE ENERGY SUPPLY - GERMANY COAL IMPORTERS ASSOCIATION
- No security of supply without hard coal
- The Substitute Power Plant Provision Act (EKBG) must be extended
- Higher grid fees due to the ...
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- Africa Commodities Group - South Africa
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Rio Tinto Coal - Australia
- Wood Mackenzie - Singapore
- Globalindo Alam Lestari - Indonesia
- Posco Energy - South Korea
- Marubeni Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Sical Logistics Limited - India
- Sarangani Energy Corporation, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Edison Trading Spa - Italy
- PowerSource Philippines DevCo
- Australian Coal Association
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Madhucon Powers Ltd - India
- Standard Chartered Bank - UAE
- Orica Australia Pty. Ltd.
- Minerals Council of Australia
- Salva Resources Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- Bhoruka Overseas - Indonesia
- CNBM International Corporation - China
- Essar Steel Hazira Ltd - India
- Star Paper Mills Limited - India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Indian Energy Exchange, India
- Bulk Trading Sa - Switzerland
- International Coal Ventures Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Independent Power Producers Association of India
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- The Treasury - Australian Government
- Parliament of New Zealand
- Coalindo Energy - Indonesia
- Energy Development Corp, Philippines
- VISA Power Limited - India
- PTC India Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- White Energy Company Limited
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Gujarat Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- San Jose City I Power Corp, Philippines
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Oldendorff Carriers - Singapore
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Karbindo Abesyapradhi - Indoneisa
- Bukit Makmur.PT - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Barasentosa Lestari - Indonesia
- Agrawal Coal Company - India
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Thai Mozambique Logistica
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Georgia Ports Authority, United States
- Orica Mining Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Bharathi Cement Corporation - India
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Tata Chemicals Ltd - India
- Goldman Sachs - Singapore
- Ministry of Transport, Egypt
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Toyota Tsusho Corporation, Japan
- MS Steel International - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Parry Sugars Refinery, India
- Tamil Nadu electricity Board
- Directorate Of Revenue Intelligence - India
- Global Green Power PLC Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Global Business Power Corporation, Philippines
- Interocean Group of Companies - India
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Aditya Birla Group - India
- Alfred C Toepfer International GmbH - Germany
- Kideco Jaya Agung - Indonesia
- Attock Cement Pakistan Limited
- Coal and Oil Company - UAE
- Commonwealth Bank - Australia
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- The University of Queensland
- Sakthi Sugars Limited - India
- Meenaskhi Energy Private Limited - India
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Baramulti Group, Indonesia
- Deloitte Consulting - India
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Power Finance Corporation Ltd., India
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Makarim & Taira - Indonesia
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Romanian Commodities Exchange
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Leighton Contractors Pty Ltd - Australia
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