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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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Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Anglo American - United Kingdom
- McConnell Dowell - Australia
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Electricity Authority, New Zealand
- Riau Bara Harum - Indonesia
- Uttam Galva Steels Limited - India
- Essar Steel Hazira Ltd - India
- Africa Commodities Group - South Africa
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Orica Mining Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- White Energy Company Limited
- Orica Australia Pty. Ltd.
- LBH Netherlands Bv - Netherlands
- London Commodity Brokers - England
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Commonwealth Bank - Australia
- Chamber of Mines of South Africa
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Sree Jayajothi Cements Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Banpu Public Company Limited - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Lanco Infratech Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Dalmia Cement Bharat India
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Coastal Gujarat Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Ind-Barath Power Infra Limited - India
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Aditya Birla Group - India
- Kobexindo Tractors - Indoneisa
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Attock Cement Pakistan Limited
- Planning Commission, India
- Larsen & Toubro Limited - India
- Standard Chartered Bank - UAE
- Globalindo Alam Lestari - Indonesia
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Electricity Generating Authority of Thailand
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Bhoruka Overseas - Indonesia
- South Luzon Thermal Energy Corporation
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Independent Power Producers Association of India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Altura Mining Limited, Indonesia
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- MS Steel International - UAE
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Intertek Mineral Services - Indonesia
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Simpson Spence & Young - Indonesia
- Bhushan Steel Limited - India
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- PowerSource Philippines DevCo
- Directorate General of MIneral and Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Xindia Steels Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Australian Coal Association
- PTC India Limited - India
- Sinarmas Energy and Mining - Indonesia
- Maheswari Brothers Coal Limited - India
- Gujarat Sidhee Cement - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Energy Development Corp, Philippines
- IHS Mccloskey Coal Group - USA
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Central Electricity Authority - India
- Deloitte Consulting - India
- Karbindo Abesyapradhi - Indoneisa
- Oldendorff Carriers - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Mercator Lines Limited - India
- Kaltim Prima Coal - Indonesia
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- IEA Clean Coal Centre - UK
- Eastern Energy - Thailand
- Coalindo Energy - Indonesia
- Bharathi Cement Corporation - India
- Romanian Commodities Exchange
- Ministry of Transport, Egypt
- Wilmar Investment Holdings
- Georgia Ports Authority, United States
- Petron Corporation, Philippines
- Posco Energy - South Korea
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