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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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Monday, 08 January 24
KOSPO TO BUY 80000 MT OF INDONESIAN LOW CALORIFIC VALUE COAL FOR FEB 2024
Korea Southern Power Co., Ltd. (KOSPO), is inviting bids for the supply of Indonesian Low Calorific Value Coal from qualified suppliers for Korean ...
Monday, 08 January 24
SEABORNE TRADE REACHES 12.4BN TONNES - CLARKSONS
China will establish a back-up coal production system by 2027 to stabilise prices and secure coal supply, the state planner said on Wednesday, even ...
Monday, 08 January 24
CAPESIZES START THE NEW YEAR ON POSITIVE NOTE - BALTIC EXCHANGE
Capesize
This week the capsize market has been marked by a mix of activities and challenges. Despite a slow start following the Christmas and N ...
Friday, 05 January 24
MORGAN STANLEY SEES LOWER OIL PRICES IN 2024 ON OVERSUPPLY CONCERNS - REUTERS
Morgan Stanley sees Brent crude prices anchored near $80 per barrel in the first half in 2024 before declining towards the end of the year as it ex ...
Friday, 05 January 24
INDIA'S COAL OUTPUT RISES NEARLY 11 PC IN DEC TO 92.87 MT - PTI
India’s coal production increased by 10.75 per cent to 92.87 million tonne in December 2023 as compared to the year-ago period, an official s ...
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- Cigading International Bulk Terminal - Indonesia
- Ministry of Mines - Canada
- Savvy Resources Ltd - HongKong
- Electricity Generating Authority of Thailand
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Petron Corporation, Philippines
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Kapuas Tunggal Persada - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Electricity Authority, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Star Paper Mills Limited - India
- Ind-Barath Power Infra Limited - India
- McConnell Dowell - Australia
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- Binh Thuan Hamico - Vietnam
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Salva Resources Pvt Ltd - India
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Agrawal Coal Company - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Indonesian Coal Mining Association
- PetroVietnam Power Coal Import and Supply Company
- Posco Energy - South Korea
- Kohat Cement Company Ltd. - Pakistan
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wilmar Investment Holdings
- Mercator Lines Limited - India
- Therma Luzon, Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Medco Energi Mining Internasional
- Marubeni Corporation - India
- Planning Commission, India
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Larsen & Toubro Limited - India
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- Kumho Petrochemical, South Korea
- Indian Oil Corporation Limited
- Heidelberg Cement - Germany
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Aboitiz Power Corporation - Philippines
- Sojitz Corporation - Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Malabar Cements Ltd - India
- Barasentosa Lestari - Indonesia
- Interocean Group of Companies - India
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Metalloyd Limited - United Kingdom
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Bhoruka Overseas - Indonesia
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Oldendorff Carriers - Singapore
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- White Energy Company Limited
- Vedanta Resources Plc - India
- Trasteel International SA, Italy
- The University of Queensland
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- IEA Clean Coal Centre - UK
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Standard Chartered Bank - UAE
- Bulk Trading Sa - Switzerland
- Jorong Barutama Greston.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Coal and Oil Company - UAE
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Toyota Tsusho Corporation, Japan
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- GVK Power & Infra Limited - India
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Vijayanagar Sugar Pvt Ltd - India
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Australian Coal Association
- Mintek Dendrill Indonesia
- Bhatia International Limited - India
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- SMG Consultants - Indonesia
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Riau Bara Harum - Indonesia
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- London Commodity Brokers - England
- Chettinad Cement Corporation Ltd - India
- Altura Mining Limited, Indonesia
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
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