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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, 09 November 23
GREEK AND CHINESE COMPANIES OWN 34% OF THE GLOBAL FLEET’S CARGO CAPACITY - BIMCO
“The global fleet of cargo carrying ships consists of around 61,000 ships with a deadweight capacity of about 2,200 million tonnes. The ships ...
Monday, 23 October 23
CHINA SEPT COAL OUTPUT HITS SIX-MONTH HIGH ON RISING POWER DEMAND - REUTERS
China’s September coal output rose 0.4% from August to the highest level since March, official data showed on Wednesday, on rising power dema ...
Monday, 23 October 23
INDIA COAL INVENTORIES DROP AT FASTEST PACE IN TWO YEARS, BOOSTING IMPORTS - REUTERS
Coal inventories at Indian power plants in the first half of October fell at their fastest rate in two years, an analysis of government data showed ...
Tuesday, 19 September 23
LNG SHIPPING STOCKS: THE ASIAN GROWTH UP-INDICES
Last week, the UP World LNG Shipping Index (UPI) gained 3.81 points or 2.51%, closing at 155.85 points. This index tracks the performance of LNG sh ...
Sunday, 10 September 23
GOLDMAN SACHS PREDICTS OIL PRICE TO HIT $100 ON OPEC CUTS - YAHOO FINANCE
Oil supply cuts by Saudi Arabia and Russia could lead to Brent crude jumping as high as $107 a barrel in 2024, Goldman Sachs Commodities Research h ...
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- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Anglo American - United Kingdom
- Directorate Of Revenue Intelligence - India
- London Commodity Brokers - England
- Binh Thuan Hamico - Vietnam
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Port Waratah Coal Services - Australia
- Kobexindo Tractors - Indoneisa
- Planning Commission, India
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- New Zealand Coal & Carbon
- The University of Queensland
- Savvy Resources Ltd - HongKong
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Singapore Mercantile Exchange
- Grasim Industreis Ltd - India
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Ministry of Mines - Canada
- Bhushan Steel Limited - India
- Lanco Infratech Ltd - India
- Leighton Contractors Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- VISA Power Limited - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- Kumho Petrochemical, South Korea
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Edison Trading Spa - Italy
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Heidelberg Cement - Germany
- Meenaskhi Energy Private Limited - India
- Central Electricity Authority - India
- Indo Tambangraya Megah - Indonesia
- GAC Shipping (India) Pvt Ltd
- Barasentosa Lestari - Indonesia
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Mjunction Services Limited - India
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Malabar Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Bayan Resources Tbk. - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- Mintek Dendrill Indonesia
- MS Steel International - UAE
- Star Paper Mills Limited - India
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Manunggal Multi Energi - Indonesia
- Latin American Coal - Colombia
- Kideco Jaya Agung - Indonesia
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Indogreen Group - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Energy Development Corp, Philippines
- Minerals Council of Australia
- IEA Clean Coal Centre - UK
- The Treasury - Australian Government
- AsiaOL BioFuels Corp., Philippines
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Bhatia International Limited - India
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Altura Mining Limited, Indonesia
- Sindya Power Generating Company Private Ltd
- Tata Chemicals Ltd - India
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- GN Power Mariveles Coal Plant, Philippines
- Essar Steel Hazira Ltd - India
- Gujarat Sidhee Cement - India
- Rio Tinto Coal - Australia
- Global Business Power Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- Coalindo Energy - Indonesia
- Banpu Public Company Limited - Thailand
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- McConnell Dowell - Australia
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Madhucon Powers Ltd - India
- Australian Coal Association
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- Petron Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kepco SPC Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Tamil Nadu electricity Board
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Formosa Plastics Group - Taiwan
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- Iligan Light & Power Inc, Philippines
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- Coal and Oil Company - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Oldendorff Carriers - Singapore
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Medco Energi Mining Internasional
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Asmin Koalindo Tuhup - Indonesia
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