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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Aditya Birla Group - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Petrochimia International Co. Ltd.- Taiwan
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Port Waratah Coal Services - Australia
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Sarangani Energy Corporation, Philippines
- Uttam Galva Steels Limited - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- TeaM Sual Corporation - Philippines
- White Energy Company Limited
- Bank of Tokyo Mitsubishi UFJ Ltd
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Bulk Trading Sa - Switzerland
- Semirara Mining Corp, Philippines
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Kobexindo Tractors - Indoneisa
- Antam Resourcindo - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Central Electricity Authority - India
- ASAPP Information Group - India
- Siam City Cement PLC, Thailand
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Kideco Jaya Agung - Indonesia
- Planning Commission, India
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- Eastern Energy - Thailand
- SN Aboitiz Power Inc, Philippines
- Wilmar Investment Holdings
- Chettinad Cement Corporation Ltd - India
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Aboitiz Power Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- Madhucon Powers Ltd - India
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Trasteel International SA, Italy
- GMR Energy Limited - India
- Independent Power Producers Association of India
- Orica Mining Services - Indonesia
- Bayan Resources Tbk. - Indonesia
- Oldendorff Carriers - Singapore
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Parry Sugars Refinery, India
- Vizag Seaport Private Limited - India
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- International Coal Ventures Pvt Ltd - India
- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- The Treasury - Australian Government
- Indian Oil Corporation Limited
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Samtan Co., Ltd - South Korea
- Maharashtra Electricity Regulatory Commission - India
- Vedanta Resources Plc - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Kartika Selabumi Mining - Indonesia
- Latin American Coal - Colombia
- Karbindo Abesyapradhi - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Makarim & Taira - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Mjunction Services Limited - India
- Australian Coal Association
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PNOC Exploration Corporation - Philippines
- New Zealand Coal & Carbon
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Thai Mozambique Logistica
- Billiton Holdings Pty Ltd - Australia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Bangladesh Power Developement Board
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Altura Mining Limited, Indonesia
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Goldman Sachs - Singapore
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Ambuja Cements Ltd - India
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Directorate Of Revenue Intelligence - India
- Electricity Generating Authority of Thailand
- Ministry of Mines - Canada
- Bhatia International Limited - India
- Chamber of Mines of South Africa
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Anglo American - United Kingdom
- Sakthi Sugars Limited - India
- Minerals Council of Australia
- Formosa Plastics Group - Taiwan
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indonesian Coal Mining Association
- The State Trading Corporation of India Ltd
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