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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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Friday, 03 April 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Wednesday, 01 April 20
TRADERS SCRAMBLE TO SELL CHEAP CRUDE CARGOES AS GLUT GROWS - REUTERS
Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, ...
Wednesday, 01 April 20
MARKET INSIGHT - INTERMODAL
There is an old, allegedly Chinese, saying suggesting that living in “interesting” times usually refers to times of trouble. The latest ...
Tuesday, 31 March 20
FREIGHT MARKET: DRY BULKERS - SPOT MARKET 23-29 MARCH 2020
Capesize
The rebound in freight rates resumed this past week, with rates man-aging to post further gains by week’s end. The BCI is in negat ...
Tuesday, 31 March 20
DRY BULK: Q1 HAS BEEN THE WORST QUARTER NOTED FOR MORE THAN 3 YEARS NOW - ALLIED RESEARCH
At this point, the Covid-19 pandemic seems to be monopolizing all market (as well as all other) discussions across the world and any market insight ...
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- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Maheswari Brothers Coal Limited - India
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- Standard Chartered Bank - UAE
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- Chamber of Mines of South Africa
- Siam City Cement PLC, Thailand
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Meralco Power Generation, Philippines
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Rio Tinto Coal - Australia
- Semirara Mining Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Orica Australia Pty. Ltd.
- Marubeni Corporation - India
- Sical Logistics Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sinarmas Energy and Mining - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Carbofer General Trading SA - India
- Grasim Industreis Ltd - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Ministry of Finance - Indonesia
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Economic Council, Georgia
- Manunggal Multi Energi - Indonesia
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Siam City Cement - Thailand
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Global Coal Blending Company Limited - Australia
- Toyota Tsusho Corporation, Japan
- The University of Queensland
- Bhoruka Overseas - Indonesia
- Kumho Petrochemical, South Korea
- Independent Power Producers Association of India
- Central Electricity Authority - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Australian Coal Association
- Bahari Cakrawala Sebuku - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kalimantan Lumbung Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Eastern Coal Council - USA
- Commonwealth Bank - Australia
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Sree Jayajothi Cements Limited - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- ICICI Bank Limited - India
- Aditya Birla Group - India
- Kaltim Prima Coal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Minerals Council of Australia
- Central Java Power - Indonesia
- PTC India Limited - India
- Jindal Steel & Power Ltd - India
- Parliament of New Zealand
- Malabar Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- LBH Netherlands Bv - Netherlands
- Global Business Power Corporation, Philippines
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Indogreen Group - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Banpu Public Company Limited - Thailand
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- Cement Manufacturers Association - India
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- Holcim Trading Pte Ltd - Singapore
- Oldendorff Carriers - Singapore
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Salva Resources Pvt Ltd - India
- Baramulti Group, Indonesia
- Electricity Generating Authority of Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coal and Oil Company - UAE
- Agrawal Coal Company - India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Australian Commodity Traders Exchange
- Barasentosa Lestari - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Coalindo Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Global Green Power PLC Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Indian Oil Corporation Limited
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Asmin Koalindo Tuhup - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Goldman Sachs - Singapore
- Mintek Dendrill Indonesia
- Attock Cement Pakistan Limited
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Cigading International Bulk Terminal - Indonesia
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Ambuja Cements Ltd - India
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Planning Commission, India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Price Waterhouse Coopers - Russia
- Vedanta Resources Plc - India
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
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