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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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Tuesday, 31 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.43 PCT - XINHUA
China Taiyuan coal transaction price index stood at 132.17 points Monday, down 0.43 percent week on week.
The index, released by Chi ...
Tuesday, 31 March 20
COAL POWER REMAINS IN GLOBAL DECLINE, DESPITE CHINESE SURGE - SYDNEY MORNING HERALD
The impact of coronavirus has prompted a surge in coal-fired power plant construction permits in China, with the Chinese government issuing more pe ...
Monday, 30 March 20
CORONAVIRUS - IMPLICATIONS FOR SHIPS AND CREW - GARD
KNOWLEDGE TO ELEVATE
Countries around the world are strengthening their border control measures in order to prevent the further spread of COVI ...
Monday, 30 March 20
LAY-UP AND RE-ACTIVATION REVISITED - GARD
KNOWLEDGE TO ELEVATE
The COVID-19 pandemic has affected the maritime industry in previously unthinkable ways. Ports around the world are denyi ...
Monday, 30 March 20
PANAMAX: INDONESIA LACKED VOLUME, PARTLY DUE TO FORCE MAJEURE IN INDIAN PORTS - BALTIC BRIEFING
Capesize
As Covid-19 continued to ratchet up tensions across the globe, the Cape market dealt with the change to remote working. Most regions o ...
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- Australian Coal Association
- Marubeni Corporation - India
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Medco Energi Mining Internasional
- Minerals Council of Australia
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- GVK Power & Infra Limited - India
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Finance - Indonesia
- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- GMR Energy Limited - India
- Mintek Dendrill Indonesia
- Larsen & Toubro Limited - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Star Paper Mills Limited - India
- Economic Council, Georgia
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- LBH Netherlands Bv - Netherlands
- Bulk Trading Sa - Switzerland
- Kepco SPC Power Corporation, Philippines
- Posco Energy - South Korea
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Borneo Indobara - Indonesia
- Dalmia Cement Bharat India
- Indonesian Coal Mining Association
- Pendopo Energi Batubara - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Holcim Trading Pte Ltd - Singapore
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Baiduri Energy - Indonesia
- Orica Mining Services - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Parry Sugars Refinery, India
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Jindal Steel & Power Ltd - India
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- SMG Consultants - Indonesia
- IEA Clean Coal Centre - UK
- PetroVietnam Power Coal Import and Supply Company
- Merrill Lynch Commodities Europe
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- The University of Queensland
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- ASAPP Information Group - India
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- South Luzon Thermal Energy Corporation
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- SN Aboitiz Power Inc, Philippines
- Siam City Cement PLC, Thailand
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Metalloyd Limited - United Kingdom
- Planning Commission, India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Latin American Coal - Colombia
- Chamber of Mines of South Africa
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Xindia Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Standard Chartered Bank - UAE
- Sinarmas Energy and Mining - Indonesia
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Leighton Contractors Pty Ltd - Australia
- TeaM Sual Corporation - Philippines
- International Coal Ventures Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Simpson Spence & Young - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Romanian Commodities Exchange
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Malabar Cements Ltd - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Gujarat Mineral Development Corp Ltd - India
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Ambuja Cements Ltd - India
- Orica Australia Pty. Ltd.
- Tamil Nadu electricity Board
- Kideco Jaya Agung - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Pipit Mutiara Jaya. PT, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
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