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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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Wednesday, 25 March 20
CORONAVIRUS CRISIS IS CRUSHING GLOBAL GDP GROWTH - FITCH RATINGS
The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly “Global Economic Outlook” (GEO) ...
Wednesday, 25 March 20
MARKET INSIGHT - INTERMODAL
There is no doubt that the Covid-19 pandemic crisis is a world-shattering event that will change the world as we know it. Societies are facing chal ...
Wednesday, 25 March 20
INDONESIA TO CANCEL RULES REQUIRING DOMESTIC SHIPS FOR COAL, PALM EXPORTS : REFINITIV
Indonesia's government will revoke rules requiring exporters of coal and palm oil to use domestic shipping companies for shipments, Coordinatin ...
Wednesday, 25 March 20
JAN-FEB 2020, INDONESIA SHIPPED 64.5 MLN TONNES OF COAL, UP +3.4% YOY - BANCHERO COSTA
In the 12 months of calendar 2019, Indonesia exported 386.4 mln tonnes of coal, according to vessel tracking data from Refinitiv. This represents a ...
Tuesday, 24 March 20
MARKET ANALYSIS - ALLIED
As countries around the world struggle to take back control of the ongoing COVID-19 pandemic the global economy shuts down bit by bit, leaving only ...
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- White Energy Company Limited
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Romanian Commodities Exchange
- Billiton Holdings Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- SMG Consultants - Indonesia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ministry of Finance - Indonesia
- Iligan Light & Power Inc, Philippines
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Merrill Lynch Commodities Europe
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Eastern Coal Council - USA
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Power Finance Corporation Ltd., India
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Pendopo Energi Batubara - Indonesia
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Vizag Seaport Private Limited - India
- PTC India Limited - India
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Semirara Mining Corp, Philippines
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Parliament of New Zealand
- Wilmar Investment Holdings
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- Sindya Power Generating Company Private Ltd
- Gujarat Mineral Development Corp Ltd - India
- Metalloyd Limited - United Kingdom
- Kalimantan Lumbung Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Siam City Cement PLC, Thailand
- Africa Commodities Group - South Africa
- Sakthi Sugars Limited - India
- Vedanta Resources Plc - India
- Edison Trading Spa - Italy
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Tata Chemicals Ltd - India
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Sidhee Cement - India
- ASAPP Information Group - India
- Grasim Industreis Ltd - India
- Global Coal Blending Company Limited - Australia
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Posco Energy - South Korea
- Coalindo Energy - Indonesia
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sical Logistics Limited - India
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Australian Commodity Traders Exchange
- Attock Cement Pakistan Limited
- Electricity Authority, New Zealand
- Aditya Birla Group - India
- Parry Sugars Refinery, India
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Orica Mining Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- VISA Power Limited - India
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
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