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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, 24 March 20
THE TRIPLE SHOCK OF CORONAVIRUS IN SHIPPING: WILL IT LAST? - DREWRY
Transport capacity shortages, disruptions to supply chains and inability to plan since late January have been a dangerous combination. But will all ...
Tuesday, 24 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.28 PCT - XINHUA
China Taiyuan coal transaction price index stood at 132.74 points Monday, down 0.28 percent week on week.
The index, released by Chi ...
Monday, 23 March 20
CHARTERPARTY REQUIREMENTS TO NOTIFY CLAIMS - TAKE CARE! - WFW
KNOWLEDGE TO ELEVATE
Voyage charterparties frequently require the owner to notify any claim with supporting documents within a relatively shor ...
Monday, 23 March 20
COAL INDIA LIMITED'S ONE-DAY OUTPUT PEAKS AT 3.17 MT - THE HINDU
Coal India Limited (CIL) output peaked at a new high of 3.17 million tonnes (MT) on March 20, overtaking the 3.14 MT production recorded on March 2 ...
Monday, 23 March 20
KOMIPO INVITED BIDS FOR 1.45 MILLION TONS OF COAL FOR JUNE & JULY 2020 LOADING
COALspot.com: Korea Midland Power Co.,Ltd (KOMIPO), on behalf of five Korean Gencos, has issued an international tender for total 1,450,000 MT (&pl ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Economic Council, Georgia
- Ministry of Transport, Egypt
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Singapore Mercantile Exchange
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- PTC India Limited - India
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Indian Energy Exchange, India
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- White Energy Company Limited
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Wood Mackenzie - Singapore
- MS Steel International - UAE
- Latin American Coal - Colombia
- Metalloyd Limited - United Kingdom
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Deloitte Consulting - India
- Chettinad Cement Corporation Ltd - India
- Madhucon Powers Ltd - India
- Directorate Of Revenue Intelligence - India
- Energy Development Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Oldendorff Carriers - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Binh Thuan Hamico - Vietnam
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Electricity Generating Authority of Thailand
- San Jose City I Power Corp, Philippines
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- Miang Besar Coal Terminal - Indonesia
- Meralco Power Generation, Philippines
- Orica Mining Services - Indonesia
- Parry Sugars Refinery, India
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Intertek Mineral Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Global Green Power PLC Corporation, Philippines
- CNBM International Corporation - China
- Medco Energi Mining Internasional
- The University of Queensland
- Salva Resources Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Mintek Dendrill Indonesia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Central Java Power - Indonesia
- Attock Cement Pakistan Limited
- Aditya Birla Group - India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Jaiprakash Power Ventures ltd
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Indian Oil Corporation Limited
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Bhushan Steel Limited - India
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- SN Aboitiz Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Directorate General of MIneral and Coal - Indonesia
- London Commodity Brokers - England
- Vizag Seaport Private Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Holcim Trading Pte Ltd - Singapore
- Ministry of Mines - Canada
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Price Waterhouse Coopers - Russia
- European Bulk Services B.V. - Netherlands
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Sree Jayajothi Cements Limited - India
- Ind-Barath Power Infra Limited - India
- Jindal Steel & Power Ltd - India
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Petron Corporation, Philippines
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Interocean Group of Companies - India
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Orica Australia Pty. Ltd.
- Kideco Jaya Agung - Indonesia
- Altura Mining Limited, Indonesia
- Simpson Spence & Young - Indonesia
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Bukit Makmur.PT - Indonesia
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Neyveli Lignite Corporation Ltd, - India
- GMR Energy Limited - India
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Kobexindo Tractors - Indoneisa
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Eastern Energy - Thailand
- Sarangani Energy Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Heidelberg Cement - Germany
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