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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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Thursday, 19 March 20
BIMCO REVISES 2020 FORECAST FOR MAIN SHIPPING MARKETS
The coronavirus pandemic is impacting global shipping demand for 2020 negatively. The speed of the virus spread makes it difficult to assess the fu ...
Thursday, 19 March 20
U.S. COAL EXPORTS DECLINED IN 2019 - EIA
In 2019, U.S. coal exports declined to 93 million short tons (MMst), a 20% decrease from the previous year, according to the U.S. Energy Informatio ...
Thursday, 19 March 20
SOUTH KOREA'S KOSPO INVITED BIDS FOR MIN 3,700 OR MIN 4,200 NCV LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO), has issued an international tender for total 160,000 MT (±10%) (80,000 x 2 Panamax) of ...
Wednesday, 18 March 20
DRY BULK: INDONESIAN COAL CARGOES PROVIDING A BIG BOOST IN THE EAST WHERE SENTIMENT FOR HANDIES ALSO STARTED IMPROVING - INTERMODAL
The BDI ended last week with small gains on the back of an encouraging number of cargoes out of key trading regions that helped sustain the reserve ...
Wednesday, 18 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
Despite we all knew about the Covid-19 weeks ago, few could realize the size of the thread until the last few days. The examples of China and Italy ...
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- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Carbofer General Trading SA - India
- Indian Oil Corporation Limited
- The University of Queensland
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- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- SMC Global Power, Philippines
- Therma Luzon, Inc, Philippines
- Australian Commodity Traders Exchange
- Aboitiz Power Corporation - Philippines
- Merrill Lynch Commodities Europe
- Thai Mozambique Logistica
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Siam City Cement PLC, Thailand
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- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- Posco Energy - South Korea
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Larsen & Toubro Limited - India
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- Krishnapatnam Port Company Ltd. - India
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- MS Steel International - UAE
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- CNBM International Corporation - China
- Thiess Contractors Indonesia
- Sical Logistics Limited - India
- Ind-Barath Power Infra Limited - India
- Australian Coal Association
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- Bukit Baiduri Energy - Indonesia
- London Commodity Brokers - England
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Intertek Mineral Services - Indonesia
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Interocean Group of Companies - India
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- Eastern Coal Council - USA
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- PTC India Limited - India
- Parliament of New Zealand
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- Bhatia International Limited - India
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- New Zealand Coal & Carbon
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- Jorong Barutama Greston.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Rio Tinto Coal - Australia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Banpu Public Company Limited - Thailand
- Barasentosa Lestari - Indonesia
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Trasteel International SA, Italy
- Planning Commission, India
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Vedanta Resources Plc - India
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- Georgia Ports Authority, United States
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
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- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- International Coal Ventures Pvt Ltd - India
- Sojitz Corporation - Japan
- Global Business Power Corporation, Philippines
- Romanian Commodities Exchange
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
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- Anglo American - United Kingdom
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- PowerSource Philippines DevCo
- Minerals Council of Australia
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Lanco Infratech Ltd - India
- Attock Cement Pakistan Limited
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Central Electricity Authority - India
- Jindal Steel & Power Ltd - India
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- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Altura Mining Limited, Indonesia
- Semirara Mining Corp, Philippines
- Coastal Gujarat Power Limited - India
- Straits Asia Resources Limited - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Timah Investasi Mineral - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Salva Resources Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bayan Resources Tbk. - Indonesia
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- Grasim Industreis Ltd - India
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Vizag Seaport Private Limited - India
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Malabar Cements Ltd - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- GAC Shipping (India) Pvt Ltd
- Kalimantan Lumbung Energi - Indonesia
- Videocon Industries ltd - India
- Mercuria Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
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- White Energy Company Limited
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