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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, 17 March 20
IT IS NOW UNQUESTIONABLE THAT 2020 WILL BE A MILESTONE YEAR FOR THE OIL MARKET, AS WELL AS THE WHOLE GLOBAL ECONOMY - ALLIED
It is now unquestionable that 2020 will be a milestone year for the oil market, as well as the whole global economy. The impact from the COVID-19 o ...
Tuesday, 17 March 20
PRELIMINARY FIELD EXPERIENCES ON THE EFFECTS OF LSFO AND VLSFO ON CYLINDER CONDITION - HANS JENSEN LUBRICATORS
It is now more than two months since the 0.5% sulphur cap entered into force, which have affected the operation of more than 70,000 vessels. As ant ...
Monday, 16 March 20
ULTRAMAX: S8 INDONESIA-INDIA AND S10 INDONESIA-CHINA ROUTES BOTH POSTED GAINS OF $1,412, AND $1,289 ON THE WEEK, TO CLOSE AT $5,575, AND $6,089 RESPECTIVELY - BALTIC BRIEFING
Capesize
The Capesize market came to work on Monday, with little expectation, or confidence, that the days ahead were going to bring anything o ...
Sunday, 15 March 20
CAPTIVE COAL OUTPUT RISES 19% IN APRIL-FEBRUARY - FINANCIAL EXPRESS
Coal production from captive mines in the first eleven months of the ongoing fiscal have increased by 18.8% year-on-year (y-o-y) to 51.7 million to ...
Friday, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
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- Planning Commission, India
- Gujarat Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Chamber of Mines of South Africa
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Holcim Trading Pte Ltd - Singapore
- New Zealand Coal & Carbon
- Bhushan Steel Limited - India
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Ind-Barath Power Infra Limited - India
- Metalloyd Limited - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Edison Trading Spa - Italy
- Leighton Contractors Pty Ltd - Australia
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Latin American Coal - Colombia
- Ministry of Mines - Canada
- AsiaOL BioFuels Corp., Philippines
- McConnell Dowell - Australia
- SMC Global Power, Philippines
- PTC India Limited - India
- Semirara Mining and Power Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Gujarat Sidhee Cement - India
- PowerSource Philippines DevCo
- Sakthi Sugars Limited - India
- Eastern Coal Council - USA
- Indika Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Economic Council, Georgia
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Bhatia International Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Bahari Cakrawala Sebuku - Indonesia
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- MS Steel International - UAE
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Posco Energy - South Korea
- Salva Resources Pvt Ltd - India
- Central Electricity Authority - India
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Uttam Galva Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Aditya Birla Group - India
- Directorate Of Revenue Intelligence - India
- Alfred C Toepfer International GmbH - Germany
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Kaltim Prima Coal - Indonesia
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Coalindo Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bukit Baiduri Energy - Indonesia
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Tata Chemicals Ltd - India
- Australian Coal Association
- Deloitte Consulting - India
- Electricity Authority, New Zealand
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Chettinad Cement Corporation Ltd - India
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Africa Commodities Group - South Africa
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Sree Jayajothi Cements Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Bhoruka Overseas - Indonesia
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Sindya Power Generating Company Private Ltd
- Renaissance Capital - South Africa
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Jorong Barutama Greston.PT - Indonesia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- Standard Chartered Bank - UAE
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- OPG Power Generation Pvt Ltd - India
- Electricity Generating Authority of Thailand
- Trasteel International SA, Italy
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Baramulti Group, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- GMR Energy Limited - India
- Malabar Cements Ltd - India
- Indonesian Coal Mining Association
- Gujarat Mineral Development Corp Ltd - India
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Kumho Petrochemical, South Korea
- Mercuria Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Siam City Cement PLC, Thailand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- ASAPP Information Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kobexindo Tractors - Indoneisa
- Orica Australia Pty. Ltd.
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- ICICI Bank Limited - India
- Heidelberg Cement - Germany
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Central Java Power - Indonesia
- Parliament of New Zealand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Bangladesh Power Developement Board
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Thiess Contractors Indonesia
- Jaiprakash Power Ventures ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
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