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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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Friday, 13 March 20
TOP 4 ACCOUNTING CONSIDERATIONS AFTER THE IMPLEMENTATION OF IMO 2020 - PWC
To install or not to install?
Following the IMO 2020 global low sulphur cap for marine fuel effective since 1 January 2020, many shi ...
Friday, 13 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 13 March 20
KOREA SOUTH-EAST POWER INVITED BIDS FOR 390,000 MT OF THERMAL COAL FOR MAY-JUNE 2020 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), has issued an international tender for total 390,000 Metric Tons of coal for May & June ...
Thursday, 12 March 20
INDIA 2019 THERMAL COAL IMPORTS RISE 12.6% TO NEARLY 200 MILLION TONNES - REUTERS
India’s thermal coal imports rose 12.6% to nearly 200 million tonnes in 2019, government data reviewed by Reuters showed, reflecting the seco ...
Wednesday, 11 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.07 PCT - XINHUA
China Taiyuan coal transaction price index stood at 133.16 points Monday, up 0.07 percent week on week.
The index, released by China ...
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- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Kumho Petrochemical, South Korea
- Antam Resourcindo - Indonesia
- Merrill Lynch Commodities Europe
- Mercator Lines Limited - India
- Madhucon Powers Ltd - India
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Anglo American - United Kingdom
- Coalindo Energy - Indonesia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Larsen & Toubro Limited - India
- Indonesian Coal Mining Association
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Orica Mining Services - Indonesia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Minerals Council of Australia
- Indo Tambangraya Megah - Indonesia
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- Medco Energi Mining Internasional
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Global Business Power Corporation, Philippines
- Eastern Energy - Thailand
- The Treasury - Australian Government
- ASAPP Information Group - India
- Pendopo Energi Batubara - Indonesia
- Price Waterhouse Coopers - Russia
- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Barasentosa Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- Meenaskhi Energy Private Limited - India
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Mercuria Energy - Indonesia
- Latin American Coal - Colombia
- CNBM International Corporation - China
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Gujarat Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Altura Mining Limited, Indonesia
- IEA Clean Coal Centre - UK
- Thai Mozambique Logistica
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- Gujarat Sidhee Cement - India
- Tamil Nadu electricity Board
- Maharashtra Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Globalindo Alam Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Tata Chemicals Ltd - India
- Dalmia Cement Bharat India
- The University of Queensland
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- GVK Power & Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- PTC India Limited - India
- Deloitte Consulting - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- LBH Netherlands Bv - Netherlands
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Bukit Baiduri Energy - Indonesia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Sakthi Sugars Limited - India
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Sojitz Corporation - Japan
- Aditya Birla Group - India
- Trasteel International SA, Italy
- Rio Tinto Coal - Australia
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- New Zealand Coal & Carbon
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Eastern Coal Council - USA
- Kepco SPC Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Banpu Public Company Limited - Thailand
- Xindia Steels Limited - India
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Makarim & Taira - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Billiton Holdings Pty Ltd - Australia
- Kartika Selabumi Mining - Indonesia
- Uttam Galva Steels Limited - India
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Orica Australia Pty. Ltd.
- Therma Luzon, Inc, Philippines
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