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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, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
Thursday, 05 March 20
SEABORNE COAL'S STRUGGLES IN ASIA ARE MORE THAN JUST CHINA CORONAVIRUS - REUTERS
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Electricity Authority, New Zealand
- Globalindo Alam Lestari - Indonesia
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- Billiton Holdings Pty Ltd - Australia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Indian Oil Corporation Limited
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Kumho Petrochemical, South Korea
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Kartika Selabumi Mining - Indonesia
- McConnell Dowell - Australia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Economic Council, Georgia
- Maharashtra Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Oldendorff Carriers - Singapore
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Straits Asia Resources Limited - Singapore
- Cigading International Bulk Terminal - Indonesia
- ICICI Bank Limited - India
- White Energy Company Limited
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- Neyveli Lignite Corporation Ltd, - India
- Indo Tambangraya Megah - Indonesia
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- Aboitiz Power Corporation - Philippines
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Development Corp, Philippines
- Bhushan Steel Limited - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Makarim & Taira - Indonesia
- Coal and Oil Company - UAE
- Dalmia Cement Bharat India
- Deloitte Consulting - India
- Singapore Mercantile Exchange
- Savvy Resources Ltd - HongKong
- Sinarmas Energy and Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Indian Energy Exchange, India
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Wood Mackenzie - Singapore
- The Treasury - Australian Government
- ASAPP Information Group - India
- Sical Logistics Limited - India
- CNBM International Corporation - China
- MS Steel International - UAE
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Madhucon Powers Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Borneo Indobara - Indonesia
- Central Electricity Authority - India
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Vizag Seaport Private Limited - India
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Central Java Power - Indonesia
- PTC India Limited - India
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Grasim Industreis Ltd - India
- International Coal Ventures Pvt Ltd - India
- Planning Commission, India
- Eastern Coal Council - USA
- Essar Steel Hazira Ltd - India
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Australian Coal Association
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Krishnapatnam Port Company Ltd. - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Anglo American - United Kingdom
- Chamber of Mines of South Africa
- Kobexindo Tractors - Indoneisa
- Barasentosa Lestari - Indonesia
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Gujarat Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Iligan Light & Power Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Lanco Infratech Ltd - India
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Bhoruka Overseas - Indonesia
- LBH Netherlands Bv - Netherlands
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Timah Investasi Mineral - Indoneisa
- Merrill Lynch Commodities Europe
- PNOC Exploration Corporation - Philippines
- Riau Bara Harum - Indonesia
- PowerSource Philippines DevCo
- Pipit Mutiara Jaya. PT, Indonesia
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- Cement Manufacturers Association - India
- Malabar Cements Ltd - India
- VISA Power Limited - India
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