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Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub-zero, albeit briefly and in somewhat freakish circumstances. Where are the signs of stress across the oil value chain? And what are the prospects of finding an exit route to recovery? I talked it through with Ann-Louise Hittle of our Macro Oils team.
First, oil demand, which we think may be close to bottoming out. Decline has been sharp and deep as Covid-19 takes its toll on global economic activity. Much of the world is currently in lockdown, with more than 65% of the world’s population under travel restrictions. Global air travel and car use have nosedived in many countries. The big hit has been on jet fuel demand (down 50% year-on-year) and gasoline (down 25%). Diesel and fuel oil – used to transport goods by truck, ship and rail – have held relatively steady.
The net effect will be April’s demand falling by an average of 15 million to 18 million b/d year on year, based on the early April forecast from our Macro Oils Service. It’s a big number but may be bigger still on certain days or weeks in April and May. Some estimates have suggested declines of 20 million b/d or more.
A key question is when the global economic recovery that’s needed to kick start oil demand growth again will begin. Right now, we appear to be in limbo. India, France and the UK, among other big economies, have extended lockdowns into May. Italy, Spain, Austria and others have started to ease restrictions while several US states are considering re-opening in May. There are early signs of US gasoline demand stabilising.
China though is the model to watch as it emerges from lockdown. It has already started ratcheting up crude purchases in April to supply a reviving economy.
Second, inventory is building at superfast rates globally. Cushing, Oklahoma, is a microcosm of the wider picture. Oil prices in Texas have incentivised producers to send crude to the Cushing hub; weak demand from refineries in the Mid-West and Gulf Coast have kept it there. Storage tanks are filling up rapidly – the three largest weekly builds on record were in consecutive weeks from late March, based on Genscape’s proprietary twice-weekly tank monitoring.
Cushing’s tightening storage capacity played a central role in WTI’s ignominious dive into negative prices on 20 April, ahead of the May contract expiry. Traders and financial players were effectively ambushed – having to pay counterparties up to US$37/bbl to roll out of their expiring May contracts and into June.
Storage globally will stay tight so long as oversupply persists. Genscape estimates Cushing‘s spare capacity of up to 15 million b/d will be full within weeks, and other landlocked hubs – the Caspian for one – are in a similar position. But in reality, producers everywhere are worried their crude won’t be able to find a home.
Third, the world is still awash with supply, which unlike demand is still close to pre-crisis levels. Low prices have killed off new investment but have not yet had much impact on production. So far, we estimate barely one million b/d of onstream non-OPEC production has been shut in.
These are sizeable volumes but, given the scale of the market oversupply, insignificant. We estimate over 15 million b/d of production generates negative operating cash flow, now that prices have lurched lower. As storage fills up, more wells and fields will be shut-in during the coming weeks. Curtailed volumes will quickly mount up.
What must happen for the oil market to start rebalancing and prices to recover? May is important for supply, with OPEC+ cuts taking effect and removing up to 7 million b/d from the market by the end of the month. We expect a slow return to “normal” life in H2 2020 to help demand recover, though most likely staying below pre-crisis levels.
A strong bounce in demand as the world emerges from recession will be needed to soak up the overhang of inventory, which threatens to reach record levels by summer. Nothing, however, can be taken for granted while coronavirus still poses a threat to economic – and social – activity.
Source: Wood Mackenzie
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Tuesday, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
Monday, 04 May 20
U.S. ESTIMATED COAL PRODUCTION FALL 39.4% YEAR ON YEAR IN THE WEEK ENDED APRIL 25 - EIA
Estimated U.S. coal production totaled about 8.6 million short tons (MMst) For the week ended April 25, 2020, says EIA in its latest report.
E ...
Saturday, 02 May 20
SUPRAMAX: ASIA, STRONGER NUMBERS - A 55.000-DWT WAS FIXED FROM INDONESIA TO CHINA IN THE MID $6,000S - BALTIC BRIEFING
Capesize
A tepid week for the big ships, as macro concerns continued to weigh heavily on the index. All of the major voyage routes lost value, ...
Friday, 01 May 20
KOSPO INVITED OFFER FOR 5600 NCV COAL FOR Q3 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 260,000 Metric Tons (MT) steam coal for Boryeong Power ...
Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY ABOUT 8% IN 2020,THE LARGEST DROP SINCE WORLD WAR II - IEA
We expect global coal demand to fall by about 8% in 2020, the largest drop since World War II, with coal use declining in virtually every sector of ...
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- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Eastern Energy - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
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- Parry Sugars Refinery, India
- Heidelberg Cement - Germany
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
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- Price Waterhouse Coopers - Russia
- The University of Queensland
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- Grasim Industreis Ltd - India
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- Deloitte Consulting - India
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- Independent Power Producers Association of India
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- Tata Chemicals Ltd - India
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- Orica Mining Services - Indonesia
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- Bank of Tokyo Mitsubishi UFJ Ltd
- Globalindo Alam Lestari - Indonesia
- GVK Power & Infra Limited - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Chettinad Cement Corporation Ltd - India
- Meralco Power Generation, Philippines
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- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
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- Leighton Contractors Pty Ltd - Australia
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Videocon Industries ltd - India
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Barasentosa Lestari - Indonesia
- Samtan Co., Ltd - South Korea
- Ministry of Mines - Canada
- Aditya Birla Group - India
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Karbindo Abesyapradhi - Indoneisa
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- South Luzon Thermal Energy Corporation
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Petron Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
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- London Commodity Brokers - England
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- Bahari Cakrawala Sebuku - Indonesia
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- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Ministry of Finance - Indonesia
- Wood Mackenzie - Singapore
- Vedanta Resources Plc - India
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- Siam City Cement - Thailand
- Coalindo Energy - Indonesia
- Kartika Selabumi Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Jaiprakash Power Ventures ltd
- Aboitiz Power Corporation - Philippines
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Gujarat Sidhee Cement - India
- Intertek Mineral Services - Indonesia
- Indian Oil Corporation Limited
- Commonwealth Bank - Australia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- Bhushan Steel Limited - India
- Kobexindo Tractors - Indoneisa
- Goldman Sachs - Singapore
- European Bulk Services B.V. - Netherlands
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Star Paper Mills Limited - India
- Planning Commission, India
- Jorong Barutama Greston.PT - Indonesia
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Oldendorff Carriers - Singapore
- Bulk Trading Sa - Switzerland
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- Posco Energy - South Korea
- VISA Power Limited - India
- Africa Commodities Group - South Africa
- Essar Steel Hazira Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Anglo American - United Kingdom
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Tamil Nadu electricity Board
- Manunggal Multi Energi - Indonesia
- PowerSource Philippines DevCo
- Kalimantan Lumbung Energi - Indonesia
- Global Coal Blending Company Limited - Australia
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Sakthi Sugars Limited - India
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Kumho Petrochemical, South Korea
- Bukit Asam (Persero) Tbk - Indonesia
- Power Finance Corporation Ltd., India
- McConnell Dowell - Australia
- Metalloyd Limited - United Kingdom
- Larsen & Toubro Limited - India
- Kaltim Prima Coal - Indonesia
- Makarim & Taira - Indonesia
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
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