We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
Saturday, 11 December 21
BUNKER BUYERS LOSE UP TO $5/MT FOR NOT COVERING ENOUGH SUPPLIERS - INTEGR8 FUELS
With the Brent price recently touching the $80 mark and before the Omicron variant concerns pushed it lower, bunker prices reached levels not seen since early 2020. Following the OPEC+ decision not to release additional crude oil volumes on the market and continuing to add to existing supply gradually, we may see more oil price increases going forward, particularly if Omicron proves to be less deadly as initially thought and given the current tight oil supply and demand balance.
The process of buying bunker fuel is essentially a reverse auction where more participants often mean a better price achieved, which is particularly important in the high oil price environment. In this article, we discuss the reasons and quantify the impact of low supplier coverage and response rate on the price paid and look into the ways to get more suppliers to quote.
More suppliers quoting means lower price paid…
We analysed a sample of over 250 Integr8 Fuels stems fixed so far in 2021 covering the hubs of ARA, Gibralter Straits and Malta which are served by multiple suppliers. For each stem, only the larger quantity fuel was analysed (often VLSFO or HSFO, unless a single LSMGO grade was procured) as supplier coverage in the dual fuel stems often depends on the main larger quantity grade.
Figure 1. shows the relationship between the supplier response rate (the share of suppliers quoting a price in the total number of suppliers) and the average premium or discount paid over the bunker benchmark price provided by ENGINE.
It is evident that, on average, stems with less than 20% of suppliers quoting were fixed at a slight premium to the benchmark, while stems with over 60% of suppliers quoting were fixed at significant discounts, hence having more suppliers’ quotes resulted in an average savings of up to $5/mt. And there are a number of ways to achieve such savings.
To visually represent this, all the stems have been mapped for supplier coverage and response rate with stems falling into three distinct categories (Figure 2.). Around 30% of stems fall into the first category, where both supplier coverage and response rates were low, including most of the stems with one supplier. Stems in this category were on average fixed with a $0.2/mt discount to the ENGINE benchmark price.
Intuitively, an over payment could be expected, however, the small discount was mostly due to a number of large quantity fixtures that usually attract good prices. The stems in the second category, which constitute around 15% of all stems, had good a supplier coverage but a low response rate.These are characterised by their smaller size, shorter lead time and a small discount to the benchmark of $0.3/mt. A lot of these fixtures were done for same day delivery. Lastly, in the third category are the stems with a good supplier coverage and response rate -these on average achieved a much larger discount of $3.4/mt to the benchmark and this is the category where more fixtures should be aiming to be.
Interestingly, we found a number of stems with the high supplier coverage and response rate yet with sizeable over-payments beyond the ENGINE benchmark pricing. The main reason for this was found to be the limitation imposed by some companies in the wake of the IMO2020 change on the acceptable levels of sulphur and viscosity when buying VLSFO. While in some instances such limitations helped to avoid buying fuel that was more likely to test off-spec or cause issues on board vessels, in others this meant that some suppliers offering lower prices were being disqualified on the basis of provisional certificates of quality which were not always representative of the delivered fuel quality. A similar trend was spotted among the minority of stems where a certain spec was requested, for example ISO8217:2017.
Overall, the data shows that increasing the lead time and stem quantity, avoiding out of hours and weekend enquiries, being flexible with the fuel specs where operationally possible and safe to do so, can help increase suppliers’ response and achieve a better price paid. Moving beyond the stem sample analysed, another typical reason for sub-optimal supplier coverage is that some companies only prefer to deal with a limited number of physical suppliers directly.
Traders can help increase supplier coverage
Direct business is often perceived as the only way to achieve low prices as it cuts the middleman from the equation. This does work well for large companies buying substantial volumes of bunkers globally who have the resources to negotiate prices, set up and maintain credit lines with the hundreds of suppliers globally. However, the reality is that a lot of medium and smaller companies may only be dealing with a handful of suppliers directly thus not covering the whole market. This significantly limits their bargaining power. A trader can not only cover the rest of the market but also act as insurance policy should the company’s own credit lines with suppliers become tight, particularly in the rising oil price environment.
Long gone the days when traders were matching sellers with buyers. In recent years, investment has been going into gathering data, setting up systems, news flow and analytics. While receiving quotes and sending back counteroffers to five suppliers may not sound too complex, a trader may have a system that allows to compare supplier quotations on the weighted by fuel grade average price while also considering suppliers’ historical claims, density short lifts, recent quality issues and fuel energy content. These days a trader can not only cover every supplier in the market but also warn about supply delays (as no one wants their $40,000/day earning bulk carrier to go off hire waiting for bunker supplies), worsening weather conditions, help prevent claims, bundle up several enquiries to achieve volume discounts and even help with bunker planning and suggest the most optimal port or combination of ports to bunker your vessel.
Source: Integr8 Fuels
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Thursday, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
|
|
|
Showing 51 to 55 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Toyota Tsusho Corporation, Japan
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Carbofer General Trading SA - India
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Georgia Ports Authority, United States
- Meenaskhi Energy Private Limited - India
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Kaltim Prima Coal - Indonesia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Gujarat Sidhee Cement - India
- Tata Chemicals Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Riau Bara Harum - Indonesia
- Formosa Plastics Group - Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- CIMB Investment Bank - Malaysia
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- IEA Clean Coal Centre - UK
- PowerSource Philippines DevCo
- MS Steel International - UAE
- South Luzon Thermal Energy Corporation
- ASAPP Information Group - India
- Cement Manufacturers Association - India
- Deloitte Consulting - India
- Iligan Light & Power Inc, Philippines
- Central Java Power - Indonesia
- PNOC Exploration Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Holcim Trading Pte Ltd - Singapore
- India Bulls Power Limited - India
- Merrill Lynch Commodities Europe
- Gujarat Mineral Development Corp Ltd - India
- Thiess Contractors Indonesia
- Siam City Cement PLC, Thailand
- Kobexindo Tractors - Indoneisa
- Dalmia Cement Bharat India
- Savvy Resources Ltd - HongKong
- Kideco Jaya Agung - Indonesia
- Global Business Power Corporation, Philippines
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Coalindo Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Price Waterhouse Coopers - Russia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- The University of Queensland
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Australian Commodity Traders Exchange
- Essar Steel Hazira Ltd - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wilmar Investment Holdings
- Mintek Dendrill Indonesia
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Vedanta Resources Plc - India
- Commonwealth Bank - Australia
- Global Coal Blending Company Limited - Australia
- Binh Thuan Hamico - Vietnam
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Indian Oil Corporation Limited
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Madhucon Powers Ltd - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Krishnapatnam Port Company Ltd. - India
- OPG Power Generation Pvt Ltd - India
- Renaissance Capital - South Africa
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- GVK Power & Infra Limited - India
- Oldendorff Carriers - Singapore
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Edison Trading Spa - Italy
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- IHS Mccloskey Coal Group - USA
- Electricity Authority, New Zealand
- Meralco Power Generation, Philippines
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ambuja Cements Ltd - India
- Borneo Indobara - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- LBH Netherlands Bv - Netherlands
- Bhushan Steel Limited - India
- Sical Logistics Limited - India
- Rio Tinto Coal - Australia
- Pendopo Energi Batubara - Indonesia
- Aditya Birla Group - India
- Metalloyd Limited - United Kingdom
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Central Electricity Authority - India
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Indogreen Group - Indonesia
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Banpu Public Company Limited - Thailand
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Kalimantan Lumbung Energi - Indonesia
- Australian Coal Association
- Chettinad Cement Corporation Ltd - India
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Directorate Of Revenue Intelligence - India
- Bayan Resources Tbk. - Indonesia
- Indika Energy - Indonesia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Bharathi Cement Corporation - India
- Independent Power Producers Association of India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Standard Chartered Bank - UAE
- Mercator Lines Limited - India
- Minerals Council of Australia
- Therma Luzon, Inc, Philippines
- Bhoruka Overseas - Indonesia
- Port Waratah Coal Services - Australia
- Sakthi Sugars Limited - India
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
|
| |
| |
|
