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.
|
|
Tuesday, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
|
|
|
Showing 76 to 80 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- GAC Shipping (India) Pvt Ltd
- Carbofer General Trading SA - India
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- GMR Energy Limited - India
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Kepco SPC Power Corporation, Philippines
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Ministry of Mines - Canada
- Aboitiz Power Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Kohat Cement Company Ltd. - Pakistan
- TNB Fuel Sdn Bhd - Malaysia
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Vedanta Resources Plc - India
- Borneo Indobara - Indonesia
- CNBM International Corporation - China
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Orica Australia Pty. Ltd.
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- The University of Queensland
- Africa Commodities Group - South Africa
- Bukit Makmur.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Eastern Energy - Thailand
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Aditya Birla Group - India
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Bhatia International Limited - India
- Kumho Petrochemical, South Korea
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bharathi Cement Corporation - India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Tata Chemicals Ltd - India
- Romanian Commodities Exchange
- Bhushan Steel Limited - India
- Timah Investasi Mineral - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Savvy Resources Ltd - HongKong
- TeaM Sual Corporation - Philippines
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Price Waterhouse Coopers - Russia
- Agrawal Coal Company - India
- Sojitz Corporation - Japan
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
- Planning Commission, India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Salva Resources Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Mercator Lines Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Karaikal Port Pvt Ltd - India
- Georgia Ports Authority, United States
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Therma Luzon, Inc, Philippines
- Singapore Mercantile Exchange
- PTC India Limited - India
- Tamil Nadu electricity Board
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Binh Thuan Hamico - Vietnam
- Cigading International Bulk Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Uttam Galva Steels Limited - India
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Independent Power Producers Association of India
- Malabar Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Parry Sugars Refinery, India
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Standard Chartered Bank - UAE
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Sidhee Cement - India
- Meenaskhi Energy Private Limited - India
- Kaltim Prima Coal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- OPG Power Generation Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- SMG Consultants - Indonesia
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Sinarmas Energy and Mining - Indonesia
- Coalindo Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wood Mackenzie - Singapore
- Indian Energy Exchange, India
- VISA Power Limited - India
- SMC Global Power, Philippines
- Ministry of Transport, Egypt
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- LBH Netherlands Bv - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- South Luzon Thermal Energy Corporation
- Economic Council, Georgia
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indo Tambangraya Megah - Indonesia
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
|
| |
| |
|
