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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
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Friday, 28 June 24
INDIAN POWER STATIONS STOCKED WITH BUMPER COAL SUPPLY AS TRANSPORT WOES EASE - BUSINESS STANDARD
Even as power demand has touched a historic high of 250 gigawatts (Gw) amid sweltering heat this June, India’s power stations are stocked wit ...
Friday, 28 June 24
INDIA'S CY23 COAL USE LARGER THAN NORTH AMERICA, EUROPE COMBINED - THE HINDU
For the first time, India’s coal consumption surpassed that of North America and Europe combined in the calendar year 2023, said Energy Insti ...
Monday, 24 June 24
PLN'S FINANCIAL SUSTAINABILITY RESTS ON ACCELERATED COAL RETIREMENT AND RENEWABLES DEPLOYMENT - MUTYA YUSTIKA
On 28 May 2024, Indonesia’s national electricity utility, PT Perusahaan Listrik Negara (PLN), released its financial report for 2023. Althoug ...
Monday, 24 June 24
INDIA'S COAL-BASED POWER DEMAND AT ALL-TIME HIGH, GOVERNMENT SAYS - REUTERS
India’s demand for coal-based power has risen by 7.3% this fiscal year to an all-time high, the government said in a statement on Wednesday.
...
Monday, 24 June 24
CHINA'S COAL INDUSTRY TURNS GREENER THROUGH INNOVATIVE APPROACHES - PEOPLE'S DAILY
At an opencast mine operated by Inner Mongolia Pingzhuang Coal Group Co. Ltd., a subsidiary of CHN Energy Investment Group (CHN Energy), a 14-meter ...
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Showing 11 to 15 news of total 6871 |
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- Baramulti Group, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Mercuria Energy - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Minerals Council of Australia
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- Directorate Of Revenue Intelligence - India
- Kalimantan Lumbung Energi - Indonesia
- Romanian Commodities Exchange
- Bharathi Cement Corporation - India
- Xindia Steels Limited - India
- Agrawal Coal Company - India
- Petron Corporation, Philippines
- Makarim & Taira - Indonesia
- Central Electricity Authority - India
- Riau Bara Harum - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Electricity Authority, New Zealand
- Petrochimia International Co. Ltd.- Taiwan
- San Jose City I Power Corp, Philippines
- Ministry of Transport, Egypt
- Karaikal Port Pvt Ltd - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- GMR Energy Limited - India
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Economic Council, Georgia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Deloitte Consulting - India
- Globalindo Alam Lestari - Indonesia
- Renaissance Capital - South Africa
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Independent Power Producers Association of India
- AsiaOL BioFuels Corp., Philippines
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Mercator Lines Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- European Bulk Services B.V. - Netherlands
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- McConnell Dowell - Australia
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- ICICI Bank Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Indogreen Group - Indonesia
- Coastal Gujarat Power Limited - India
- Standard Chartered Bank - UAE
- Port Waratah Coal Services - Australia
- Australian Coal Association
- South Luzon Thermal Energy Corporation
- Orica Australia Pty. Ltd.
- Mintek Dendrill Indonesia
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Tamil Nadu electricity Board
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Ind-Barath Power Infra Limited - India
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Sical Logistics Limited - India
- Metalloyd Limited - United Kingdom
- Merrill Lynch Commodities Europe
- London Commodity Brokers - England
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- SN Aboitiz Power Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Cement Manufacturers Association - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Gujarat Electricity Regulatory Commission - India
- Goldman Sachs - Singapore
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- SMG Consultants - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Eastern Coal Council - USA
- Posco Energy - South Korea
- Straits Asia Resources Limited - Singapore
- Ambuja Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Sojitz Corporation - Japan
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Trasteel International SA, Italy
- Maharashtra Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- OPG Power Generation Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Salva Resources Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Siam City Cement PLC, Thailand
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- MS Steel International - UAE
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Binh Thuan Hamico - Vietnam
- GN Power Mariveles Coal Plant, Philippines
- Maheswari Brothers Coal Limited - India
- New Zealand Coal & Carbon
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Finance - Indonesia
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Formosa Plastics Group - Taiwan
- Bayan Resources Tbk. - Indonesia
- Lanco Infratech Ltd - India
- PowerSource Philippines DevCo
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Planning Commission, India
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- ASAPP Information Group - India
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Star Paper Mills Limited - India
- Coal and Oil Company - UAE
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Global Business Power Corporation, Philippines
- Rio Tinto Coal - Australia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Kideco Jaya Agung - Indonesia
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Bukit Baiduri Energy - Indonesia
- IHS Mccloskey Coal Group - USA
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