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, 13 October 22
OPEC DOWNGRADES CRUDE OIL DEMAND, AS WORLD ECONOMY ENTERS SLOWDOWN
Crude Oil Price Movements
The OPEC Reference Basket (ORB) declined m-o-m by $6.58 in September, or 6.5%, to average $95.32/b. Pressure from equ ...
Wednesday, 12 October 22
MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2022 has been remarkable.
Focusing only on Tankers and Bulkers, such v ...
Monday, 10 October 22
ENERGY TRANSITION BOOSTS GLOBAL LONG-TERM DEMAND FOR METALS - FITCH RATINGS
The energy transition will significantly increase demand for metals used in manufacturing of electric vehicles (EVs) and renewable power generation ...
Monday, 10 October 22
GLOBAL CEOS EXPECT IMPENDING RECESSION TO BE 'SHORT AND SHARP,' POLL SHOWS - CNBC
Global CEOs are anticipating a recession in the next 12 months, according to a new survey by professional services firm KPMG, which said more than ...
Thursday, 06 October 22
AUSTRALIA’S RESOURCES REVENUE TO HIT RECORD AMID UKRAINE CONFLICT - REUTERS
Australian resources and energy export earnings are forecast to jump 7% to a record A$450 billion ($290 billion) this fiscal year, bolstered by soa ...
|
|
|
Showing 211 to 215 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Australian Coal Association
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Minerals Council of Australia
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Singapore Mercantile Exchange
- Timah Investasi Mineral - Indoneisa
- PTC India Limited - India
- Deloitte Consulting - India
- Latin American Coal - Colombia
- Aditya Birla Group - India
- Africa Commodities Group - South Africa
- Price Waterhouse Coopers - Russia
- New Zealand Coal & Carbon
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Iligan Light & Power Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Intertek Mineral Services - Indonesia
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Indian Energy Exchange, India
- Pendopo Energi Batubara - Indonesia
- Bhushan Steel Limited - India
- Kaltim Prima Coal - Indonesia
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Global Green Power PLC Corporation, Philippines
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Straits Asia Resources Limited - Singapore
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Sree Jayajothi Cements Limited - India
- GMR Energy Limited - India
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Economic Council, Georgia
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Energy Development Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- Cigading International Bulk Terminal - Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- White Energy Company Limited
- Therma Luzon, Inc, Philippines
- ASAPP Information Group - India
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Directorate Of Revenue Intelligence - India
- Medco Energi Mining Internasional
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Rio Tinto Coal - Australia
- Interocean Group of Companies - India
- International Coal Ventures Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Karaikal Port Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Port Waratah Coal Services - Australia
- Bhatia International Limited - India
- Maharashtra Electricity Regulatory Commission - India
- The State Trading Corporation of India Ltd
- Ministry of Mines - Canada
- Sindya Power Generating Company Private Ltd
- Anglo American - United Kingdom
- Larsen & Toubro Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Sinarmas Energy and Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- Indogreen Group - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Oldendorff Carriers - Singapore
- Tamil Nadu electricity Board
- Uttam Galva Steels Limited - India
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- Billiton Holdings Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Formosa Plastics Group - Taiwan
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Electricity Authority, New Zealand
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- VISA Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- PetroVietnam Power Coal Import and Supply Company
- Carbofer General Trading SA - India
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Global Business Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Kideco Jaya Agung - Indonesia
- Kepco SPC Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- LBH Netherlands Bv - Netherlands
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- OPG Power Generation Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- TeaM Sual Corporation - Philippines
- Electricity Generating Authority of Thailand
- Tata Chemicals Ltd - India
- London Commodity Brokers - England
- Parliament of New Zealand
- Posco Energy - South Korea
- Indika Energy - Indonesia
- Standard Chartered Bank - UAE
- Mercuria Energy - Indonesia
- Thiess Contractors Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhoruka Overseas - Indonesia
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Meenaskhi Energy Private Limited - India
- Australian Commodity Traders Exchange
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
|
| |
| |
|
