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.
|
|
Friday, 16 September 22
WHEN IS A VESSEL'S INCOME EARNING CAPACITY AT RISK? 'CONTROLLED INCOME CAN BE A KEY OF SUCCESS' - MARASCO MARINE
Managing marine risks is not an easy task, which requires special knowledge and expertise on the subject per se. Customarily, big ship management c ...
Friday, 16 September 22
DRY BULK MARKET: EU’S BAN ON RUSSIAN COAL LIFTS DEMAND DESPITE ECONOMIC HEADWINDS - BIMCO
Highlights
– The Baltic Exchange Dry Index (BDI) peaked in late May and has since fallen sharply as lower Chinese demand and adverse glob ...
Friday, 16 September 22
BIMCO EMBARKS ON NEW STANDARD FOR “QUIET ENJOYMENT”
KNOWLEDGE TO ELEVATE
A newly set-up BIMCO drafting team involving a cross-section of shipowners, charterers, financing and leasing i ...
Friday, 16 September 22
INDIAN COAL PRODUCTION TO RISE 150 PER CENT IN 10 YEARS: CENTRE - EXPRESS NEWS SERVICE
The Union Ministry of Mines is expecting 150 per cent growth in coal production 10 years down the line as a result of coal reforms that had been us ...
Thursday, 15 September 22
MARKET INSIGHT - INTERMODAL
While the Organization of Petroleum Exporting Countries and its allies agreed on a 100,000 b/d output cut last week, oil flows are in the spotlight ...
|
|
|
Showing 236 to 240 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Australian Coal Association
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Tata Chemicals Ltd - India
- Power Finance Corporation Ltd., India
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Georgia Ports Authority, United States
- Holcim Trading Pte Ltd - Singapore
- White Energy Company Limited
- Neyveli Lignite Corporation Ltd, - India
- CNBM International Corporation - China
- Leighton Contractors Pty Ltd - Australia
- Manunggal Multi Energi - Indonesia
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Grasim Industreis Ltd - India
- Australian Commodity Traders Exchange
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- GVK Power & Infra Limited - India
- Sojitz Corporation - Japan
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- Siam City Cement - Thailand
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Coal and Oil Company - UAE
- European Bulk Services B.V. - Netherlands
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Bangladesh Power Developement Board
- Aboitiz Power Corporation - Philippines
- Ministry of Mines - Canada
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- AsiaOL BioFuels Corp., Philippines
- Jindal Steel & Power Ltd - India
- TeaM Sual Corporation - Philippines
- The University of Queensland
- Alfred C Toepfer International GmbH - Germany
- PetroVietnam Power Coal Import and Supply Company
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Cement Manufacturers Association - India
- Economic Council, Georgia
- SN Aboitiz Power Inc, Philippines
- SMC Global Power, Philippines
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- OPG Power Generation Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- LBH Netherlands Bv - Netherlands
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Antam Resourcindo - Indonesia
- Aditya Birla Group - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Bulk Trading Sa - Switzerland
- Sree Jayajothi Cements Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Mjunction Services Limited - India
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Gujarat Sidhee Cement - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Medco Energi Mining Internasional
- Chettinad Cement Corporation Ltd - India
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- IHS Mccloskey Coal Group - USA
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Coalindo Energy - Indonesia
- Heidelberg Cement - Germany
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Ind-Barath Power Infra Limited - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Thai Mozambique Logistica
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Global Coal Blending Company Limited - Australia
- Kapuas Tunggal Persada - Indonesia
- Renaissance Capital - South Africa
- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- GAC Shipping (India) Pvt Ltd
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Uttam Galva Steels Limited - India
- Iligan Light & Power Inc, Philippines
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- Goldman Sachs - Singapore
- SMG Consultants - Indonesia
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Baramulti Group, Indonesia
- Indian Oil Corporation Limited
- Electricity Authority, New Zealand
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- GMR Energy Limited - India
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Kumho Petrochemical, South Korea
- Binh Thuan Hamico - Vietnam
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Oldendorff Carriers - Singapore
- Latin American Coal - Colombia
- Kepco SPC Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- Bharathi Cement Corporation - India
- Rio Tinto Coal - Australia
- Borneo Indobara - Indonesia
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Anglo American - United Kingdom
- Metalloyd Limited - United Kingdom
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Energy Link Ltd, New Zealand
- Malabar Cements Ltd - India
- PTC India Limited - India
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Indian Energy Exchange, India
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kalimantan Lumbung Energi - Indonesia
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Parliament of New Zealand
- Kobexindo Tractors - Indoneisa
|
| |
| |
|
