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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- The Treasury - Australian Government
- The University of Queensland
- Renaissance Capital - South Africa
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- Meralco Power Generation, Philippines
- Merrill Lynch Commodities Europe
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- TeaM Sual Corporation - Philippines
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Iligan Light & Power Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Planning Commission, India
- Thiess Contractors Indonesia
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Ministry of Finance - Indonesia
- GAC Shipping (India) Pvt Ltd
- Coal and Oil Company - UAE
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Commonwealth Bank - Australia
- Directorate General of MIneral and Coal - Indonesia
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Kohat Cement Company Ltd. - Pakistan
- Kalimantan Lumbung Energi - Indonesia
- GMR Energy Limited - India
- Singapore Mercantile Exchange
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- The State Trading Corporation of India Ltd
- European Bulk Services B.V. - Netherlands
- Sojitz Corporation - Japan
- Central Java Power - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Energy Link Ltd, New Zealand
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Sical Logistics Limited - India
- PowerSource Philippines DevCo
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Economic Council, Georgia
- Kepco SPC Power Corporation, Philippines
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Anglo American - United Kingdom
- Kartika Selabumi Mining - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Dalmia Cement Bharat India
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- SMC Global Power, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vedanta Resources Plc - India
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- India Bulls Power Limited - India
- Coastal Gujarat Power Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Goldman Sachs - Singapore
- Coalindo Energy - Indonesia
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Pendopo Energi Batubara - Indonesia
- Africa Commodities Group - South Africa
- Maharashtra Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Agrawal Coal Company - India
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Larsen & Toubro Limited - India
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- PTC India Limited - India
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Interocean Group of Companies - India
- Billiton Holdings Pty Ltd - Australia
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Kobexindo Tractors - Indoneisa
- Indian Oil Corporation Limited
- Australian Coal Association
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Georgia Ports Authority, United States
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Global Coal Blending Company Limited - Australia
- Chettinad Cement Corporation Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Baramulti Group, Indonesia
- International Coal Ventures Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- MS Steel International - UAE
- Oldendorff Carriers - Singapore
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Siam City Cement - Thailand
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Sarangani Energy Corporation, Philippines
- Posco Energy - South Korea
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Maheswari Brothers Coal Limited - India
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