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, 23 February 24
STRONG OUTLOOK FOR THE TANKER MARKET IN 2024 AND BEYOND - DNV
Several factors have aligned over the past two years to create a robust and profitable market for tanker owners, which is expected to drive newbuil ...
Friday, 23 February 24
AUSTRALIAN COAL FLOWS TO ASIA HOVER ABOVE LAST YEAR’S VOLUME TONNES - SIGNAL GROUP
In the final days of February, the dry bulk freight market appeared to maintain a relatively stable momentum, particularly evident in the large ves ...
Friday, 23 February 24
RUSSIAN COAL SHIPMENTS FALL 14% AS SANCTIONS BITE - BIMCO
During the first seven weeks of 2024, Russian coal shipments have fallen 14% y/y. Volumes have gradually declined since October 2023 when logistica ...
Thursday, 22 February 24
BIMCO PUBLISHES SHIP FINANCING FORMS TO ENSURE UNINTERRUPTED USE OF SHIPS
BIMCO has published two standard Quiet Enjoyment Letters (QELs), the first standard form QELs available to the industry, to offer a tool that can e ...
Monday, 19 February 24
METALS INVESTMENT: THE DARKEST HOUR IS JUST BEFORE THE DAWN - WOOD MACKENZIE
Things often seem at their worst just before they get better. In terms of meeting our net zero 2050 scenario, we’ve reached a watershed momen ...
|
|
|
Showing 31 to 35 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Coastal Gujarat Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Coal and Oil Company - UAE
- Marubeni Corporation - India
- Vizag Seaport Private Limited - India
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- White Energy Company Limited
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Tata Chemicals Ltd - India
- Kartika Selabumi Mining - Indonesia
- Lanco Infratech Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PTC India Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Edison Trading Spa - Italy
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Siam City Cement - Thailand
- ASAPP Information Group - India
- Savvy Resources Ltd - HongKong
- Bukit Baiduri Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Commonwealth Bank - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Madhucon Powers Ltd - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Posco Energy - South Korea
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Mjunction Services Limited - India
- Petron Corporation, Philippines
- McConnell Dowell - Australia
- Carbofer General Trading SA - India
- Independent Power Producers Association of India
- Cigading International Bulk Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Indo Tambangraya Megah - Indonesia
- Australian Coal Association
- Videocon Industries ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Banpu Public Company Limited - Thailand
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Thiess Contractors Indonesia
- Directorate Of Revenue Intelligence - India
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- Semirara Mining Corp, Philippines
- Sical Logistics Limited - India
- CIMB Investment Bank - Malaysia
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- PowerSource Philippines DevCo
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- SMG Consultants - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- ICICI Bank Limited - India
- Simpson Spence & Young - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Altura Mining Limited, Indonesia
- Latin American Coal - Colombia
- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Renaissance Capital - South Africa
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- New Zealand Coal & Carbon
- Global Business Power Corporation, Philippines
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Sree Jayajothi Cements Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Sindya Power Generating Company Private Ltd
- Interocean Group of Companies - India
- Heidelberg Cement - Germany
- Directorate General of MIneral and Coal - Indonesia
- Central Java Power - Indonesia
- Globalindo Alam Lestari - Indonesia
- Vedanta Resources Plc - India
- MS Steel International - UAE
- Krishnapatnam Port Company Ltd. - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Samtan Co., Ltd - South Korea
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Larsen & Toubro Limited - India
- Ministry of Transport, Egypt
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- GAC Shipping (India) Pvt Ltd
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Straits Asia Resources Limited - Singapore
- The University of Queensland
- Romanian Commodities Exchange
- Intertek Mineral Services - Indonesia
- Electricity Generating Authority of Thailand
- Attock Cement Pakistan Limited
- Bhatia International Limited - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Global Coal Blending Company Limited - Australia
- Bayan Resources Tbk. - Indonesia
- Ambuja Cements Ltd - India
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Mines - Canada
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Indian Energy Exchange, India
- OPG Power Generation Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Star Paper Mills Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
|
| |
| |
|
