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, 23 December 21
COAL DEMAND TO PEAK IN INDIA BY 2030, WILL BACK UP RENEWABLES: NITI REPORT - BUSINESS STANDARD
Coal will remain India’s mainstay energy source and the country will shape global demand this decade, two reports have said a month after the ...
Thursday, 23 December 21
INDONESIA’S 2022 COAL OUTPUT SEEN BETWEEN 637 MLN-664 MLN T- OFFICIAL - REUTERS
Indonesia’s 2022 coal output is estimated at between 637 million to 664 million tonnes based on production plans currently being finalised, s ...
Thursday, 23 December 21
VALE ANNOUNCES THE SALE OF ITS COAL ASSETS
Vale informs that, on this date, it has entered into a binding agreement with Vulcan to sell the Moatize coal mine and the Nacala Logistics Corrido ...
Thursday, 23 December 21
INDIA: CAPTIVE POWER PRODUCERS URGE GOVT TO ENSURE NORMAL COAL SUPPLIES - PTI
A captive power producers’ association has urged the government for 100 per cent normalisation of coal supply to captive power producers whil ...
Thursday, 23 December 21
MARKET INSIGHT - INTERMODAL
As an outstanding year for the dry bulk freight market comes to a close, so does a thriving year for the SnP market which can only be compared to 2 ...
|
|
|
Showing 381 to 385 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Sree Jayajothi Cements Limited - India
- Medco Energi Mining Internasional
- Siam City Cement PLC, Thailand
- Minerals Council of Australia
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kepco SPC Power Corporation, Philippines
- Sojitz Corporation - Japan
- Globalindo Alam Lestari - Indonesia
- VISA Power Limited - India
- AsiaOL BioFuels Corp., Philippines
- Gujarat Electricity Regulatory Commission - India
- Indonesian Coal Mining Association
- Standard Chartered Bank - UAE
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- Cement Manufacturers Association - India
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- The State Trading Corporation of India Ltd
- London Commodity Brokers - England
- Thai Mozambique Logistica
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Billiton Holdings Pty Ltd - Australia
- Singapore Mercantile Exchange
- Kaltim Prima Coal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Indian Energy Exchange, India
- CNBM International Corporation - China
- Bahari Cakrawala Sebuku - Indonesia
- Semirara Mining Corp, Philippines
- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Makarim & Taira - Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Simpson Spence & Young - Indonesia
- Indika Energy - Indonesia
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Merrill Lynch Commodities Europe
- Siam City Cement - Thailand
- GAC Shipping (India) Pvt Ltd
- GN Power Mariveles Coal Plant, Philippines
- PTC India Limited - India
- Energy Link Ltd, New Zealand
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- MS Steel International - UAE
- Bharathi Cement Corporation - India
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Essar Steel Hazira Ltd - India
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Bhoruka Overseas - Indonesia
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- PowerSource Philippines DevCo
- Orica Australia Pty. Ltd.
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- White Energy Company Limited
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- International Coal Ventures Pvt Ltd - India
- Central Java Power - Indonesia
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- Aditya Birla Group - India
- Xindia Steels Limited - India
- Mjunction Services Limited - India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Indo Tambangraya Megah - Indonesia
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- Bhatia International Limited - India
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Ambuja Cements Ltd - India
- Binh Thuan Hamico - Vietnam
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Australian Coal Association
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- Ceylon Electricity Board - Sri Lanka
- Toyota Tsusho Corporation, Japan
- New Zealand Coal & Carbon
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Sinarmas Energy and Mining - Indonesia
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Pendopo Energi Batubara - Indonesia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Vizag Seaport Private Limited - India
- Sarangani Energy Corporation, Philippines
- Renaissance Capital - South Africa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Borneo Indobara - Indonesia
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Kartika Selabumi Mining - Indonesia
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
|
| |
| |
|
