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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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Friday, 02 February 24
DRY BULK MARKET: THE DOWNWARD REVISION IN THE GROWTH OF CAPESIZE TONNE DAYS IN JANUARY WITH THE BCI DROPPING - MARIA BERTZELETOU
In the last week of January, the dry freight market sustained weakness in the Capesize segment, while the number of ballasters in the Southeast (SE ...
Friday, 02 February 24
COAL INDIA ACHIEVES NEARLY 80% OF ITS FY24 PRODUCTION TARGET IN TEN MONTHS - CNBCTV18
For the month of January, the company’s production grew by 9.1% from the same period last year to 78.4 Million Tonnes (MT), from 71.9 MT last ...
Thursday, 01 February 24
CHINA'S WIND, SOLAR CAPACITY TO OVERTAKE COAL IN 2024 - INDUSTRY BODY, REUTERS REPORTED
China’s installed wind and solar capacity is expected to overtake coal for the first time this year, according to industry forecasts.
&nb ...
Thursday, 01 February 24
ANTI-DEDUCTION CLAUSES: CAN A CHARTERER WITHHOLD HIRE WITHOUT AN OWNER'S CONSENT? - SKULD
KNOWLEDGE TO ELEVATE
Summary
In The Anna Dorothea, the Court found that where a charterparty provides that no deduction from hire may be m ...
Thursday, 01 February 24
INDIA REBUILDS COAL STOCKS TO ENSURE ELECTRIC RELIABILITY - REUTERS
India’s electricity supply is much more comfortable at the start of 2024 than in either 2023 or 2022 as coal production has ramped up and the ...
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- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- Goldman Sachs - Singapore
- Gujarat Electricity Regulatory Commission - India
- Edison Trading Spa - Italy
- Planning Commission, India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Mintek Dendrill Indonesia
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Indogreen Group - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Oldendorff Carriers - Singapore
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Ministry of Finance - Indonesia
- Rio Tinto Coal - Australia
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Sarangani Energy Corporation, Philippines
- London Commodity Brokers - England
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- European Bulk Services B.V. - Netherlands
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Parliament of New Zealand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- GMR Energy Limited - India
- Indian Oil Corporation Limited
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Ind-Barath Power Infra Limited - India
- Chamber of Mines of South Africa
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Merrill Lynch Commodities Europe
- Petrochimia International Co. Ltd.- Taiwan
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Banpu Public Company Limited - Thailand
- Gujarat Sidhee Cement - India
- Vijayanagar Sugar Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Sakthi Sugars Limited - India
- White Energy Company Limited
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Baramulti Group, Indonesia
- Commonwealth Bank - Australia
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Formosa Plastics Group - Taiwan
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thiess Contractors Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Savvy Resources Ltd - HongKong
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Australian Coal Association
- Port Waratah Coal Services - Australia
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Romanian Commodities Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SN Aboitiz Power Inc, Philippines
- The State Trading Corporation of India Ltd
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Lanco Infratech Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Simpson Spence & Young - Indonesia
- India Bulls Power Limited - India
- Georgia Ports Authority, United States
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Sindya Power Generating Company Private Ltd
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Makarim & Taira - Indonesia
- Deloitte Consulting - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Vizag Seaport Private Limited - India
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Heidelberg Cement - Germany
- Global Coal Blending Company Limited - Australia
- Posco Energy - South Korea
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Orica Mining Services - Indonesia
- Latin American Coal - Colombia
- Mercator Lines Limited - India
- Sinarmas Energy and Mining - Indonesia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Pipit Mutiara Jaya. PT, Indonesia
- CIMB Investment Bank - Malaysia
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- SMG Consultants - Indonesia
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Bukit Makmur.PT - Indonesia
- ICICI Bank Limited - India
- Indonesian Coal Mining Association
- Krishnapatnam Port Company Ltd. - India
- Independent Power Producers Association of India
- Gujarat Mineral Development Corp Ltd - India
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Minerals Council of Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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