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Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
 Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil prices from mid-2014 created strength on both sides. Freight rates started to take off in October 2014 for all types and sizes. The combination of an early start to the fourth-quarter seasonal strength heading into winter and the fact that the oil prices continued to slide became a catalyst.
Throughout 2015, the global refinery throughput has been on a rise. The normal seasonal lower throughput in the first half of the year with widespread maintenance did not occur. Owing to rising and already elevated refinery margins from East to West, refineries simply wanted all the crude oil they could get. This development still provides strong demand and solid freight rates for the tanker industry. In India, we saw a record of 4.74 million barrels per day (mb/d) of crude throughput in June, marking a truly global trend, whereas Middle Eastern refineries also hit a record throughput because of increased runs in Saudi Arabia.
October is traditionally another month of lower throughput as refineries get ready for the winter season when crude runs normally peak. Moreover, the American “Labor Day” on 7 September marks the end of the US driving season which started on Memorial Day, 25 May. This means that the recent 10mb/d production of gasoline will come down.
Some of that weakness may already have caused freight rates to come down sharply, in combination with the global financial uncertainties originating from China. Very large crude Carriers (VLCCs), Suezmax and Aframax have seen freight rates cut in two since mid-June, while Handysize has been the one to drop the most among oil product tankers.
In a rush of excitement, it’s easily forgotten that such high refinery crude runs can only go on for so long, if end consumption supports it. End consumption has supported it some of the way but not all the way. Swollen stocks of crude oil and oil products are now seen everywhere. Preliminary OECD total industry stock change in second-quarter was 1.1mb/d. All stocks but gasoline increased, US crude oil stocks too. In comparison global oil demand dropped by 0.1mb/d over the same period of time and is expected to see an increase of 1.6mb/d to be consumed for the full year over 2014.
Supply:
Contrary to what happens too often, the strong freight markets for oil product tankers have not resulted in a knee-jerk run to the shipyard to order a massive amount of new ships. This stands in opposition to the crude oil tanker orders seen in 2015, as if the lid has come off finally after several years of resisting the temptation.
By end-August 2015, 56 product tankers with a total capacity of 4.8 million DWT, predominantly LR2 (20) and LR1 (21), have been ordered and will be delivered in 2016-17. They are aiming to get a share of the market for longer-haul trades out of Middle East refineries, predominantly into the Western markets. This ordering trend has been on for two years now.
Among the crude oil tanker segments, we have already seen more orders for both Aframax and VLCCs than we did in the whole of 2014. Aframax in particular has been popular with investors this year; after six years with one order a month on average, 2015 has seen 29 new contracts in the first eight months. For the VLCCs, the orders with delivery in particular 2017 (21) and in 2018 (14) have been favoured by investors. In 2015, 50 new VLCC contracts in total have been signed.
One of the launchers which has lifted the freight rates into orbit is two years of very slow fleet growth. Today the fleet holds 648 VLCCs, whereas 628 VLCCs were active by mid-2013. That’s a growth of just 3% in 26 months. Looking forward into the future inflow of crude oil tankers, we can see the delivery pace is picking up and the demolition potential is vanishing with just 14 VLCCs being more than 20 years old and another 16 getting inside the window of the fourth special survey in 2016.
On order for a scheduled delivery during the next 16 months are 71 VLCCs. This means a double-paced inflow as it has taken 34 months for the latest 71 VLCCs to be put into active service.
The change in supply-side conditions will slowly tighten the freight market, and as we look into 2016, the tide could turn fundamentally as a fleet growth of 4.4% is likely to outstrip demand growth. As the coming two years are now “full” in terms of remaining in control of supply-side growth, any additional crude oil tanker orders should be placed for 2018 delivery.
BIMCO forecasts the present and next year supply growth for oil product tankers to be at 5.4% and 5.7% respectively, meaning two “full” years too for that segment.
Outlook:
Looking forward, the winter markets are expected to soften, as the eventual lower refinery crude oil throughput when no more stocks can be filled and margins begin to crumble as demand slips. Until then BIMCO expects earnings for both crude oil and oil product tankers to remain strong. Our expectations are primarily supported by low fleet growth for crude oil tankers and long-haul trades for oil product tankers.
High volatility in freight rates can be expected in the coming half year half a year, when it may also be prudent to look at the time charter market, where one- and three-year time charter rates are both at their highest level since 2009. At USD 48,000 per day and USD 43,500 per day, time charters will make positive returns after all costs inclusive of capital cost and depreciations are deducted.
In the longer run, an eventual repeal of the US crude oil export ban will likely have some impact on the tanker trading lanes. The US congress is set to vote on the issues during this autumn. For the supporters the case is clear: US refineries are saturated with light sweet crude which is produced abundantly. For those in favour of keeping the crude oil export ban still in place there is “national interest”, which currently seems to hold the upper hand. Currently, the only crude oil exports today go to Canada (0.5mb/d).
Moreover, the eventual lifting of international sanctions on Iran is likely to see a steady increase in crude oil, both sweet and sour, into the market over the coming one to three years, depending on much-needed investments to boost production and time to regain market shares. BIMCO expects the re-entry of Iranian crude oil into the market will change trade patterns as other suppliers will be squeezed on their market share. The key will be West African produced sweet crude now going to Europe and East Asia. The latter is the vital one and a stronghold behind the current upturn. The overall impact on the tanker earnings from these changes holds the potential to become both negative and positive.
Source: BIMCO | Hellenic Shipping News
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Monday, 09 November 15
CFR SOUTH CHINA THERMAL COAL SWAP FOR Q3' 16 CONTRACT DECLINED US$ 4 PER TON
COALspot.com: API 8 CFR South China Coal swap for Q1’ 2016 delivery declined US$ 4.35 (9.03 %) per ton month over month.
A commodity swa ...
Monday, 09 November 15
INDIAN THERMAL COAL IMPORTS SURGED 18%; COKING COAL 6.31% DURING APRIL-OCTOBER: BUSINESS-STANDARD
Indian thermal coal imports surged 18% at the country's top 12 major ports to 55.90 million tonnes (MT) in the first seven months of the curren ...
Sunday, 08 November 15
THE FREIGHT MARKET KEEP DROPPING THIS WEEK - VISTAAR
COALspot.com: The freight market keep dropping this week.
The BDI down 12.48 percent week on week and closed at 631 points on 6 November 2015. ...
Sunday, 08 November 15
CAPESIZE FREIGHT RATES IN AUSTRALIA-CHINA ROUTES OVER 50% CHEAPER THAN BRAZIL-CHINA ROUTE - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
China’s mining and steel industries are facing tectonic shifts over the past couple of years, with the country’s limiting of coal use, ...
Friday, 06 November 15
COAL PRODUCTION IN THE U.S. FELL SHARPLY FOR THE WEEK ENDING OCTOBER 31
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 16.6 million shor ...
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- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Ministry of Finance - Indonesia
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Chamber of Mines of South Africa
- Anglo American - United Kingdom
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- PetroVietnam Power Coal Import and Supply Company
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Indian Energy Exchange, India
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Barasentosa Lestari - Indonesia
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Bhatia International Limited - India
- Indo Tambangraya Megah - Indonesia
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Indonesian Coal Mining Association
- Altura Mining Limited, Indonesia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Marubeni Corporation - India
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Planning Commission, India
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- Attock Cement Pakistan Limited
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Vijayanagar Sugar Pvt Ltd - India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Renaissance Capital - South Africa
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- SMC Global Power, Philippines
- PowerSource Philippines DevCo
- MS Steel International - UAE
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Malabar Cements Ltd - India
- Heidelberg Cement - Germany
- Energy Link Ltd, New Zealand
- White Energy Company Limited
- Karbindo Abesyapradhi - Indoneisa
- Ind-Barath Power Infra Limited - India
- Iligan Light & Power Inc, Philippines
- CNBM International Corporation - China
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bukit Baiduri Energy - Indonesia
- Goldman Sachs - Singapore
- Commonwealth Bank - Australia
- Borneo Indobara - Indonesia
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Merrill Lynch Commodities Europe
- Global Green Power PLC Corporation, Philippines
- Timah Investasi Mineral - Indoneisa
- Mjunction Services Limited - India
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- The University of Queensland
- CIMB Investment Bank - Malaysia
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Essar Steel Hazira Ltd - India
- Antam Resourcindo - Indonesia
- Kideco Jaya Agung - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Coastal Gujarat Power Limited - India
- Larsen & Toubro Limited - India
- Semirara Mining and Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Bukit Makmur.PT - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- ICICI Bank Limited - India
- Energy Development Corp, Philippines
- Singapore Mercantile Exchange
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- The Treasury - Australian Government
- Medco Energi Mining Internasional
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Wood Mackenzie - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Rio Tinto Coal - Australia
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Central Java Power - Indonesia
- Bayan Resources Tbk. - Indonesia
- Karaikal Port Pvt Ltd - India
- Gujarat Sidhee Cement - India
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Bharathi Cement Corporation - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Chettinad Cement Corporation Ltd - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Kepco SPC Power Corporation, Philippines
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Siam City Cement PLC, Thailand
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Sakthi Sugars Limited - India
- Thiess Contractors Indonesia
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