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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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Thursday, 05 November 15
Q2'16 INDO THERMAL COAL SWAP CONTRACT FOB INDONESIA FALLS TO $39.90/T
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week. Price of coal seen no improvements this past we ...
Thursday, 05 November 15
INFORMATION EXCHANGE GROUP'S LATAM MINING SECURITY SUMMIT 2016 - INTERNATIONAL CONFERENCE ON TECHNOLOGY SECURITY IN MINING
Press Release: LATAM Mining Security Summit 2016 is a carefully designed event that will bring together the leading stakeholders in the mining sect ...
Wednesday, 04 November 15
MARKET INSIGHT - CHRISTOPHER THOMAS WHITTY
Four companies dominate global iron ore production, namely; BHP Billiton, Vale, Rio Tinto, and Fortescue Metals Group. Together these companies con ...
Wednesday, 04 November 15
FOB RICHARDS BAY COAL SWAPS GAIN W-W AND M-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gained week over week and month over month.
The Q4 swap was up US$ 1.4 ...
Tuesday, 03 November 15
THE DISCHARGE OF CARGO IN THE PRC WITHOUT ORIGINAL BILLS OF LADING - CLYDE&CO
KNOWLEDGE TO ELEVATE
On occasions, a vessel may arrive at a port and be ready to discharge but the original bills of lading in respect of the ...
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- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Bukit Baiduri Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Bhatia International Limited - India
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Orica Australia Pty. Ltd.
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Marubeni Corporation - India
- Global Green Power PLC Corporation, Philippines
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Savvy Resources Ltd - HongKong
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ambuja Cements Ltd - India
- Edison Trading Spa - Italy
- Bangladesh Power Developement Board
- Uttam Galva Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- Port Waratah Coal Services - Australia
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Formosa Plastics Group - Taiwan
- Tamil Nadu electricity Board
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Mintek Dendrill Indonesia
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Grasim Industreis Ltd - India
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Manunggal Multi Energi - Indonesia
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Lanco Infratech Ltd - India
- Antam Resourcindo - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Renaissance Capital - South Africa
- Larsen & Toubro Limited - India
- Essar Steel Hazira Ltd - India
- Therma Luzon, Inc, Philippines
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Central Electricity Authority - India
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Maharashtra Electricity Regulatory Commission - India
- The University of Queensland
- ASAPP Information Group - India
- Energy Link Ltd, New Zealand
- Thai Mozambique Logistica
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Indonesian Coal Mining Association
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Central Java Power - Indonesia
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Meralco Power Generation, Philippines
- Global Business Power Corporation, Philippines
- The Treasury - Australian Government
- Banpu Public Company Limited - Thailand
- Indian Energy Exchange, India
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Energy Development Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Billiton Holdings Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Ministry of Mines - Canada
- Globalindo Alam Lestari - Indonesia
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Wilmar Investment Holdings
- Orica Mining Services - Indonesia
- Carbofer General Trading SA - India
- Xindia Steels Limited - India
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ministry of Finance - Indonesia
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Indika Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Sojitz Corporation - Japan
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Oldendorff Carriers - Singapore
- Parliament of New Zealand
- Cement Manufacturers Association - India
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indogreen Group - Indonesia
- Wood Mackenzie - Singapore
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Samtan Co., Ltd - South Korea
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Siam City Cement - Thailand
- Altura Mining Limited, Indonesia
- CNBM International Corporation - China
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Asmin Koalindo Tuhup - Indonesia
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- Standard Chartered Bank - UAE
- Petron Corporation, Philippines
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Indo Tambangraya Megah - Indonesia
- TeaM Sual Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Videocon Industries ltd - India
- VISA Power Limited - India
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Madhucon Powers Ltd - India
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