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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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Tuesday, 03 November 15
API 5 FOB NEWCASTLE COAL SWAPS DECLINE CONTINUES
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery slid $1.84 per ton (4.34%) month over month to US$ 40.54 per ton. The swap ...
Tuesday, 03 November 15
EU OIL MAJORS FACE FURTHER EARNINGS DECLINE IN Q415 - FITCH RATINGS
The sharp drop in major European oil companies' third-quarter profits is likely to be extended in the fourth quarter as refining margins, which ...
Monday, 02 November 15
DESPITE CHALLENGING MARKET CONDITIONS, ADARO LOWERS COSTS, DEBT AND DELIVERS STRONG FREE CASH FLOW
COALspot.com: Despite challenging market conditions, Adaro lowers costs, lowers debt and delivers strong free cash flow.
The Indonesia’s ...
Monday, 02 November 15
CFR SOUTH CHINA COAL SWAPS CLOSED ON A WEAK NOTE
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery declined US$ 1.81(3.71 %) per ton month over month.
A commodity swap ...
Sunday, 01 November 15
THE FREIGHT MARKET SENTIMENT REMAINS WEAK
This week’s freight market sentiment remains weak compared to last week.
The Baltic Dry Index (BDI), an economic indicator issued daily ...
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Showing 2736 to 2740 news of total 6871 |
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- Maheswari Brothers Coal Limited - India
- Orica Australia Pty. Ltd.
- The State Trading Corporation of India Ltd
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Sarangani Energy Corporation, Philippines
- ASAPP Information Group - India
- IEA Clean Coal Centre - UK
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Barasentosa Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Independent Power Producers Association of India
- India Bulls Power Limited - India
- Borneo Indobara - Indonesia
- The University of Queensland
- Indian Energy Exchange, India
- Energy Development Corp, Philippines
- Electricity Authority, New Zealand
- Therma Luzon, Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Kapuas Tunggal Persada - Indonesia
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- White Energy Company Limited
- SMC Global Power, Philippines
- Sindya Power Generating Company Private Ltd
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- PTC India Limited - India
- Bhoruka Overseas - Indonesia
- Mercuria Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Metalloyd Limited - United Kingdom
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Vizag Seaport Private Limited - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Makarim & Taira - Indonesia
- GVK Power & Infra Limited - India
- Semirara Mining and Power Corporation, Philippines
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Posco Energy - South Korea
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- TeaM Sual Corporation - Philippines
- Chettinad Cement Corporation Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kartika Selabumi Mining - Indonesia
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Lanco Infratech Ltd - India
- Bhushan Steel Limited - India
- IHS Mccloskey Coal Group - USA
- Riau Bara Harum - Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Videocon Industries ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- London Commodity Brokers - England
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Sree Jayajothi Cements Limited - India
- SN Aboitiz Power Inc, Philippines
- Latin American Coal - Colombia
- Parry Sugars Refinery, India
- Malabar Cements Ltd - India
- Indian Oil Corporation Limited
- Directorate General of MIneral and Coal - Indonesia
- Eastern Coal Council - USA
- Pendopo Energi Batubara - Indonesia
- Mjunction Services Limited - India
- Energy Link Ltd, New Zealand
- Ministry of Transport, Egypt
- Heidelberg Cement - Germany
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Meralco Power Generation, Philippines
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Anglo American - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Sical Logistics Limited - India
- Alfred C Toepfer International GmbH - Germany
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Ministry of Mines - Canada
- MS Steel International - UAE
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- Gujarat Sidhee Cement - India
- Bangladesh Power Developement Board
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Chamber of Mines of South Africa
- Kideco Jaya Agung - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Attock Cement Pakistan Limited
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Sojitz Corporation - Japan
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Economic Council, Georgia
- Australian Coal Association
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Dalmia Cement Bharat India
- Directorate Of Revenue Intelligence - India
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- New Zealand Coal & Carbon
- Iligan Light & Power Inc, Philippines
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Tamil Nadu electricity Board
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Grasim Industreis Ltd - India
- Central Electricity Authority - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Vedanta Resources Plc - India
- Kohat Cement Company Ltd. - Pakistan
- Kumho Petrochemical, South Korea
- Bulk Trading Sa - Switzerland
- Interocean Group of Companies - India
- Thiess Contractors Indonesia
- Deloitte Consulting - India
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