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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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Saturday, 31 October 15
ADARO ENERGY'S CORE EARNINGS DECLINE 21 PER CENT FOR THE NINE MONTHS PERIOD TO SEPTEMBER 2015
COALspot.com: Adaro Energy's core earnings decline 21% to US$228 Million for first 9months of this year compared to the same period last year. ...
Friday, 30 October 15
INDONESIA'S COAL EXPORTS DROP ON LOW PRICES - THE JAKARTA POST
Indonesia's coal exports significantly dropped in the first nine months of the year as coal companies continued to suffer from low prices in ad ...
Friday, 30 October 15
CHINESE MINERAL IMPORTS: MOVING ON FROM INDONESIA? - CLARKSONS
China has accounted for almost 90% of global imports of nickel ore and bauxite in recent years and was therefore heavily hit by the Indonesian mine ...
Friday, 30 October 15
COAL PRODUCTION IN THE UNITED STATES INCREASED THIS WEEK - EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.5 million shor ...
Thursday, 29 October 15
IRAN'S RETURN TO OIL MARKETS WILL HAVE TEMPERED IMPACT FOR THE TANKER SHIPPING INDUSTRY - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
While many analysts appear to be fearful of a potential incremental rise in tanker ships’ supply, as a result of the imminent return of Iran ...
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- Straits Asia Resources Limited - Singapore
- Coastal Gujarat Power Limited - India
- The University of Queensland
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- Deloitte Consulting - India
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Larsen & Toubro Limited - India
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Central Java Power - Indonesia
- Carbofer General Trading SA - India
- Billiton Holdings Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Simpson Spence & Young - Indonesia
- Power Finance Corporation Ltd., India
- Videocon Industries ltd - India
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- Indika Energy - Indonesia
- Star Paper Mills Limited - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- Georgia Ports Authority, United States
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- Holcim Trading Pte Ltd - Singapore
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Bangladesh Power Developement Board
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- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- International Coal Ventures Pvt Ltd - India
- Thiess Contractors Indonesia
- Price Waterhouse Coopers - Russia
- The Treasury - Australian Government
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Central Electricity Authority - India
- Aditya Birla Group - India
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- Orica Australia Pty. Ltd.
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Madhucon Powers Ltd - India
- Medco Energi Mining Internasional
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- Indian Energy Exchange, India
- Semirara Mining Corp, Philippines
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- CIMB Investment Bank - Malaysia
- Essar Steel Hazira Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- VISA Power Limited - India
- CNBM International Corporation - China
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
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- Sical Logistics Limited - India
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Mintek Dendrill Indonesia
- Bhoruka Overseas - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Rio Tinto Coal - Australia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- ASAPP Information Group - India
- Malabar Cements Ltd - India
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Eastern Coal Council - USA
- Orica Mining Services - Indonesia
- Ind-Barath Power Infra Limited - India
- PowerSource Philippines DevCo
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Thai Mozambique Logistica
- San Jose City I Power Corp, Philippines
- Economic Council, Georgia
- Renaissance Capital - South Africa
- Savvy Resources Ltd - HongKong
- Cigading International Bulk Terminal - Indonesia
- Metalloyd Limited - United Kingdom
- Bharathi Cement Corporation - India
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Antam Resourcindo - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Meralco Power Generation, Philippines
- Bukit Makmur.PT - Indonesia
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- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
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- Global Green Power PLC Corporation, Philippines
- Tata Chemicals Ltd - India
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- Siam City Cement PLC, Thailand
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
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- Jaiprakash Power Ventures ltd
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Africa Commodities Group - South Africa
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Anglo American - United Kingdom
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Mercuria Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kohat Cement Company Ltd. - Pakistan
- Wilmar Investment Holdings
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Parry Sugars Refinery, India
- Standard Chartered Bank - UAE
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Jindal Steel & Power Ltd - India
- Barasentosa Lestari - Indonesia
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
- Latin American Coal - Colombia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- India Bulls Power Limited - India
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Petron Corporation, Philippines
- Intertek Mineral Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Ambuja Cements Ltd - India
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Xindia Steels Limited - India
- Edison Trading Spa - Italy
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Rashtriya Ispat Nigam Limited - India
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- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Mineral Development Corp Ltd - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Banpu Public Company Limited - Thailand
- Iligan Light & Power Inc, Philippines
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Vedanta Resources Plc - India
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