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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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Wednesday, 21 October 15
RUSSIA'S CARBO ONE COAL SALES TO HIT 50 MLN T/YR - JACQUELINE HOLMES
COALspot.com: Russia's Carbo One has become one of the world's leading physical coal traders with an annual volume approaching 50 million t ...
Wednesday, 21 October 15
MARKET INSIGHT - TIMOS PAPADIMITRIOU
In today’s dry bulk market, both freight rates and asset prices are creating mixed feelings to seasoned ship owners, who tend to instinctivel ...
Wednesday, 21 October 15
INDONESIAN COAL MINER BUKIT ASAM POSTS POSITIVE PERFORMANCE DURING FIRST THREE QUARTERS OF 2015
COALspot.com: Indonesian publicly listed and state controlled coal miner PT. Bukit Asam has announced that, the company’s coal sales up 8 per ...
Wednesday, 21 October 15
LOWER DEMAND HIT Q1' 16 INDONESIA COAL SWAPS
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 1.88 (-4.71%) per t ...
Tuesday, 20 October 15
SHIPBROKER SEES CAPESIZE RATES EASILY REACHING $25,000/DAY BY YEAR-END : NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
The future course of the dry bulk market has been troubling market participants for quite some time now, as the “elusive” freight rate ...
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- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- PowerSource Philippines DevCo
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Energy Link Ltd, New Zealand
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- TeaM Sual Corporation - Philippines
- Xindia Steels Limited - India
- Deloitte Consulting - India
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Essar Steel Hazira Ltd - India
- Uttam Galva Steels Limited - India
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Planning Commission, India
- Wilmar Investment Holdings
- Rashtriya Ispat Nigam Limited - India
- Eastern Energy - Thailand
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Cement Manufacturers Association - India
- GVK Power & Infra Limited - India
- Standard Chartered Bank - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Ministry of Mines - Canada
- Economic Council, Georgia
- Gujarat Mineral Development Corp Ltd - India
- Kumho Petrochemical, South Korea
- IEA Clean Coal Centre - UK
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- India Bulls Power Limited - India
- The University of Queensland
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Sakthi Sugars Limited - India
- Trasteel International SA, Italy
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Vizag Seaport Private Limited - India
- Kaltim Prima Coal - Indonesia
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Orica Mining Services - Indonesia
- Anglo American - United Kingdom
- PNOC Exploration Corporation - Philippines
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Krishnapatnam Port Company Ltd. - India
- Asmin Koalindo Tuhup - Indonesia
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Lanco Infratech Ltd - India
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- MS Steel International - UAE
- Miang Besar Coal Terminal - Indonesia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- Simpson Spence & Young - Indonesia
- Grasim Industreis Ltd - India
- Binh Thuan Hamico - Vietnam
- Interocean Group of Companies - India
- Global Business Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- South Luzon Thermal Energy Corporation
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Videocon Industries ltd - India
- PTC India Limited - India
- Marubeni Corporation - India
- Mintek Dendrill Indonesia
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- OPG Power Generation Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- Global Coal Blending Company Limited - Australia
- VISA Power Limited - India
- Wood Mackenzie - Singapore
- Leighton Contractors Pty Ltd - Australia
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Eastern Coal Council - USA
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Tamil Nadu electricity Board
- Meralco Power Generation, Philippines
- Semirara Mining and Power Corporation, Philippines
- Sojitz Corporation - Japan
- Billiton Holdings Pty Ltd - Australia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Georgia Ports Authority, United States
- Chettinad Cement Corporation Ltd - India
- Orica Australia Pty. Ltd.
- Coal and Oil Company - UAE
- Price Waterhouse Coopers - Russia
- Indogreen Group - Indonesia
- Malabar Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Australian Coal Association
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Africa Commodities Group - South Africa
- Edison Trading Spa - Italy
- Baramulti Group, Indonesia
- Metalloyd Limited - United Kingdom
- Mercator Lines Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Rio Tinto Coal - Australia
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- GAC Shipping (India) Pvt Ltd
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Jorong Barutama Greston.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Central Electricity Authority - India
- Kartika Selabumi Mining - Indonesia
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Larsen & Toubro Limited - India
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Altura Mining Limited, Indonesia
- Attock Cement Pakistan Limited
- New Zealand Coal & Carbon
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Antam Resourcindo - Indonesia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- Kohat Cement Company Ltd. - Pakistan
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- Dalmia Cement Bharat India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- McConnell Dowell - Australia
- Samtan Co., Ltd - South Korea
- Thai Mozambique Logistica
- Bayan Resources Tbk. - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
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