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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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Sunday, 18 October 15
THE BDI AND OTHER INDICES CLOSED OFF ON NEGATIVE NOTE THIS FRIDAY
COALspot.com: The BDI closed off on negative note this Friday compared to previous Friday's closing.
The BDI closed this Friday (16 Octobe ...
Friday, 16 October 15
MAJOR REVISION OF NYPE TIME CHAPTER PARTY - BIMCO
Major revision of NYPE time charter party promises to be both balanced and comprehensive
BIMCO has today jointly issued the first revision of ...
Friday, 16 October 15
FOB INDONESIA COAL SWAP FOR Q4'15 DELIVERY FLAT WEEK OVER WEEK; DOWN 5.5 PER CENT M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and flat week over week.
The Q4 swap declined $ 2.23 (-5.51%) ...
Friday, 16 October 15
COAL PRODUCTION IN THE UNITED STATES DECREASED THIS WEEK; DOWN 11.3 PER CENT Y-Y, DOWN 3.5 PERCENT W-W
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.1 million shor ...
Friday, 16 October 15
INDONESIA REJOINING OPEC DESPITE BEING A NET IMPORTER OF PETROLEUM - EIA
The Organization of the Petroleum Exporting Countries (OPEC) notified Indonesia that it plans to accept the country's request to reactivate its ...
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- Energy Development Corp, Philippines
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Oldendorff Carriers - Singapore
- Grasim Industreis Ltd - India
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- CIMB Investment Bank - Malaysia
- Asmin Koalindo Tuhup - Indonesia
- Mercator Lines Limited - India
- New Zealand Coal & Carbon
- The University of Queensland
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Wilmar Investment Holdings
- Larsen & Toubro Limited - India
- Energy Link Ltd, New Zealand
- GVK Power & Infra Limited - India
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Singapore Mercantile Exchange
- Iligan Light & Power Inc, Philippines
- Siam City Cement - Thailand
- Global Coal Blending Company Limited - Australia
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Australian Coal Association
- Bukit Makmur.PT - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Orica Australia Pty. Ltd.
- Malabar Cements Ltd - India
- Madhucon Powers Ltd - India
- Renaissance Capital - South Africa
- SN Aboitiz Power Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Carbofer General Trading SA - India
- Holcim Trading Pte Ltd - Singapore
- Merrill Lynch Commodities Europe
- Simpson Spence & Young - Indonesia
- PTC India Limited - India
- Edison Trading Spa - Italy
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- VISA Power Limited - India
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Indonesian Coal Mining Association
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Xindia Steels Limited - India
- Rashtriya Ispat Nigam Limited - India
- MS Steel International - UAE
- Dalmia Cement Bharat India
- Timah Investasi Mineral - Indoneisa
- Aboitiz Power Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Binh Thuan Hamico - Vietnam
- Banpu Public Company Limited - Thailand
- Electricity Generating Authority of Thailand
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Posco Energy - South Korea
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- SMG Consultants - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- McConnell Dowell - Australia
- Chettinad Cement Corporation Ltd - India
- India Bulls Power Limited - India
- Karaikal Port Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Indogreen Group - Indonesia
- Romanian Commodities Exchange
- Parliament of New Zealand
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- Billiton Holdings Pty Ltd - Australia
- Kapuas Tunggal Persada - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Bangladesh Power Developement Board
- Karbindo Abesyapradhi - Indoneisa
- Baramulti Group, Indonesia
- Kumho Petrochemical, South Korea
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Samtan Co., Ltd - South Korea
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Ministry of Transport, Egypt
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Gujarat Mineral Development Corp Ltd - India
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Semirara Mining and Power Corporation, Philippines
- Australian Commodity Traders Exchange
- Bayan Resources Tbk. - Indonesia
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Altura Mining Limited, Indonesia
- Africa Commodities Group - South Africa
- Anglo American - United Kingdom
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Kobexindo Tractors - Indoneisa
- Vizag Seaport Private Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Alfred C Toepfer International GmbH - Germany
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mjunction Services Limited - India
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Uttam Galva Steels Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Rio Tinto Coal - Australia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Indika Energy - Indonesia
- Central Electricity Authority - India
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Gujarat Sidhee Cement - India
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Planning Commission, India
- Borneo Indobara - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- The Treasury - Australian Government
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