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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, 15 October 15
INDONESIA COAL PRICE REFERENCE FALLS FOR SEVEN STRAIGHT MONTH IN OCTOBER
COALspot.com - The Director General of Mineral and Coal of Indonesia once a again revised down Indonesian coal benchmark price this month.
The ...
Thursday, 15 October 15
Q1' 16 FOB RICHARDS BAY COAL SWAP ADVANCED 2 PER CENT WEEK OVER WEEK
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 gain week over week and declined month over month.
The Q4 swap was dow ...
Tuesday, 13 October 15
DRY BULK SHIPPING FLEET NET EXPANSION WAS 1.3% DURING THIRD QUARTER, BUT ORDERBOOK REDUCED TO 17% OF THE TRADING FLEET
If the dry bulk market is to rebound on a sustainable level, it needs to limit the tonnage expansion, at least until demand picks up again, as Chin ...
Tuesday, 13 October 15
FOB NEWCASTLE COAL SWAP DECLINED 2 PER CENT MONTH OVER MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.46 per ton (1.08%) month over month to US$ 42.17 per ton. The ...
Monday, 12 October 15
CFR SOUTH CHINA COAL SWAPS GAIN W-W; SLIGHTLY DOWN M-M
COALspot.com: API 8 CFR South China Coal swap for 4Q’ 2015 delivery down just US cents 3 (0.06 %) per ton month over month.
A commodity ...
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- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- MS Steel International - UAE
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Standard Chartered Bank - UAE
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Chettinad Cement Corporation Ltd - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Eastern Energy - Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Trasteel International SA, Italy
- TNB Fuel Sdn Bhd - Malaysia
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Antam Resourcindo - Indonesia
- Kaltim Prima Coal - Indonesia
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Anglo American - United Kingdom
- Bhoruka Overseas - Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- Aboitiz Power Corporation - Philippines
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Global Business Power Corporation, Philippines
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Oldendorff Carriers - Singapore
- The Treasury - Australian Government
- Kalimantan Lumbung Energi - Indonesia
- PTC India Limited - India
- Coal and Oil Company - UAE
- Cigading International Bulk Terminal - Indonesia
- Mintek Dendrill Indonesia
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Karbindo Abesyapradhi - Indoneisa
- Barasentosa Lestari - Indonesia
- Metalloyd Limited - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- LBH Netherlands Bv - Netherlands
- Global Coal Blending Company Limited - Australia
- Price Waterhouse Coopers - Russia
- Parry Sugars Refinery, India
- Rio Tinto Coal - Australia
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Economic Council, Georgia
- Mercuria Energy - Indonesia
- Indika Energy - Indonesia
- Australian Commodity Traders Exchange
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- GAC Shipping (India) Pvt Ltd
- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Bhatia International Limited - India
- Parliament of New Zealand
- South Luzon Thermal Energy Corporation
- Coalindo Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- India Bulls Power Limited - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- CNBM International Corporation - China
- Semirara Mining Corp, Philippines
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- Riau Bara Harum - Indonesia
- Salva Resources Pvt Ltd - India
- Directorate Of Revenue Intelligence - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- SMG Consultants - Indonesia
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- White Energy Company Limited
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Simpson Spence & Young - Indonesia
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- The University of Queensland
- Heidelberg Cement - Germany
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Indian Energy Exchange, India
- Carbofer General Trading SA - India
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Meenaskhi Energy Private Limited - India
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Alfred C Toepfer International GmbH - Germany
- SMC Global Power, Philippines
- Bhushan Steel Limited - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Timah Investasi Mineral - Indoneisa
- Independent Power Producers Association of India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- New Zealand Coal & Carbon
- GVK Power & Infra Limited - India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Ambuja Cements Ltd - India
- Latin American Coal - Colombia
- Renaissance Capital - South Africa
- Asmin Koalindo Tuhup - Indonesia
- Samtan Co., Ltd - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Videocon Industries ltd - India
- Thai Mozambique Logistica
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Tamil Nadu electricity Board
- Africa Commodities Group - South Africa
- Kumho Petrochemical, South Korea
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