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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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Monday, 12 October 15
DRY BULK SHIPPING: MARKETS ARE SLOWLY IMPROVING FROM A VERY LOW LEVEL AS THE DEMAND SIDE FALTERS - HELLENIC SHIPPING NEWS
The dry bulk market is in the midst of a shift in demand patterns, which coupled with a tonnage supply overhang, has been facing headwinds over the ...
Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
Wednesday, 07 October 15
U.S. COAL EXPORTS FOR THE FIRST SEVEN MONTHS DOWN 21 PER CENT COMPARED WITH THE SAME PERIOD IN 2014 - EIA
Coal Supply
Lower U.S.’s domestic coal consumption and reduced exports contribute to a forecast decline of 89 million short tons (M ...
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- Indogreen Group - Indonesia
- Commonwealth Bank - Australia
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- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- Trasteel International SA, Italy
- IEA Clean Coal Centre - UK
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- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- The Treasury - Australian Government
- Minerals Council of Australia
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Neyveli Lignite Corporation Ltd, - India
- TNB Fuel Sdn Bhd - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Semirara Mining Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
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- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Formosa Plastics Group - Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Barasentosa Lestari - Indonesia
- Anglo American - United Kingdom
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Singapore Mercantile Exchange
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Energy Development Corp, Philippines
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Wilmar Investment Holdings
- Meenaskhi Energy Private Limited - India
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Australian Coal Association
- Sojitz Corporation - Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Xindia Steels Limited - India
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Deloitte Consulting - India
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
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- Straits Asia Resources Limited - Singapore
- Indika Energy - Indonesia
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- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- Orica Australia Pty. Ltd.
- Orica Mining Services - Indonesia
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Romanian Commodities Exchange
- Kepco SPC Power Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- ASAPP Information Group - India
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- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- Kaltim Prima Coal - Indonesia
- Banpu Public Company Limited - Thailand
- Ministry of Transport, Egypt
- New Zealand Coal & Carbon
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Georgia Ports Authority, United States
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meralco Power Generation, Philippines
- Riau Bara Harum - Indonesia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
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- Mercuria Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Bulk Trading Sa - Switzerland
- Indian Oil Corporation Limited
- Directorate Of Revenue Intelligence - India
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Videocon Industries ltd - India
- Electricity Generating Authority of Thailand
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- PNOC Exploration Corporation - Philippines
- Mjunction Services Limited - India
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Attock Cement Pakistan Limited
- LBH Netherlands Bv - Netherlands
- Central Electricity Authority - India
- Aboitiz Power Corporation - Philippines
- Goldman Sachs - Singapore
- Medco Energi Mining Internasional
- Samtan Co., Ltd - South Korea
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Gujarat Electricity Regulatory Commission - India
- Parliament of New Zealand
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Parry Sugars Refinery, India
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- San Jose City I Power Corp, Philippines
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Independent Power Producers Association of India
- OPG Power Generation Pvt Ltd - India
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
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