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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, 30 September 15
Q1'16 FOB INDONESIA COAL SWAP FALLS $1.25 A TON AS SLIDE CONTINUES
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 0.72 (-1.78%) per t ...
Wednesday, 30 September 15
NEW BUILDING MARKET INSIGHT
COALspot.com: This year has been, beyond any doubt, a rather strenuous one for the newbuilding market. Ordering activity with regards to Dry Bulker ...
Tuesday, 29 September 15
FOB RICHARDS BAY COAL SWAPS ARE SLIDING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 28 September 15
API 5 FOB NEWCASTLE COAL SWAPS UP $2.15 IN ONE MONTH
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery increased $2.10 per ton (5.15%) month over month to US$ 42.93 per ton. The ...
Monday, 28 September 15
CAPESIZE FLEET INCREASES BY JUST 1 VESSEL DURING LAST 12 MONTHS, IN POSITIVE SIGN FOR DRY BULK SHIPPING MARKET - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
After a rather tumultuous period, the shipping industry and more particular the dry bulk market has started to adjust to the new realities of globa ...
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- Star Paper Mills Limited - India
- Wilmar Investment Holdings
- Global Green Power PLC Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Gujarat Electricity Regulatory Commission - India
- Minerals Council of Australia
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- Anglo American - United Kingdom
- Bukit Baiduri Energy - Indonesia
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Kobexindo Tractors - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Vizag Seaport Private Limited - India
- Rashtriya Ispat Nigam Limited - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Sidhee Cement - India
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Marubeni Corporation - India
- The State Trading Corporation of India Ltd
- Maharashtra Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Meenaskhi Energy Private Limited - India
- Africa Commodities Group - South Africa
- Intertek Mineral Services - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- International Coal Ventures Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- IHS Mccloskey Coal Group - USA
- Therma Luzon, Inc, Philippines
- Vedanta Resources Plc - India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Indian Oil Corporation Limited
- Krishnapatnam Port Company Ltd. - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Bhatia International Limited - India
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Tamil Nadu electricity Board
- Tata Chemicals Ltd - India
- The University of Queensland
- Attock Cement Pakistan Limited
- Parliament of New Zealand
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- CIMB Investment Bank - Malaysia
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- Binh Thuan Hamico - Vietnam
- Australian Commodity Traders Exchange
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- Sojitz Corporation - Japan
- Maheswari Brothers Coal Limited - India
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- CNBM International Corporation - China
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- ASAPP Information Group - India
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- SN Aboitiz Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement - Thailand
- Jindal Steel & Power Ltd - India
- VISA Power Limited - India
- Chettinad Cement Corporation Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Grasim Industreis Ltd - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Bharathi Cement Corporation - India
- Economic Council, Georgia
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Xindia Steels Limited - India
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Kumho Petrochemical, South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Uttam Galva Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Energy Development Corp, Philippines
- Trasteel International SA, Italy
- Baramulti Group, Indonesia
- San Jose City I Power Corp, Philippines
- Port Waratah Coal Services - Australia
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Larsen & Toubro Limited - India
- Agrawal Coal Company - India
- Coal and Oil Company - UAE
- Romanian Commodities Exchange
- Directorate Of Revenue Intelligence - India
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Metalloyd Limited - United Kingdom
- Kideco Jaya Agung - Indonesia
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Aditya Birla Group - India
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- SMG Consultants - Indonesia
- Siam City Cement PLC, Thailand
- Cigading International Bulk Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Sindya Power Generating Company Private Ltd
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Interocean Group of Companies - India
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Deloitte Consulting - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- Toyota Tsusho Corporation, Japan
- Bhushan Steel Limited - India
- Ministry of Transport, Egypt
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Bhoruka Overseas - Indonesia
- PowerSource Philippines DevCo
- Altura Mining Limited, Indonesia
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