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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, 20 September 15
BALTIC CAPE INDEX ROSE 66.52 PER CENT AND STAND NOW AT 1995 POINTS
COALspot.com: The BDI (Baltic Dry Index) rose 17.35 per cent week over week to 960 points on Friday mainly driven by the Capesize segment. The Cape ...
Friday, 18 September 15
SHIPPING AND THE FED RATE DECISION: FINANCING COSTS COULD RISE EVEN HIGHER - NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Regardless of the FED’s decision to raise rates, shipping stands to be influenced by the decision. Shipbroker Allied Shipbroking noted this w ...
Friday, 18 September 15
U.S. COAL PRODUCTION DECLINED 6.7 PER CENT W-W: EIA
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.4 million shor ...
Thursday, 17 September 15
COALSPOT HAS LAUNCHED NEW THERMAL COAL INDICES FOR INDONESIAN COAL
COALspot.com has today launched real-time CS (i) Coal Indices.
The Indices represents 3800 kcal/kg GAR, 4200 kcal/kg GAR, 5000 kcal/kg GAR a ...
Thursday, 17 September 15
LOW DEMAND PUSH COAL SWAP DOWN
COALspot.com: Indonesian coal swap for delivery 4Q 2015 declined month on month and gain week over week.
The 4Q swap declined $ 1.77 (-4.17%) ...
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- Australian Coal Association
- Indonesian Coal Mining Association
- Sree Jayajothi Cements Limited - India
- Chettinad Cement Corporation Ltd - India
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Borneo Indobara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- GMR Energy Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- Formosa Plastics Group - Taiwan
- IHS Mccloskey Coal Group - USA
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Port Waratah Coal Services - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Planning Commission, India
- Mercuria Energy - Indonesia
- Eastern Coal Council - USA
- Bhushan Steel Limited - India
- Salva Resources Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Tamil Nadu electricity Board
- SMC Global Power, Philippines
- Kartika Selabumi Mining - Indonesia
- Metalloyd Limited - United Kingdom
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Renaissance Capital - South Africa
- Straits Asia Resources Limited - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Anglo American - United Kingdom
- Indika Energy - Indonesia
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Kapuas Tunggal Persada - Indonesia
- Bhatia International Limited - India
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Globalindo Alam Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Sindya Power Generating Company Private Ltd
- SN Aboitiz Power Inc, Philippines
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Indogreen Group - Indonesia
- India Bulls Power Limited - India
- Savvy Resources Ltd - HongKong
- Holcim Trading Pte Ltd - Singapore
- The University of Queensland
- Larsen & Toubro Limited - India
- Indian Energy Exchange, India
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Star Paper Mills Limited - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- Iligan Light & Power Inc, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Directorate Of Revenue Intelligence - India
- Manunggal Multi Energi - Indonesia
- McConnell Dowell - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Essar Steel Hazira Ltd - India
- OPG Power Generation Pvt Ltd - India
- Electricity Authority, New Zealand
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Grasim Industreis Ltd - India
- Bukit Baiduri Energy - Indonesia
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Sarangani Energy Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Miang Besar Coal Terminal - Indonesia
- Madhucon Powers Ltd - India
- Semirara Mining Corp, Philippines
- Standard Chartered Bank - UAE
- Lanco Infratech Ltd - India
- Therma Luzon, Inc, Philippines
- Romanian Commodities Exchange
- Altura Mining Limited, Indonesia
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- International Coal Ventures Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- European Bulk Services B.V. - Netherlands
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- GAC Shipping (India) Pvt Ltd
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Xindia Steels Limited - India
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- Australian Commodity Traders Exchange
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Baramulti Group, Indonesia
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Deloitte Consulting - India
- Heidelberg Cement - Germany
- The Treasury - Australian Government
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Mining Services - Indonesia
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Central Java Power - Indonesia
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