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Wednesday, 03 October 18
SHIPPING MARKET INSIGHT - KATERINA RESTIS
 The bunker fuel supply and availability landscape is close to its transformation with the enforcement of the IMO’s global 0.5% fuel Sulphur content cap regulation from 1st of January, 2020. Shipowners will have to choose between available options for them to comply with the regulation, while refiners will have to make suitable changes to refinery configuration and production in response to market demand. Thus far all parties will have to decide on the most efficient and appropriate solution that will suit their operations and allow them to remain commercially sustainable in the long run.
The swipe from the present 3.5% to 0.5% Sulphur content marine fuel will practically be an overnight shift as refineries would need to continue production and supply of up to 3.5% marine fuel until the day regulation requirement kicks in. Global refining will face enormous logistics, storage and delivery issues, while ships will have to clean out fuel systems to avoid Sulphur contamination. Thus, there is a risk such quick swing to lead to a period of product shortages and inflated marine oil prices. According to data reported on average up to 2017, the shipping industry was consuming approximately 3.2m barrels p/d of HFO and 800k p/d of MGO. Accordingly, from 2020 onwards it is estimated that proportion will alter to 700k p/d of HFO to 3.4m barrels p/d of MGO. Obviously, the use of compliant Sulphur oil products will be the expensive solution for ship-owners that will either absorb the cost or possibly operators will try to pass the cost to Charterers via increased freight rates.
Simple refineries that produce a substantial share of their crude oil into HFO may face margin pressures, while complex refineries with greater infrastructures may potentially boost margins with larger production of low Sulphur products. IEA has stated that if refiners ran at similar utilization rates as of today, it would be unlikely to produce the essential volumes of gas oil. Particularly, if quantity rises to meet the required gas oil volumes, margins would be inevitably affected by shrinking profits.
Overall, oil majors and refineries will try to back up the bunker fuel demand ascending from the new regulation through several ways. Refiners may elevate ULSFO production by extracting low Sulphur fuel streams that are currently blended into LSFO or HSFO will be made available to the market as ULS FO. ExxonMobil, for example has introduced a product, Heavy Distillate Marine ECA 50 that can be consumed onboard like HFO and has only 0.1% Sulphur content. Furthermore, refiners have an issue of handling their surplus residue as this option comes with higher risk on returns of investment. This is due to the fact that oil demand is founded on shippers’ uptake of alternative options such as scrubber installation and LNG bunkering. Refiners can raise LNG bunker supplies in major bunkering hubs. In Singapore, Shell and ExxonMobil are working with Maritime and Port Authority of Singapore to supply LNG as fuel.
To sum up, in the scenario that refineries restrict the availability of HFO on expected higher margins from selling MGO, then vessels fitted with scrubbers might face challenges in relation to adequate supply of HFO. On the other hand, refineries worry that any surge in the use of MGO would head to excess quantity of HFO. For sure refineries are not rushing to big investments to change production set ups while ship-owners are still considering their options. It’s a dilemma for all parties and a puzzle to be solved.
By Katerina Restis
Tanker Chartering
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Tuesday, 29 January 19
HARD COAL BEARS THE BRUNT OF THE RECOMMENDATIONS OF THE COMMISSION GROWTH STRUCTURAL CHANGE AND EMPLOYMENT - VDKI
Press Release: Hard coal bears the brunt of the recommendations of the Commission Growth Structural change and employment.
In its fi ...
Tuesday, 29 January 19
CHINA HAS BEEN THE TOP DRIVER OF GLOBAL GROWTH FOR NEARLY TWO DECADES - ALLIED
China has been the top driver of global growth for nearly two decades now, pushing demand for seaborne trade and being the key influencer for deman ...
Saturday, 26 January 19
SUPRAMAX: NICKEL ORE RUNS SAW A 56K DWT VESSEL, DELIVERY PHILIPPINES, FIXED FOR A TRIP TO CHINA AT $6K - BALTIC BRIEFING
Capesize
A week of dashed hopes for owners as the optimism evident the previous week evaporated. Rates slipped on all routes and underlying thr ...
Thursday, 24 January 19
ANOTHER DISAPPOINTING WEEK FOR PANAMAX OWNERS; MARKET CONTINUES DOWN IN BOTH BASINS - FEARNLEYS
Capesize
The week has been marked by low activity and dropping rates in both basins. As usual, supply additions have increased at the beginning ...
Thursday, 24 January 19
KOREA SOUTHERN POWER INVITED BIDS FOR 960K MT OF 4600 NCV COAL FOR THREE YEARS
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,600 kcal/kg NCV low calo ...
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- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- McConnell Dowell - Australia
- Ambuja Cements Ltd - India
- Romanian Commodities Exchange
- VISA Power Limited - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Rashtriya Ispat Nigam Limited - India
- Global Green Power PLC Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- SN Aboitiz Power Inc, Philippines
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Samtan Co., Ltd - South Korea
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Aboitiz Power Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Directorate General of MIneral and Coal - Indonesia
- Dalmia Cement Bharat India
- Chamber of Mines of South Africa
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Indonesian Coal Mining Association
- Singapore Mercantile Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Baramulti Group, Indonesia
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- White Energy Company Limited
- Indian Oil Corporation Limited
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Siam City Cement PLC, Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Xindia Steels Limited - India
- Toyota Tsusho Corporation, Japan
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Tata Chemicals Ltd - India
- Sakthi Sugars Limited - India
- Tamil Nadu electricity Board
- Videocon Industries ltd - India
- Minerals Council of Australia
- Jindal Steel & Power Ltd - India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Standard Chartered Bank - UAE
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Manunggal Multi Energi - Indonesia
- Oldendorff Carriers - Singapore
- Kepco SPC Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Mercator Lines Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- PTC India Limited - India
- Independent Power Producers Association of India
- The Treasury - Australian Government
- Marubeni Corporation - India
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Medco Energi Mining Internasional
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Sree Jayajothi Cements Limited - India
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Vedanta Resources Plc - India
- Energy Link Ltd, New Zealand
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- PNOC Exploration Corporation - Philippines
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Bangladesh Power Developement Board
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Posco Energy - South Korea
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Sojitz Corporation - Japan
- Renaissance Capital - South Africa
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Orica Mining Services - Indonesia
- Metalloyd Limited - United Kingdom
- Africa Commodities Group - South Africa
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Coastal Gujarat Power Limited - India
- Maheswari Brothers Coal Limited - India
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- International Coal Ventures Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Heidelberg Cement - Germany
- Binh Thuan Hamico - Vietnam
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Makarim & Taira - Indonesia
- Kaltim Prima Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Agrawal Coal Company - India
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- Neyveli Lignite Corporation Ltd, - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Uttam Galva Steels Limited - India
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- London Commodity Brokers - England
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- Central Electricity Authority - India
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Indika Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Carbofer General Trading SA - India
- Bulk Trading Sa - Switzerland
- Indogreen Group - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Kapuas Tunggal Persada - Indonesia
- Australian Coal Association
- Thai Mozambique Logistica
- Sarangani Energy Corporation, Philippines
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Antam Resourcindo - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
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