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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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Sunday, 30 December 18
MAJOR LNG BUYERS' UNCONTRACTED DEMAND TO QUADRUPLE BY 2030 - WOOD MACKENZIE
Wood Mackenzie’s latest research reveals that uncontracted demand by the world’s seven largest LNG buyers could quadruple to 80 million ...
Saturday, 29 December 18
DELIVERY OF CARGO WITHOUT PRODUCTION OF THE ORIGINAL BILL OF LADING - TT CLUB
KNOWLEDGE TO ELEVATE
As the bill of lading is a document of title, a person presenting it to the carrier or its agent is ostensibly entitled t ...
Friday, 28 December 18
BIMCO 2020 SULPHUR CLAUSES: "A FAIR ALLOCATION OF RESPONSIBILITIES AND LIABILITIES'? - INCE & CO.
To assist owners and charterers to address the legal issues arising under any time charterparties, which will span the 1 January 2020 implementatio ...
Thursday, 27 December 18
DRY BULKERS SPOT FREIGHT MARKET W/E 21 DEC - ALLIED SHIPBROKING
Capesize
A negative week for the Capesize sector, as activity remained at low levels, especially in the Pacific, with rumors regarding agreed r ...
Thursday, 27 December 18
SHIPPING IS ENTERING A NEW ERA OF EVER CHALLENGING CONDITIONS - ALLIED
As we move closer to the end of the year and we look forward into New Year, we are still finding ourselves looking deep into a market outlook full ...
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- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- VISA Power Limited - India
- PTC India Limited - India
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Iligan Light & Power Inc, Philippines
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- Chettinad Cement Corporation Ltd - India
- Carbofer General Trading SA - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Samtan Co., Ltd - South Korea
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Ministry of Finance - Indonesia
- Mercator Lines Limited - India
- Jaiprakash Power Ventures ltd
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Eastern Coal Council - USA
- Karaikal Port Pvt Ltd - India
- Romanian Commodities Exchange
- Rio Tinto Coal - Australia
- Karbindo Abesyapradhi - Indoneisa
- London Commodity Brokers - England
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Mintek Dendrill Indonesia
- Oldendorff Carriers - Singapore
- CNBM International Corporation - China
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- Sical Logistics Limited - India
- White Energy Company Limited
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- India Bulls Power Limited - India
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- The University of Queensland
- Tamil Nadu electricity Board
- Parliament of New Zealand
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Malabar Cements Ltd - India
- Indo Tambangraya Megah - Indonesia
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- SN Aboitiz Power Inc, Philippines
- Therma Luzon, Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- European Bulk Services B.V. - Netherlands
- Wood Mackenzie - Singapore
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- ASAPP Information Group - India
- Thiess Contractors Indonesia
- Medco Energi Mining Internasional
- Uttam Galva Steels Limited - India
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Bukit Makmur.PT - Indonesia
- MS Steel International - UAE
- Baramulti Group, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- New Zealand Coal & Carbon
- Petron Corporation, Philippines
- Dalmia Cement Bharat India
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Indian Oil Corporation Limited
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Bahari Cakrawala Sebuku - Indonesia
- Economic Council, Georgia
- Antam Resourcindo - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- San Jose City I Power Corp, Philippines
- Holcim Trading Pte Ltd - Singapore
- OPG Power Generation Pvt Ltd - India
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Bharathi Cement Corporation - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Gujarat Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Merrill Lynch Commodities Europe
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Sojitz Corporation - Japan
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Kobexindo Tractors - Indoneisa
- Madhucon Powers Ltd - India
- Africa Commodities Group - South Africa
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- South Luzon Thermal Energy Corporation
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Siam City Cement - Thailand
- GVK Power & Infra Limited - India
- Cement Manufacturers Association - India
- Tata Chemicals Ltd - India
- Anglo American - United Kingdom
- TeaM Sual Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Gujarat Mineral Development Corp Ltd - India
- Indian Energy Exchange, India
- Attock Cement Pakistan Limited
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Gujarat Sidhee Cement - India
- Salva Resources Pvt Ltd - India
- Aboitiz Power Corporation - Philippines
- Pendopo Energi Batubara - Indonesia
- Australian Coal Association
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Planning Commission, India
- Coastal Gujarat Power Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
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