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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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Wednesday, 19 December 18
GLOBAL COAL DEMAND SET TO REMAIN STABLE THROUGH 2023, DESPITE HEADWINDS - IEA
While global coal demand looks set to rise for the second year in a row in 2018, it is forecast to remain stable over the next five years, as decli ...
Wednesday, 19 December 18
GLOBAL SHIPPING SCOUTS FOR FUTURE GROWTH - PETER SAND, BIMCO
Where do we go to find economic growth that spurs shipping demand in the next five years? According to the International Monetary Fund (IMF), we sh ...
Wednesday, 19 December 18
SHIPPING MARKET INSIGHT - INTERMODAL
As another year is coming to an end, it is interesting to look at the main shipping markets and how these performed compared to 2017.
&nb ...
Tuesday, 18 December 18
COAL DEMAND WILL REMAIN STEADY THROUGH 2023, INTERNATIONAL ENERGY AGENCY SAYS - TOM DICHRISTOPHER, CNBC
Coal consumption is on the rise but will remain roughly stable over the next five years, the International Energy Agency forecasts.
...
Tuesday, 18 December 18
DRY BULK: IN ABSOLUTE TERMS, ALL MAIN SIZE SEGMENTS SAW THEIR ACTUAL VOLATILITY FIGURES DECREASE - ALLIED
Since the beginning of 2016, when the dry bulk market reached its absolute bottom, freight rates have been ever since on an upward trajectory. Taki ...
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- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Lanco Infratech Ltd - India
- Marubeni Corporation - India
- Intertek Mineral Services - Indonesia
- Agrawal Coal Company - India
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Kumho Petrochemical, South Korea
- Central Java Power - Indonesia
- Australian Coal Association
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- SN Aboitiz Power Inc, Philippines
- Central Electricity Authority - India
- International Coal Ventures Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Manunggal Multi Energi - Indonesia
- Orica Mining Services - Indonesia
- Meenaskhi Energy Private Limited - India
- Bhushan Steel Limited - India
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Posco Energy - South Korea
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Larsen & Toubro Limited - India
- Petron Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- GVK Power & Infra Limited - India
- Essar Steel Hazira Ltd - India
- Mjunction Services Limited - India
- Timah Investasi Mineral - Indoneisa
- Cement Manufacturers Association - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- ICICI Bank Limited - India
- Attock Cement Pakistan Limited
- Global Coal Blending Company Limited - Australia
- Indogreen Group - Indonesia
- San Jose City I Power Corp, Philippines
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Thiess Contractors Indonesia
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Ministry of Transport, Egypt
- Parliament of New Zealand
- The University of Queensland
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Bhoruka Overseas - Indonesia
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Sindya Power Generating Company Private Ltd
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Global Business Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- McConnell Dowell - Australia
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- IHS Mccloskey Coal Group - USA
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Economic Council, Georgia
- Indo Tambangraya Megah - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Miang Besar Coal Terminal - Indonesia
- Indian Energy Exchange, India
- VISA Power Limited - India
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- Bulk Trading Sa - Switzerland
- Electricity Generating Authority of Thailand
- OPG Power Generation Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Jaiprakash Power Ventures ltd
- Directorate Of Revenue Intelligence - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Anglo American - United Kingdom
- Vedanta Resources Plc - India
- Vizag Seaport Private Limited - India
- South Luzon Thermal Energy Corporation
- Grasim Industreis Ltd - India
- Sree Jayajothi Cements Limited - India
- Ceylon Electricity Board - Sri Lanka
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Latin American Coal - Colombia
- Ministry of Finance - Indonesia
- Straits Asia Resources Limited - Singapore
- Thai Mozambique Logistica
- Alfred C Toepfer International GmbH - Germany
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- IEA Clean Coal Centre - UK
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Malabar Cements Ltd - India
- The State Trading Corporation of India Ltd
- PTC India Limited - India
- Antam Resourcindo - Indonesia
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Asmin Koalindo Tuhup - Indonesia
- TeaM Sual Corporation - Philippines
- Billiton Holdings Pty Ltd - Australia
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Bayan Resources Tbk. - Indonesia
- Kaltim Prima Coal - Indonesia
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- ASAPP Information Group - India
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Kalimantan Lumbung Energi - Indonesia
- Uttam Galva Steels Limited - India
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Deloitte Consulting - India
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- European Bulk Services B.V. - Netherlands
- Holcim Trading Pte Ltd - Singapore
- SMC Global Power, Philippines
- CNBM International Corporation - China
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Simpson Spence & Young - Indonesia
- Toyota Tsusho Corporation, Japan
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- India Bulls Power Limited - India
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Port Waratah Coal Services - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Ministry of Mines - Canada
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