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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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Friday, 14 December 18
KOSPO INVITED BIDS FOR 320,000 MT OF LOW CALORIFIC VALUE COAL
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 320,000 MT of min 4,300 kcal/kg NCV coal per ...
Friday, 14 December 18
KOSPO INVITES BIDS FOR 1,177,000 METRIC TONS OF COAL FOR Q1' 19 LOADING
COALspot.com: South Korea state-owned utility Korea Southern Power Co. Ltd (KOSPO) issued a tender for 701,000 MT of min 5,600 kcal/kg NCV coal and ...
Friday, 14 December 18
COAL IMPORT TO BE CHECKED BY RISING DOMESTIC PRODUCTION - FINANCIAL EXPRESS
The government’s effort to increase domestic coal production and power demand falling with the onset of the winters will check coal imports, ...
Thursday, 13 December 18
STRAITS AFFECTED BY TERRITORIAL DISPUTE BETWEEN SINGAPORE AND MALAYSIA - THE STANDARD CLUB
A recent territorial dispute has occurred between Singapore and Malaysia involving the Straits of Johor.
The Malaysian Attorney Gene ...
Wednesday, 12 December 18
SHIPPING MARKET INSIGHT - CHRISTOPHER WHITTY
China’s monthly iron ore imports dropped for the first time this year joined by declines in copper and soybeans as economic growth slows in t ...
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- Ceylon Electricity Board - Sri Lanka
- Jindal Steel & Power Ltd - India
- Directorate Of Revenue Intelligence - India
- Kohat Cement Company Ltd. - Pakistan
- The Treasury - Australian Government
- CIMB Investment Bank - Malaysia
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thiess Contractors Indonesia
- Eastern Coal Council - USA
- Manunggal Multi Energi - Indonesia
- Barasentosa Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Interocean Group of Companies - India
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- ASAPP Information Group - India
- Maharashtra Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- GMR Energy Limited - India
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Maheswari Brothers Coal Limited - India
- San Jose City I Power Corp, Philippines
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Anglo American - United Kingdom
- London Commodity Brokers - England
- Wood Mackenzie - Singapore
- Ambuja Cements Ltd - India
- Meralco Power Generation, Philippines
- Lanco Infratech Ltd - India
- Trasteel International SA, Italy
- Renaissance Capital - South Africa
- Sakthi Sugars Limited - India
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Jorong Barutama Greston.PT - Indonesia
- Independent Power Producers Association of India
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- New Zealand Coal & Carbon
- Commonwealth Bank - Australia
- Bukit Asam (Persero) Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Minerals Council of Australia
- Iligan Light & Power Inc, Philippines
- Tamil Nadu electricity Board
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Kalimantan Lumbung Energi - Indonesia
- Sical Logistics Limited - India
- Karaikal Port Pvt Ltd - India
- Tata Chemicals Ltd - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Ministry of Transport, Egypt
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Savvy Resources Ltd - HongKong
- Krishnapatnam Port Company Ltd. - India
- Alfred C Toepfer International GmbH - Germany
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Central Electricity Authority - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rio Tinto Coal - Australia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Price Waterhouse Coopers - Russia
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- Mintek Dendrill Indonesia
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- SMG Consultants - Indonesia
- Indonesian Coal Mining Association
- MS Steel International - UAE
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- PetroVietnam Power Coal Import and Supply Company
- Energy Development Corp, Philippines
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Timah Investasi Mineral - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- SMC Global Power, Philippines
- White Energy Company Limited
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- GAC Shipping (India) Pvt Ltd
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Bukit Baiduri Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Ministry of Finance - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- European Bulk Services B.V. - Netherlands
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Marubeni Corporation - India
- Altura Mining Limited, Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Edison Trading Spa - Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Sojitz Corporation - Japan
- Semirara Mining Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Baramulti Group, Indonesia
- Samtan Co., Ltd - South Korea
- Chettinad Cement Corporation Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Carbofer General Trading SA - India
- VISA Power Limited - India
- Straits Asia Resources Limited - Singapore
- Kartika Selabumi Mining - Indonesia
- Georgia Ports Authority, United States
- Bukit Makmur.PT - Indonesia
- Kumho Petrochemical, South Korea
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Australian Coal Association
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Bhatia International Limited - India
- PowerSource Philippines DevCo
- Bhushan Steel Limited - India
- TeaM Sual Corporation - Philippines
- Madhucon Powers Ltd - India
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Port Waratah Coal Services - Australia
- Global Business Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Vedanta Resources Plc - India
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Economic Council, Georgia
- Kideco Jaya Agung - Indonesia
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