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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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Thursday, 06 December 18
CHINA REVISES MANAGEMENT RULES ON ESTABLISHMENT OF FULLY FOREIGN-OWNED SHIPPING BUSINESSES - XINHUA
Foreign shipping companies will find it easier to establish wholly-owned subsidiaries in China thanks to a revised regulation due to take effect on ...
Wednesday, 05 December 18
WORLD COAL PRICES FALL, WITH INDONESIA BENCHMARK FOR DECEMBER, ENDING AT LOWEST SINCE JUNE 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 05 December 18
SHIPPING MARKET INSIGHT - GIANNIS ANDRITSOPOULOS
Is the rise in crude carrier rates driven only by seasonality, or is the recent positive reversal signaling the end of challenging days for the mar ...
Monday, 03 December 18
WCA'S ENGAGEMENT AT COP24 IN KATOWICE - WCA
The 24th Conference of the Parties (COP) to the UN Framework Convention on Climate Change (UNFCCC) will take place from the 2-14 December 2018 in K ...
Monday, 03 December 18
SUPRAMAX: FIXED DELIVERY KALIMANTAN TO WEST COAST INDIA, AT $11000 - THE BALTIC BRIEFING
Capesize
A roller-coaster week for the big ships with hopes soaring at the start for a mini last quarter revival, only to be dashed as the week ...
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Tamil Nadu electricity Board
- VISA Power Limited - India
- Orica Australia Pty. Ltd.
- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Eastern Energy - Thailand
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Coal and Oil Company - UAE
- Malabar Cements Ltd - India
- Coalindo Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Independent Power Producers Association of India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- Sarangani Energy Corporation, Philippines
- Bangladesh Power Developement Board
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Meenaskhi Energy Private Limited - India
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Antam Resourcindo - Indonesia
- Pendopo Energi Batubara - Indonesia
- Standard Chartered Bank - UAE
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Planning Commission, India
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Heidelberg Cement - Germany
- Power Finance Corporation Ltd., India
- Siam City Cement - Thailand
- CIMB Investment Bank - Malaysia
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- London Commodity Brokers - England
- Banpu Public Company Limited - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ambuja Cements Ltd - India
- Vizag Seaport Private Limited - India
- Parry Sugars Refinery, India
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- The Treasury - Australian Government
- Videocon Industries ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Global Coal Blending Company Limited - Australia
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Gujarat Electricity Regulatory Commission - India
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- SMC Global Power, Philippines
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Africa Commodities Group - South Africa
- Vedanta Resources Plc - India
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- The University of Queensland
- Bukit Makmur.PT - Indonesia
- ASAPP Information Group - India
- Agrawal Coal Company - India
- Jaiprakash Power Ventures ltd
- Star Paper Mills Limited - India
- Kapuas Tunggal Persada - Indonesia
- ICICI Bank Limited - India
- McConnell Dowell - Australia
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- Trasteel International SA, Italy
- Parliament of New Zealand
- Minerals Council of Australia
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- PTC India Limited - India
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Posco Energy - South Korea
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Deloitte Consulting - India
- Petrochimia International Co. Ltd.- Taiwan
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- TeaM Sual Corporation - Philippines
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Kobexindo Tractors - Indoneisa
- PNOC Exploration Corporation - Philippines
- GN Power Mariveles Coal Plant, Philippines
- Attock Cement Pakistan Limited
- Central Electricity Authority - India
- Billiton Holdings Pty Ltd - Australia
- Coastal Gujarat Power Limited - India
- Altura Mining Limited, Indonesia
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Borneo Indobara - Indonesia
- Siam City Cement PLC, Thailand
- Electricity Generating Authority of Thailand
- Aboitiz Power Corporation - Philippines
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- The State Trading Corporation of India Ltd
- Singapore Mercantile Exchange
- Mercator Lines Limited - India
- Ministry of Finance - Indonesia
- Central Java Power - Indonesia
- Romanian Commodities Exchange
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- San Jose City I Power Corp, Philippines
- Therma Luzon, Inc, Philippines
- IHS Mccloskey Coal Group - USA
- South Luzon Thermal Energy Corporation
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Metalloyd Limited - United Kingdom
- Wood Mackenzie - Singapore
- Price Waterhouse Coopers - Russia
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Globalindo Alam Lestari - Indonesia
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Leighton Contractors Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Aditya Birla Group - India
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Asmin Koalindo Tuhup - Indonesia
- Oldendorff Carriers - Singapore
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