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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, 27 November 18
PANAMAX AND SUPRAMAX INDICES WITNESSED A DECLINE OF JUST BELOW 14% IN THEIR MEAN ON A MONTH-ON-MONTH COMPARISON - ALLIED SHIPPING
A month of sharp corrections and great asymmetries for the dry bulk sector, with the overall overview of the market shipping rapidly from a state o ...
Monday, 26 November 18
SUPRAMAX: THE ASIAN MARKET STALLED THIS WEEK WITH A BUILD-UP OF TONNAGE - BALTIC BRIEFING
Capesize
It was a positive end to the week, with West Australia/China making significant gains and firing owners’ resolve. There was talk ...
Friday, 23 November 18
GOLDEN ENERGY'S POTENTIAL ACQUISITION OF STANMORE CREDIT POSITIVE - FITCH RATINGS
Golden Energy and Resources Limited's (GEAR, B+/Positive) potential acquisition of Stanmore Coal will help the company diversify its coal opera ...
Friday, 23 November 18
ASSOCIATION CALLS FOR REVISION OF DMO SCHEME FOR COAL - JP
The Indonesian Coal Mining Association (APBI) has called on the government to revise the domestic market obligation (DMO) scheme for coal, which re ...
Friday, 23 November 18
INDONESIA'S REVENUES FROM MINERAL AND COAL INCREASE TO US$ 2.858 BILLION - ANTARA
Indonesia`s non-tax state revenues from the mineral and coal sub-sector reached Rp 41.77 trillion (approximately US$ 2.858 Billion) as of Nov 16, 2 ...
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- Bahari Cakrawala Sebuku - Indonesia
- Central Electricity Authority - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Finance - Indonesia
- Savvy Resources Ltd - HongKong
- Makarim & Taira - Indonesia
- VISA Power Limited - India
- CNBM International Corporation - China
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Orica Australia Pty. Ltd.
- Baramulti Group, Indonesia
- IEA Clean Coal Centre - UK
- Xindia Steels Limited - India
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Pendopo Energi Batubara - Indonesia
- Altura Mining Limited, Indonesia
- Kartika Selabumi Mining - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Simpson Spence & Young - Indonesia
- Intertek Mineral Services - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Global Business Power Corporation, Philippines
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- PTC India Limited - India
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- SN Aboitiz Power Inc, Philippines
- Economic Council, Georgia
- GVK Power & Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- McConnell Dowell - Australia
- Energy Link Ltd, New Zealand
- Therma Luzon, Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhushan Steel Limited - India
- Bharathi Cement Corporation - India
- Power Finance Corporation Ltd., India
- Electricity Authority, New Zealand
- Anglo American - United Kingdom
- Parry Sugars Refinery, India
- India Bulls Power Limited - India
- Singapore Mercantile Exchange
- Coalindo Energy - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Heidelberg Cement - Germany
- Trasteel International SA, Italy
- Electricity Generating Authority of Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Bayan Resources Tbk. - Indonesia
- Straits Asia Resources Limited - Singapore
- Vedanta Resources Plc - India
- GN Power Mariveles Coal Plant, Philippines
- Sinarmas Energy and Mining - Indonesia
- Renaissance Capital - South Africa
- TeaM Sual Corporation - Philippines
- Medco Energi Mining Internasional
- Grasim Industreis Ltd - India
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Mercuria Energy - Indonesia
- Indian Energy Exchange, India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Parliament of New Zealand
- Vizag Seaport Private Limited - India
- MS Steel International - UAE
- Salva Resources Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Global Green Power PLC Corporation, Philippines
- Ministry of Transport, Egypt
- Metalloyd Limited - United Kingdom
- Banpu Public Company Limited - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Bukit Baiduri Energy - Indonesia
- Attock Cement Pakistan Limited
- Antam Resourcindo - Indonesia
- Posco Energy - South Korea
- Global Coal Blending Company Limited - Australia
- Sojitz Corporation - Japan
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Oldendorff Carriers - Singapore
- IHS Mccloskey Coal Group - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Binh Thuan Hamico - Vietnam
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Price Waterhouse Coopers - Russia
- Coastal Gujarat Power Limited - India
- Bangladesh Power Developement Board
- Orica Mining Services - Indonesia
- The Treasury - Australian Government
- Kohat Cement Company Ltd. - Pakistan
- White Energy Company Limited
- Jaiprakash Power Ventures ltd
- The State Trading Corporation of India Ltd
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Bhatia International Limited - India
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- South Luzon Thermal Energy Corporation
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Riau Bara Harum - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Videocon Industries ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Cement Manufacturers Association - India
- Coal and Oil Company - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- PNOC Exploration Corporation - Philippines
- Georgia Ports Authority, United States
- Planning Commission, India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- ASAPP Information Group - India
- Interocean Group of Companies - India
- Latin American Coal - Colombia
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- LBH Netherlands Bv - Netherlands
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- San Jose City I Power Corp, Philippines
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- Madhucon Powers Ltd - India
- Independent Power Producers Association of India
- Jindal Steel & Power Ltd - India
- The University of Queensland
- Minerals Council of Australia
- Marubeni Corporation - India
- Eastern Energy - Thailand
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Australian Commodity Traders Exchange
- Mintek Dendrill Indonesia
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Leighton Contractors Pty Ltd - Australia
- Essar Steel Hazira Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Africa Commodities Group - South Africa
- Alfred C Toepfer International GmbH - Germany
- Energy Development Corp, Philippines
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- GMR Energy Limited - India
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
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