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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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Monday, 19 November 18
SUPRAMAX: THE BSI CONTINUED TO FALL LAST WEEK, ESPECIALLY THE ASIAN ROUTES - BALTIC BRIEFING
Capesize
After a cut throat couple of weeks, the market finally appeared to have found a floor and rates ticked up. Those analysts that predict ...
Sunday, 18 November 18
COAL STOCKS IN A THIRD OF NTPC PLANTS CLOSE TO NIL - FINANCIAL EXPRESS
Coal supply shortage continues to haunt NTPC, the country’s largest power generator, with latest government data showing 31% of the company&r ...
Thursday, 15 November 18
OIL MARKET REPORT: HEEDING THE WARNINGS - IEA
In last month’s Report, we noted that since the middle of the year oil supply had increased sharply, with gains in the Middle East, Russia an ...
Wednesday, 14 November 18
BIMCO ADOPTS 2020 BUNKER CLAUSES
BIMCO has developed two 2020 bunker clauses that deal with general compliance and the transitional period for an early December release.
...
Wednesday, 14 November 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The shipping industry is going through an interesting period across all markets. Since the end of last year, the Dry Baltic Index has been showing ...
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- Indo Tambangraya Megah - Indonesia
- Kideco Jaya Agung - Indonesia
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Grasim Industreis Ltd - India
- Barasentosa Lestari - Indonesia
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Semirara Mining Corp, Philippines
- VISA Power Limited - India
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Neyveli Lignite Corporation Ltd, - India
- Merrill Lynch Commodities Europe
- Semirara Mining and Power Corporation, Philippines
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Kumho Petrochemical, South Korea
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- Carbofer General Trading SA - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Renaissance Capital - South Africa
- Makarim & Taira - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- Jaiprakash Power Ventures ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Gujarat Electricity Regulatory Commission - India
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- Pendopo Energi Batubara - Indonesia
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Simpson Spence & Young - Indonesia
- Thiess Contractors Indonesia
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Bayan Resources Tbk. - Indonesia
- Indian Oil Corporation Limited
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indian Energy Exchange, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- Jindal Steel & Power Ltd - India
- Essar Steel Hazira Ltd - India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- International Coal Ventures Pvt Ltd - India
- Central Electricity Authority - India
- Attock Cement Pakistan Limited
- Gujarat Mineral Development Corp Ltd - India
- MS Steel International - UAE
- San Jose City I Power Corp, Philippines
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Cigading International Bulk Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- Anglo American - United Kingdom
- Heidelberg Cement - Germany
- PTC India Limited - India
- Leighton Contractors Pty Ltd - Australia
- Indika Energy - Indonesia
- Energy Development Corp, Philippines
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Thai Mozambique Logistica
- Ministry of Transport, Egypt
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Bhoruka Overseas - Indonesia
- Planning Commission, India
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Rio Tinto Coal - Australia
- GVK Power & Infra Limited - India
- Indogreen Group - Indonesia
- Standard Chartered Bank - UAE
- Tata Chemicals Ltd - India
- IEA Clean Coal Centre - UK
- TeaM Sual Corporation - Philippines
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Economic Council, Georgia
- Timah Investasi Mineral - Indoneisa
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Parliament of New Zealand
- Bhatia International Limited - India
- India Bulls Power Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Sakthi Sugars Limited - India
- Mintek Dendrill Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Mercuria Energy - Indonesia
- South Luzon Thermal Energy Corporation
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Orica Mining Services - Indonesia
- Coal and Oil Company - UAE
- Karbindo Abesyapradhi - Indoneisa
- Bangladesh Power Developement Board
- Sindya Power Generating Company Private Ltd
- Bhushan Steel Limited - India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Sree Jayajothi Cements Limited - India
- Siam City Cement PLC, Thailand
- Savvy Resources Ltd - HongKong
- Australian Commodity Traders Exchange
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Star Paper Mills Limited - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- The University of Queensland
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- GAC Shipping (India) Pvt Ltd
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Mines - Canada
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Intertek Mineral Services - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Bukit Baiduri Energy - Indonesia
- Mercator Lines Limited - India
- Sical Logistics Limited - India
- Formosa Plastics Group - Taiwan
- Globalindo Alam Lestari - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Meenaskhi Energy Private Limited - India
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Global Coal Blending Company Limited - Australia
- Ambuja Cements Ltd - India
- Interocean Group of Companies - India
- CNBM International Corporation - China
- Meralco Power Generation, Philippines
- Maheswari Brothers Coal Limited - India
- Antam Resourcindo - Indonesia
- Edison Trading Spa - Italy
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
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