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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, 13 November 18
INDIA: POWER DEMAND UP; COAL STOCKS AT MINES AT A 5-YEAR LOW - FINANCIAL EXPRESS
Stocks at Coal India mines plunged to a five-year low of 21 million tonne (mt) in October, as a sudden surge in demand for the fuel from the power ...
Monday, 12 November 18
COAL BUSINESS REMAINS PROSPECTIVE - ANTARA
Coal business happened to be sluggish in the 2012-2015 period because coal prices in the world market fell sharply, but it has begun to crawl up si ...
Monday, 12 November 18
INDONESIA'S HBA ENDS DECLINE IN NOVEMBER
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
Wednesday, 07 November 18
SHIPPING MARKET INSIGHT - VASILIS MOIRIS
This has been another active week in the second-hand market for both the dry bulk and tanker sectors. Buying interest has recently increased, which ...
Monday, 05 November 18
TIGHTER FUEL RULES COULD RAISE SHIPOWNERS' COSTS AND CAPEX - FITCH RATINGS
More stringent fuel regulations regarding sulphur content could significantly increase global shipping companies’ operating costs and capex n ...
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- The Treasury - Australian Government
- Jorong Barutama Greston.PT - Indonesia
- Formosa Plastics Group - Taiwan
- India Bulls Power Limited - India
- Mercator Lines Limited - India
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Attock Cement Pakistan Limited
- Power Finance Corporation Ltd., India
- Rashtriya Ispat Nigam Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Petron Corporation, Philippines
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Australian Coal Association
- Minerals Council of Australia
- Goldman Sachs - Singapore
- Africa Commodities Group - South Africa
- Billiton Holdings Pty Ltd - Australia
- McConnell Dowell - Australia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Siam City Cement - Thailand
- Kobexindo Tractors - Indoneisa
- Coastal Gujarat Power Limited - India
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- Pendopo Energi Batubara - Indonesia
- Deloitte Consulting - India
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- Vizag Seaport Private Limited - India
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Bharathi Cement Corporation - India
- Agrawal Coal Company - India
- Therma Luzon, Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Bhoruka Overseas - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- PowerSource Philippines DevCo
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Carbofer General Trading SA - India
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- Bhushan Steel Limited - India
- Kartika Selabumi Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- SMC Global Power, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Indika Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Port Waratah Coal Services - Australia
- Meralco Power Generation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Electricity Authority, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Directorate General of MIneral and Coal - Indonesia
- Grasim Industreis Ltd - India
- The State Trading Corporation of India Ltd
- GVK Power & Infra Limited - India
- Vedanta Resources Plc - India
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Commonwealth Bank - Australia
- Meenaskhi Energy Private Limited - India
- Dalmia Cement Bharat India
- Mjunction Services Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- London Commodity Brokers - England
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Mintek Dendrill Indonesia
- Simpson Spence & Young - Indonesia
- Timah Investasi Mineral - Indoneisa
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- SN Aboitiz Power Inc, Philippines
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Electricity Generating Authority of Thailand
- Sakthi Sugars Limited - India
- Toyota Tsusho Corporation, Japan
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Bank of Tokyo Mitsubishi UFJ Ltd
- TeaM Sual Corporation - Philippines
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- VISA Power Limited - India
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Aboitiz Power Corporation - Philippines
- Global Business Power Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Iligan Light & Power Inc, Philippines
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Parliament of New Zealand
- Barasentosa Lestari - Indonesia
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- Posco Energy - South Korea
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- New Zealand Coal & Carbon
- White Energy Company Limited
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Bayan Resources Tbk. - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Economic Council, Georgia
- Planning Commission, India
- Mercuria Energy - Indonesia
- Borneo Indobara - Indonesia
- Australian Commodity Traders Exchange
- Rio Tinto Coal - Australia
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Sojitz Corporation - Japan
- Parry Sugars Refinery, India
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Ministry of Finance - Indonesia
- Kideco Jaya Agung - Indonesia
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Coalindo Energy - Indonesia
- Standard Chartered Bank - UAE
- IEA Clean Coal Centre - UK
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Romanian Commodities Exchange
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Star Paper Mills Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CNBM International Corporation - China
- Kohat Cement Company Ltd. - Pakistan
- Trasteel International SA, Italy
- Bangladesh Power Developement Board
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Interocean Group of Companies - India
- Singapore Mercantile Exchange
- PetroVietnam Power Coal Import and Supply Company
- Baramulti Group, Indonesia
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Price Waterhouse Coopers - Russia
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- South Luzon Thermal Energy Corporation
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