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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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- Commonwealth Bank - Australia
- Cigading International Bulk Terminal - Indonesia
- Australian Commodity Traders Exchange
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Jaiprakash Power Ventures ltd
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- VISA Power Limited - India
- Posco Energy - South Korea
- Kepco SPC Power Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Jindal Steel & Power Ltd - India
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Mintek Dendrill Indonesia
- Meralco Power Generation, Philippines
- TeaM Sual Corporation - Philippines
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhoruka Overseas - Indonesia
- Videocon Industries ltd - India
- Latin American Coal - Colombia
- ASAPP Information Group - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Antam Resourcindo - Indonesia
- Renaissance Capital - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Ambuja Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Salva Resources Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Holcim Trading Pte Ltd - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- Heidelberg Cement - Germany
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- GVK Power & Infra Limited - India
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Directorate Of Revenue Intelligence - India
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Gujarat Sidhee Cement - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Global Coal Blending Company Limited - Australia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Coal and Oil Company - UAE
- GMR Energy Limited - India
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- CNBM International Corporation - China
- Cement Manufacturers Association - India
- Karbindo Abesyapradhi - Indoneisa
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Agrawal Coal Company - India
- Kideco Jaya Agung - Indonesia
- South Luzon Thermal Energy Corporation
- Banpu Public Company Limited - Thailand
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Kobexindo Tractors - Indoneisa
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Minerals Council of Australia
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- Trasteel International SA, Italy
- Uttam Galva Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Grasim Industreis Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Leighton Contractors Pty Ltd - Australia
- Bharathi Cement Corporation - India
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Savvy Resources Ltd - HongKong
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- ICICI Bank Limited - India
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Electricity Authority, New Zealand
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Bayan Resources Tbk. - Indonesia
- PTC India Limited - India
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- McConnell Dowell - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sojitz Corporation - Japan
- Global Green Power PLC Corporation, Philippines
- Thiess Contractors Indonesia
- Mjunction Services Limited - India
- Oldendorff Carriers - Singapore
- Indika Energy - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Orica Mining Services - Indonesia
- Borneo Indobara - Indonesia
- Kaltim Prima Coal - Indonesia
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Bangladesh Power Developement Board
- Sarangani Energy Corporation, Philippines
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Eastern Energy - Thailand
- Price Waterhouse Coopers - Russia
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- GAC Shipping (India) Pvt Ltd
- CIMB Investment Bank - Malaysia
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Aboitiz Power Corporation - Philippines
- Directorate General of MIneral and Coal - Indonesia
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Energy Development Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- London Commodity Brokers - England
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Australian Coal Association
- Semirara Mining Corp, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
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