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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, 29 October 18
IMPLEMENTATION OF SULPHUR 2020 LIMIT - CARRIAGE BAN ADOPTED - IMO
An amendment to support consistent implementation of the forthcoming 0.50% limit on sulphur in ships fuel oil was adopted by the International Mari ...
Monday, 29 October 18
SUPRAMAX: THE ASIAN AREA SAW FALLING RATES, WITH A 61,000DWT FIXING DELIVERY KOHSICHANG TRIP VIA INDONESIA, REDELIVERY INDIA, AT $10,500 - BALTIC BRIEFING
Capesize
A market of two halves for most of the week with rates in the Atlantic firming and easing in the East for most of the week, but then, ...
Friday, 26 October 18
SHIP OPERATING COSTS EXPECTED TO RISE IN 2018 AND 2019 - MOORE STEPHENS
Total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019, according to our latest survey.
...
Friday, 26 October 18
SEVERAL CONTRACTIONS IN GLOBAL STEEL PRODUCTION - JEFFREY LANDSBERG
World Steel Association data released today shows that global crude steel production totaled approximately 151.7 million tons in September. T ...
Thursday, 25 October 18
WHAT DOES THE "IMO 2020" REGULATION REALLY SAY? A QUICK GUIDE - BIMCO
KNOWLEDGE TO ELEVATE
The shipping industry has all eyes firmly fixed on the topic, but what exactly do the “IMO 2020” global sulph ...
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- Vizag Seaport Private Limited - India
- Deloitte Consulting - India
- Edison Trading Spa - Italy
- Parliament of New Zealand
- Coal and Oil Company - UAE
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Metalloyd Limited - United Kingdom
- London Commodity Brokers - England
- Siam City Cement - Thailand
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Electricity Generating Authority of Thailand
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Ambuja Cements Ltd - India
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CIMB Investment Bank - Malaysia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhoruka Overseas - Indonesia
- OPG Power Generation Pvt Ltd - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Standard Chartered Bank - UAE
- Malabar Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Bhatia International Limited - India
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- Offshore Bulk Terminal Pte Ltd, Singapore
- Independent Power Producers Association of India
- Ministry of Transport, Egypt
- Bayan Resources Tbk. - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Sindya Power Generating Company Private Ltd
- Xindia Steels Limited - India
- Global Coal Blending Company Limited - Australia
- Straits Asia Resources Limited - Singapore
- Parry Sugars Refinery, India
- Australian Coal Association
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Central Electricity Authority - India
- Planning Commission, India
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Commonwealth Bank - Australia
- CNBM International Corporation - China
- Sakthi Sugars Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Tata Chemicals Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Ind-Barath Power Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Wilmar Investment Holdings
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- Central Java Power - Indonesia
- Orica Mining Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- GMR Energy Limited - India
- Electricity Authority, New Zealand
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- SN Aboitiz Power Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- Manunggal Multi Energi - Indonesia
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Oldendorff Carriers - Singapore
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Baramulti Group, Indonesia
- Trasteel International SA, Italy
- Antam Resourcindo - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Madhucon Powers Ltd - India
- Star Paper Mills Limited - India
- Bukit Baiduri Energy - Indonesia
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Chettinad Cement Corporation Ltd - India
- Simpson Spence & Young - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PowerSource Philippines DevCo
- Indogreen Group - Indonesia
- Carbofer General Trading SA - India
- Bharathi Cement Corporation - India
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- Agrawal Coal Company - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Mercator Lines Limited - India
- Sarangani Energy Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Africa Commodities Group - South Africa
- Samtan Co., Ltd - South Korea
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Salva Resources Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- SMC Global Power, Philippines
- Ceylon Electricity Board - Sri Lanka
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- VISA Power Limited - India
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Borneo Indobara - Indonesia
- Chamber of Mines of South Africa
- India Bulls Power Limited - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- LBH Netherlands Bv - Netherlands
- Karaikal Port Pvt Ltd - India
- San Jose City I Power Corp, Philippines
- New Zealand Coal & Carbon
- South Luzon Thermal Energy Corporation
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Kobexindo Tractors - Indoneisa
- Directorate Of Revenue Intelligence - India
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- GVK Power & Infra Limited - India
- Dalmia Cement Bharat India
- Posco Energy - South Korea
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Kepco SPC Power Corporation, Philippines
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Marubeni Corporation - India
- Bukit Makmur.PT - Indonesia
- Interocean Group of Companies - India
- Miang Besar Coal Terminal - Indonesia
- Georgia Ports Authority, United States
- AsiaOL BioFuels Corp., Philippines
- Mercuria Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- Binh Thuan Hamico - Vietnam
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Therma Luzon, Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
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