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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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Wednesday, 17 October 18
SHIPPING MARKET INSIGHT - TIMOS PAPADIMITRIOU
In the last three months approximately 72 tankers changed hands involving ships larger than 33kdwt up to VLCC. 43 of those vessels had to do ...
Tuesday, 16 October 18
A PRACTICAL OVERVIEW OF THE IMO 2020 SULPHUR CAP - CLYDE&CO
KNOWLEDGE TO ELEVATE
With less than eighteen months before Regulation 14.1.3 of Annex VI of the MARPOL Convention comes into effect, there are ...
Saturday, 13 October 18
SUPRAMAX: SIGNIFICANT ACTIVITY IN THE INDIAN OCEAN WAS EVIDENT AND RATES JUMPED - BALTIC BRIEFING
Capesize
A sharp reversal of fortunes for the big ships as the week closed after a depressed beginning. To start with drops were sudden, with t ...
Wednesday, 10 October 18
SHIPPING MARKET INSIGHT - ILIAS M. LALAOUNIS
During the end of last month the BHSI was hovering around 630 points, while the last observed sale on a 10-yr old Japanese Handy was the M/V Van Im ...
Monday, 08 October 18
INDONESIAN THERMAL COAL PRICE REFERENCE FELL 3.74% IN OCTOBER 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down the benchmark price of Indonesian thermal ...
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- Orica Australia Pty. Ltd.
- Parliament of New Zealand
- Planning Commission, India
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Electricity Authority, New Zealand
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Vedanta Resources Plc - India
- Antam Resourcindo - Indonesia
- Metalloyd Limited - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Intertek Mineral Services - Indonesia
- IEA Clean Coal Centre - UK
- International Coal Ventures Pvt Ltd - India
- Malabar Cements Ltd - India
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Jindal Steel & Power Ltd - India
- GAC Shipping (India) Pvt Ltd
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Port Waratah Coal Services - Australia
- LBH Netherlands Bv - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Bukit Asam (Persero) Tbk - Indonesia
- Kideco Jaya Agung - Indonesia
- Essar Steel Hazira Ltd - India
- Samtan Co., Ltd - South Korea
- Thiess Contractors Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Price Waterhouse Coopers - Russia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Billiton Holdings Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Energy Development Corp, Philippines
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Meenaskhi Energy Private Limited - India
- Rio Tinto Coal - Australia
- Alfred C Toepfer International GmbH - Germany
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Heidelberg Cement - Germany
- Deloitte Consulting - India
- Sojitz Corporation - Japan
- Neyveli Lignite Corporation Ltd, - India
- Interocean Group of Companies - India
- Carbofer General Trading SA - India
- Energy Link Ltd, New Zealand
- Ceylon Electricity Board - Sri Lanka
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Economic Council, Georgia
- India Bulls Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Jaiprakash Power Ventures ltd
- Edison Trading Spa - Italy
- New Zealand Coal & Carbon
- Riau Bara Harum - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Aditya Birla Group - India
- Toyota Tsusho Corporation, Japan
- GN Power Mariveles Coal Plant, Philippines
- Eastern Energy - Thailand
- Manunggal Multi Energi - Indonesia
- Wood Mackenzie - Singapore
- GVK Power & Infra Limited - India
- Indika Energy - Indonesia
- Singapore Mercantile Exchange
- Larsen & Toubro Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Directorate General of MIneral and Coal - Indonesia
- The State Trading Corporation of India Ltd
- Uttam Galva Steels Limited - India
- Independent Power Producers Association of India
- Agrawal Coal Company - India
- Karbindo Abesyapradhi - Indoneisa
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Sical Logistics Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- London Commodity Brokers - England
- Indonesian Coal Mining Association
- Xindia Steels Limited - India
- Commonwealth Bank - Australia
- Sindya Power Generating Company Private Ltd
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Ministry of Finance - Indonesia
- Australian Commodity Traders Exchange
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Chamber of Mines of South Africa
- The University of Queensland
- Semirara Mining Corp, Philippines
- Salva Resources Pvt Ltd - India
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Maheswari Brothers Coal Limited - India
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- Banpu Public Company Limited - Thailand
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- European Bulk Services B.V. - Netherlands
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Central Java Power - Indonesia
- GMR Energy Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- SMG Consultants - Indonesia
- Australian Coal Association
- Globalindo Alam Lestari - Indonesia
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Mercator Lines Limited - India
- Barasentosa Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Central Electricity Authority - India
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Cement Manufacturers Association - India
- PowerSource Philippines DevCo
- Coalindo Energy - Indonesia
- Bukit Baiduri Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Directorate Of Revenue Intelligence - India
- Kartika Selabumi Mining - Indonesia
- Bayan Resources Tbk. - Indonesia
- VISA Power Limited - India
- Savvy Resources Ltd - HongKong
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Karaikal Port Pvt Ltd - India
- Medco Energi Mining Internasional
- Minerals Council of Australia
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Vizag Seaport Private Limited - India
- Straits Asia Resources Limited - Singapore
- Coal and Oil Company - UAE
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- Global Green Power PLC Corporation, Philippines
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Therma Luzon, Inc, Philippines
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Miang Besar Coal Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
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