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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, 02 October 18
PANAMAX: A FURTHER RISE ACROSS ALL MAIN ROUTES THIS WEEK - ALLIED
Capesize
Finally an upward recovery was in sight in the spot market the past few days, after the prolonged negative pressure noted the weeks pr ...
Tuesday, 02 October 18
THE PRICE OF OIL CONTINUES ITS CLIMB AMIDST A SERIES OF CONCERNS REGARDING SUPPLY CONSTRAINTS - GEORGE LAZARIDIS
It has been a busy week for oil traders as the price of oil continues its climb amidst a series of concerns regarding supply constraints.
...
Tuesday, 02 October 18
INDONESIA GETS READY TO MEET INCREASED COAL DEMAND FROM CHINA, FREIGHT TO RESPOND - MIKAL BOE
Indonesian coal suppliers have increased their domestic coal production target by 4.5 percent from a previous 485 million tonnes to a massive 507 m ...
Monday, 01 October 18
SUPRAMAX: A 56,000 DWT FIXED DELIVERY FOR A SURABAYA TRIP WITH REDELIVERY TO WEST COAST INDIA AT $13,500 - THE BALTIC BRIEFING
Capesize
A stop-start market for the big ships with many expectations and few fulfilled. Holidays curtailed trading early in the week, but the ...
Monday, 01 October 18
A NO-DEAL BREXIT WILL UNDOUBTEDLY HAVE CONSEQUENCES FOR IMPORTERS AND EXPORTERS - KATE JONES, THE BALTIC BRIEFING
If you live in the UK, you might be finding it difficult to get away from the Brexit debate. “Hard Brexit”, “soft Brexit”, ...
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- Energy Development Corp, Philippines
- Krishnapatnam Port Company Ltd. - India
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Cement Manufacturers Association - India
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Agrawal Coal Company - India
- Baramulti Group, Indonesia
- Africa Commodities Group - South Africa
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Ambuja Cements Ltd - India
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Grasim Industreis Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Chamber of Mines of South Africa
- The University of Queensland
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Bhoruka Overseas - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Coalindo Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Vedanta Resources Plc - India
- Toyota Tsusho Corporation, Japan
- Thiess Contractors Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indian Energy Exchange, India
- Star Paper Mills Limited - India
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Eastern Coal Council - USA
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Global Business Power Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Mines - Canada
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Coastal Gujarat Power Limited - India
- Singapore Mercantile Exchange
- Riau Bara Harum - Indonesia
- Latin American Coal - Colombia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- South Luzon Thermal Energy Corporation
- Karaikal Port Pvt Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Parliament of New Zealand
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- McConnell Dowell - Australia
- Sojitz Corporation - Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Georgia Ports Authority, United States
- Xindia Steels Limited - India
- Sinarmas Energy and Mining - Indonesia
- Aditya Birla Group - India
- Aboitiz Power Corporation - Philippines
- Australian Commodity Traders Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Global Coal Blending Company Limited - Australia
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement PLC, Thailand
- Orica Australia Pty. Ltd.
- Kobexindo Tractors - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Globalindo Alam Lestari - Indonesia
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- The State Trading Corporation of India Ltd
- Orica Mining Services - Indonesia
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Attock Cement Pakistan Limited
- Malabar Cements Ltd - India
- Larsen & Toubro Limited - India
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Baiduri Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Romanian Commodities Exchange
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Sree Jayajothi Cements Limited - India
- Rashtriya Ispat Nigam Limited - India
- Simpson Spence & Young - Indonesia
- Chettinad Cement Corporation Ltd - India
- PNOC Exploration Corporation - Philippines
- Altura Mining Limited, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- CNBM International Corporation - China
- Billiton Holdings Pty Ltd - Australia
- Indo Tambangraya Megah - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Trasteel International SA, Italy
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Posco Energy - South Korea
- Dalmia Cement Bharat India
- Vizag Seaport Private Limited - India
- Uttam Galva Steels Limited - India
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- London Commodity Brokers - England
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Indika Energy - Indonesia
- Gujarat Sidhee Cement - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Therma Luzon, Inc, Philippines
- San Jose City I Power Corp, Philippines
- Indian Oil Corporation Limited
- Metalloyd Limited - United Kingdom
- Kartika Selabumi Mining - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Madhucon Powers Ltd - India
- Mjunction Services Limited - India
- Ceylon Electricity Board - Sri Lanka
- Port Waratah Coal Services - Australia
- Anglo American - United Kingdom
- MS Steel International - UAE
- Bayan Resources Tbk. - Indonesia
- Electricity Authority, New Zealand
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Ministry of Finance - Indonesia
- Energy Link Ltd, New Zealand
- Bangladesh Power Developement Board
- Renaissance Capital - South Africa
- Antam Resourcindo - Indonesia
- Coal and Oil Company - UAE
- Central Electricity Authority - India
- Planning Commission, India
- Borneo Indobara - Indonesia
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- Karbindo Abesyapradhi - Indoneisa
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
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