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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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Saturday, 22 September 18
SHIPOWNERS URGENTLY NEED A FUEL-MANAGEMENT PLAN - METTE KRONHOLM FRAENDE, BIMCO
With the majority of ship operators expected to choose low-sulphur fuel over scrubbers to comply with the new IMO sulphur cap regulation, all eyes ...
Saturday, 22 September 18
GERMANY'S MOVE TO SCRAP COAL WILL COST TAXPAYERS - BRIAN PARKIN | WILLIAM WILKES
Chancellor Angela Merkel’s plan to close Germany’s remaining coal-fired power stations will drive up subsidies for regions that mine th ...
Saturday, 22 September 18
FITCH RATINGS: WORLD GROWTH FORECAST CUT ON US-CHINA TRADE BATTLE
Protectionist US trade policies have now reached the point where they are materially affecting what remains a strong global growth outlook, with th ...
Tuesday, 18 September 18
COOLING OUTLOOK FOR COAL - KATE JONES
At a time of increasing focus on the renewables market as the world seeks to clean up its act to prevent climate change, what is the outlook like f ...
Monday, 17 September 18
GLENCORE RETURNS TO JAPAN COAL TALKS SCUPPERED BY HIGH PRICES - BLOOMBERG
Mining giant Glencore Plc and Japanese utilities have resumed thermal coal supply negotiations, restarting talks that fell apart earlier this year ...
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- Sinarmas Energy and Mining - Indonesia
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- AsiaOL BioFuels Corp., Philippines
- Binh Thuan Hamico - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
- The State Trading Corporation of India Ltd
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Bharathi Cement Corporation - India
- Kohat Cement Company Ltd. - Pakistan
- Lanco Infratech Ltd - India
- Ministry of Mines - Canada
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Indo Tambangraya Megah - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Madhucon Powers Ltd - India
- Altura Mining Limited, Indonesia
- Indian Oil Corporation Limited
- McConnell Dowell - Australia
- Interocean Group of Companies - India
- Ministry of Transport, Egypt
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Mjunction Services Limited - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Thiess Contractors Indonesia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Malabar Cements Ltd - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- Energy Link Ltd, New Zealand
- OPG Power Generation Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- Kobexindo Tractors - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Pipit Mutiara Jaya. PT, Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Carbofer General Trading SA - India
- Kumho Petrochemical, South Korea
- Coalindo Energy - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- India Bulls Power Limited - India
- Kideco Jaya Agung - Indonesia
- PNOC Exploration Corporation - Philippines
- Bangladesh Power Developement Board
- PetroVietnam Power Coal Import and Supply Company
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coal and Oil Company - UAE
- Indika Energy - Indonesia
- Mintek Dendrill Indonesia
- Semirara Mining Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Sindya Power Generating Company Private Ltd
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Indonesian Coal Mining Association
- Chamber of Mines of South Africa
- Gujarat Sidhee Cement - India
- Makarim & Taira - Indonesia
- The Treasury - Australian Government
- Antam Resourcindo - Indonesia
- Georgia Ports Authority, United States
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Eastern Energy - Thailand
- Jaiprakash Power Ventures ltd
- Petron Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Renaissance Capital - South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Electricity Authority, New Zealand
- Kaltim Prima Coal - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Sojitz Corporation - Japan
- Marubeni Corporation - India
- VISA Power Limited - India
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- MS Steel International - UAE
- Siam City Cement PLC, Thailand
- Essar Steel Hazira Ltd - India
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Latin American Coal - Colombia
- PTC India Limited - India
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- Salva Resources Pvt Ltd - India
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Therma Luzon, Inc, Philippines
- Formosa Plastics Group - Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Central Java Power - Indonesia
- Sical Logistics Limited - India
- Jindal Steel & Power Ltd - India
- Singapore Mercantile Exchange
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Deloitte Consulting - India
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Finance - Indonesia
- Energy Development Corp, Philippines
- Vizag Seaport Private Limited - India
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Star Paper Mills Limited - India
- Agrawal Coal Company - India
- Bahari Cakrawala Sebuku - Indonesia
- Goldman Sachs - Singapore
- Ambuja Cements Ltd - India
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Alfred C Toepfer International GmbH - Germany
- Edison Trading Spa - Italy
- White Energy Company Limited
- Port Waratah Coal Services - Australia
- Iligan Light & Power Inc, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Dalmia Cement Bharat India
- London Commodity Brokers - England
- IHS Mccloskey Coal Group - USA
- Jorong Barutama Greston.PT - Indonesia
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Ceylon Electricity Board - Sri Lanka
- SMG Consultants - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Trasteel International SA, Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Leighton Contractors Pty Ltd - Australia
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