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