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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, 17 September 18
SMALL PERCENTAGE OF THE WORLD FLEET WILL FIT SCRUBBERS - FORECASTS : METTE KRONHOLM FRAENDE
In recent months, there have been numerous reports of a strong pick-up in demand for scrubbers. On 1 January 2020, however, the number of ships fit ...
Saturday, 15 September 18
POWERING SUSTAINABLE DEVELOPMENT WITH LOW EMISSION COAL TECHNOLOGIES - WCA
In its 5th Strategic Energy Plan this year (2018), the Japanese Cabinet recognised coal as an important energy resource, necessary for the country& ...
Friday, 14 September 18
10 YEARS ON FROM LEHMAN, HOW IS SHIPPING'S "HANGOVER"? - CLARKSONS RESEARCH
On 15th September 2008, the collapse of Lehman Brothers crystallised the financial crisis and the onset the worst economic downturn for a century. ...
Thursday, 13 September 18
OPEC SEES SLOWER 2019 OIL DEMAND GROWTH, WARNS ON ECONOMY
Crude Oil Price Movements
In August, the OPEC Reference Basket declined by $1.01 m-o-m, settling at $72.26/b. Crude oil futures were also down ...
Thursday, 13 September 18
SUPRAMAX: INDO-INDIA COAL RUN WAS FIXED CLOSE TO $16000 ON ULTRA - FEARNLEYS
Capesize
Rates took a further drop in the beginning of the week, to later find a floor around mid-week reaching mid USD 7 level for c5 and just ...
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- GAC Shipping (India) Pvt Ltd
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Kohat Cement Company Ltd. - Pakistan
- Makarim & Taira - Indonesia
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- TeaM Sual Corporation - Philippines
- Savvy Resources Ltd - HongKong
- Toyota Tsusho Corporation, Japan
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Energy - Thailand
- Gujarat Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- PTC India Limited - India
- The University of Queensland
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Attock Cement Pakistan Limited
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Lanco Infratech Ltd - India
- London Commodity Brokers - England
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Mercuria Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Central Electricity Authority - India
- Edison Trading Spa - Italy
- TNB Fuel Sdn Bhd - Malaysia
- Sinarmas Energy and Mining - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Kobexindo Tractors - Indoneisa
- IEA Clean Coal Centre - UK
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Renaissance Capital - South Africa
- Merrill Lynch Commodities Europe
- Semirara Mining Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Binh Thuan Hamico - Vietnam
- India Bulls Power Limited - India
- Ministry of Transport, Egypt
- Offshore Bulk Terminal Pte Ltd, Singapore
- CNBM International Corporation - China
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Gujarat Sidhee Cement - India
- Straits Asia Resources Limited - Singapore
- New Zealand Coal & Carbon
- Australian Coal Association
- Samtan Co., Ltd - South Korea
- Krishnapatnam Port Company Ltd. - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Thai Mozambique Logistica
- Formosa Plastics Group - Taiwan
- Bukit Baiduri Energy - Indonesia
- Bulk Trading Sa - Switzerland
- Pipit Mutiara Jaya. PT, Indonesia
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Siam City Cement - Thailand
- Independent Power Producers Association of India
- GMR Energy Limited - India
- White Energy Company Limited
- Pendopo Energi Batubara - Indonesia
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Kumho Petrochemical, South Korea
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Leighton Contractors Pty Ltd - Australia
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- Parry Sugars Refinery, India
- Maharashtra Electricity Regulatory Commission - India
- Directorate General of MIneral and Coal - Indonesia
- Sakthi Sugars Limited - India
- Bhushan Steel Limited - India
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- Port Waratah Coal Services - Australia
- Altura Mining Limited, Indonesia
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Globalindo Alam Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- AsiaOL BioFuels Corp., Philippines
- Indika Energy - Indonesia
- Xindia Steels Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- Antam Resourcindo - Indonesia
- Bangladesh Power Developement Board
- Simpson Spence & Young - Indonesia
- GVK Power & Infra Limited - India
- Chamber of Mines of South Africa
- Agrawal Coal Company - India
- Jindal Steel & Power Ltd - India
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Indogreen Group - Indonesia
- Anglo American - United Kingdom
- San Jose City I Power Corp, Philippines
- Bharathi Cement Corporation - India
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Alfred C Toepfer International GmbH - Germany
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Indonesian Coal Mining Association
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- IHS Mccloskey Coal Group - USA
- Kartika Selabumi Mining - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Neyveli Lignite Corporation Ltd, - India
- Deloitte Consulting - India
- Metalloyd Limited - United Kingdom
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Thiess Contractors Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cement Manufacturers Association - India
- MS Steel International - UAE
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Minerals Council of Australia
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- CIMB Investment Bank - Malaysia
- Kaltim Prima Coal - Indonesia
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- Petron Corporation, Philippines
- Latin American Coal - Colombia
- Jorong Barutama Greston.PT - Indonesia
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Ministry of Mines - Canada
- VISA Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- Coastal Gujarat Power Limited - India
- ICICI Bank Limited - India
- Ind-Barath Power Infra Limited - India
- Mercator Lines Limited - India
- Parliament of New Zealand
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Commodity Traders Exchange
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
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