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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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Thursday, 13 September 18
SHIPPING IS INCREASINGLY CAUGHT IN THE TRADE WAR LINE OF CROSSFIRE - PETER SAND
Once again, the already long list of tariffed goods has been made even longer. Many more commodities were hit on 23 August, but September is likely ...
Wednesday, 12 September 18
THE INTERRELATIONSHIP BETWEEN LETTERS OF INDEMNITY AND CHARTERPARTY "TIME BAR" PROVISIONS - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Introduction
A recent English Court of Appeal decision provides important guidance on the applicability of charterpar ...
Wednesday, 12 September 18
IS LNG POISED FOR A NEW GROWTH CYCLE? - WOOD MACKENZIE
Gas needs to work for its long-term sustainability. But the mood music is upbeat. Just 18 months ago the LNG market was depressed, anticipating an ...
Wednesday, 12 September 18
U.S. TOTAL COAL EXPORTS TO BE 107 MMST IN 2018 AND 101 MMST IN 2019 - EIA
EIA forecasts U.S. coal production will decline by 1% to 768 million short tons (MMst) in 2018, despite a 10% (10 MMst) increase in coal exports.
...
Wednesday, 12 September 18
MARINE BUNKERS: THE END OF THE WORLD AS WE KNOW IT - IBIA
KNOWLEDGE TO ELEVATE
The world of bunkers is heading for rapid and fundamental changes and not just because of the 0.50% sulphur cap in 2020. ...
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- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Power Finance Corporation Ltd., India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bulk Trading Sa - Switzerland
- San Jose City I Power Corp, Philippines
- Heidelberg Cement - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- The University of Queensland
- Wood Mackenzie - Singapore
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Ind-Barath Power Infra Limited - India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- PowerSource Philippines DevCo
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Tamil Nadu electricity Board
- Maheswari Brothers Coal Limited - India
- Ambuja Cements Ltd - India
- Larsen & Toubro Limited - India
- Alfred C Toepfer International GmbH - Germany
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Kapuas Tunggal Persada - Indonesia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Medco Energi Mining Internasional
- PetroVietnam Power Coal Import and Supply Company
- Renaissance Capital - South Africa
- Indika Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Australian Coal Association
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Indian Oil Corporation Limited
- Sical Logistics Limited - India
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- European Bulk Services B.V. - Netherlands
- Parliament of New Zealand
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Global Business Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Georgia Ports Authority, United States
- Central Electricity Authority - India
- Mercuria Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- SN Aboitiz Power Inc, Philippines
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Meralco Power Generation, Philippines
- Sakthi Sugars Limited - India
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- Indogreen Group - Indonesia
- VISA Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Australian Commodity Traders Exchange
- Antam Resourcindo - Indonesia
- Eastern Coal Council - USA
- Xindia Steels Limited - India
- Latin American Coal - Colombia
- Cement Manufacturers Association - India
- Sree Jayajothi Cements Limited - India
- Bukit Baiduri Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Chamber of Mines of South Africa
- Directorate General of MIneral and Coal - Indonesia
- Vedanta Resources Plc - India
- Singapore Mercantile Exchange
- Sindya Power Generating Company Private Ltd
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Vizag Seaport Private Limited - India
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- White Energy Company Limited
- Romanian Commodities Exchange
- Coastal Gujarat Power Limited - India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- GVK Power & Infra Limited - India
- Videocon Industries ltd - India
- Mercator Lines Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Dalmia Cement Bharat India
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- SMG Consultants - Indonesia
- Standard Chartered Bank - UAE
- Directorate Of Revenue Intelligence - India
- Bahari Cakrawala Sebuku - Indonesia
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- Simpson Spence & Young - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Electricity Authority, New Zealand
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Indian Energy Exchange, India
- Meenaskhi Energy Private Limited - India
- Indonesian Coal Mining Association
- Malabar Cements Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Banpu Public Company Limited - Thailand
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Interocean Group of Companies - India
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Bhushan Steel Limited - India
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- CIMB Investment Bank - Malaysia
- Siam City Cement PLC, Thailand
- ICICI Bank Limited - India
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Grasim Industreis Ltd - India
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Planning Commission, India
- Makarim & Taira - Indonesia
- TeaM Sual Corporation - Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Binh Thuan Hamico - Vietnam
- Jindal Steel & Power Ltd - India
- Manunggal Multi Energi - Indonesia
- Leighton Contractors Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- Deloitte Consulting - India
- GMR Energy Limited - India
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- Riau Bara Harum - Indonesia
- Barasentosa Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Rashtriya Ispat Nigam Limited - India
- Economic Council, Georgia
- Siam City Cement - Thailand
- PTC India Limited - India
- Borneo Indobara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
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