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Monday, 05 November 18
TIGHTER FUEL RULES COULD RAISE SHIPOWNERS' COSTS AND CAPEX - FITCH RATINGS
 More stringent fuel regulations regarding sulphur content could significantly increase global shipping companies’ operating costs and capex needs, Fitch Ratings says. This may negatively affect their credit quality unless they manage to pass these costs to customers. Many shipping companies have started implementing fuel surcharges to recover costs associated with the new sulphur cap regulation, but their ability to sustain these will depend on market fundamentals, which remain challenging.
Competitive dynamics may change in the longer term with companies that are less financially able to absorb additional costs, especially given higher oil prices, withdrawing from the market. Reduced competitive pressures could then support a better supply-demand balance and allow the remaining shipping companies to raise freight rates in a bid to recoup some of the extra costs. The change in shipping fuel consumption could also affect refineries.
International Maritime Organization rules requiring ships to use fuel with sulphur content no higher than 0.5% (compared with 3.5% currently) come into effect on 1 January 2020. This means that shipping companies need to switch to higher-quality and more expensive marine fuel, use special equipment (“scrubbers”) to reduce sulphur emissions or switch to alternative fuels, such as liquefied natural gas (LNG). The new regulation will apply globally. Sulphur Emission Control Areas were established in a limited number of sea areas in 2005 and the sulphur content limit for fuel in those areas was tightened to 0.1% in 2015.
The global shipping industry fuel cost bill could increase by up to USD60 billion a year as a result of the new rules from 2020 for a total merchant fleet of 60,000 vessels, according to Wood Mackenzie. According to Maersk Line, its additional fuel costs would be over USD2 billion with a cost for the container shipping industry as a whole of up to USD15 billion, based on the difference in price of fuel with 3.5% and 0.5% sulphur content.
Scrubbers could be a viable alternative for some companies, but require several million dollars in upfront investments for each ship. Furthermore, scrubbers’ manufacturing and installing capacity is limited to fitting only about 2,000 scrubbers by 2020, according to Norwegian bank SEB. The LNG option will also require investments to retrofit ship engines and capacity to carry high-volume LNG tanks. In addition, LNG refuelling infrastructure may not be readily available globally.
The impact of the new regulation is unlikely to be uniform across segments. Ship owners that lease out ships with fuel costs borne by the charterer will be significantly less affected than operators that cover the fuel bill themselves if fuel surcharges related to the sulphur cap are not sustained.
If a significant proportion of shipping companies opt for higher-quality, low-sulphur fuel to comply with the regulations, the balance in the oil products market, and therefore refineries, may be affected. The 4 million barrel a day marine fuel market has been absorbing residue from the refining process, so there may be a need for refineries to adjust processes if demand for heavy fuel drops.
Demand for higher-quality fuel could lead to higher prices and widen pricing differentials between low- and high-sulphur products. Refineries with a higher share of middle distillates in their output, which are required to produce low-sulphur marine fuel, will benefit from the change. Low-complexity refineries will be hit and may need to invest in upgrades to shift their output towards middle distillates.
Source: Fitch Ratings
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Wednesday, 09 January 19
SHIPPING MARKET INSIGHT - INERMODAL
Paraphrasing the words of a Chief economist in a latest report of the World Bank Group, the current state of the shipping market very much resemble ...
Tuesday, 08 January 19
GLOBAL TRADE GROWTH EXPECTED TO REMAIN AT HEALTHY IN 2019 - ALLIED
2019 is here and we find ourselves with new challenges for the shipping industry and the global economy as whole, with market prospects being neith ...
Monday, 07 January 19
THE NEWCASTLE BENCHMARK SPOT PRICE IS FORECAST TO DECLINE FROM AN ESTIMATED AVERAGE OF US$105 A TONNE IN 2018 TO US$74 A TONNE IN 2020 - DEPARTMENT OF INDUSTRY, AUSTRALIA
• The Newcastle benchmark spot price is forecast to decline from an estimated average of US$105 a tonne in 2018 to US$74 a tonne in 2020, prim ...
Monday, 07 January 19
INDONESIAN GOVERNMENT DECLARED COAL BENCHMARK PRICE FALLS FOR FIFTH STRAIGHT MONTH IN JANUARY 2019; LOWEST SINCE JUNE 2018
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
Monday, 07 January 19
RUSSIA'S COAL PRODUCTION UP 5.9% TO 433.4 MLN TONNES IN 2018 - TASS
Coal production in Russia in 2018 increased by 5.9% year-on-year to 433.4 mln tonnes, according to the Central Dispatching Department of Fuel Energ ...
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- Pipit Mutiara Jaya. PT, Indonesia
- London Commodity Brokers - England
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- Sinarmas Energy and Mining - Indonesia
- Port Waratah Coal Services - Australia
- Goldman Sachs - Singapore
- Marubeni Corporation - India
- New Zealand Coal & Carbon
- Planning Commission, India
- Salva Resources Pvt Ltd - India
- Global Green Power PLC Corporation, Philippines
- ASAPP Information Group - India
- The University of Queensland
- Baramulti Group, Indonesia
- Intertek Mineral Services - Indonesia
- Kobexindo Tractors - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Aditya Birla Group - India
- San Jose City I Power Corp, Philippines
- Sree Jayajothi Cements Limited - India
- Eastern Energy - Thailand
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Ministry of Mines - Canada
- Bhoruka Overseas - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Bhatia International Limited - India
- Manunggal Multi Energi - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Posco Energy - South Korea
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- International Coal Ventures Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Jorong Barutama Greston.PT - Indonesia
- Essar Steel Hazira Ltd - India
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Dalmia Cement Bharat India
- Energy Link Ltd, New Zealand
- Ind-Barath Power Infra Limited - India
- Thiess Contractors Indonesia
- Bhushan Steel Limited - India
- SMG Consultants - Indonesia
- Therma Luzon, Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Vizag Seaport Private Limited - India
- Georgia Ports Authority, United States
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- South Luzon Thermal Energy Corporation
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- CNBM International Corporation - China
- Australian Commodity Traders Exchange
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Orica Australia Pty. Ltd.
- Edison Trading Spa - Italy
- Coal and Oil Company - UAE
- Anglo American - United Kingdom
- Cigading International Bulk Terminal - Indonesia
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Mercator Lines Limited - India
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- Alfred C Toepfer International GmbH - Germany
- Semirara Mining Corp, Philippines
- CIMB Investment Bank - Malaysia
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Larsen & Toubro Limited - India
- Power Finance Corporation Ltd., India
- Leighton Contractors Pty Ltd - Australia
- Sojitz Corporation - Japan
- Central Electricity Authority - India
- Bayan Resources Tbk. - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- White Energy Company Limited
- MS Steel International - UAE
- Malabar Cements Ltd - India
- Parry Sugars Refinery, India
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Standard Chartered Bank - UAE
- Kalimantan Lumbung Energi - Indonesia
- Simpson Spence & Young - Indonesia
- Kaltim Prima Coal - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Rio Tinto Coal - Australia
- Indo Tambangraya Megah - Indonesia
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- Uttam Galva Steels Limited - India
- PNOC Exploration Corporation - Philippines
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Toyota Tsusho Corporation, Japan
- Bulk Trading Sa - Switzerland
- Indian Energy Exchange, India
- Parliament of New Zealand
- Global Coal Blending Company Limited - Australia
- Gujarat Mineral Development Corp Ltd - India
- Trasteel International SA, Italy
- Lanco Infratech Ltd - India
- Chamber of Mines of South Africa
- Ambuja Cements Ltd - India
- Coastal Gujarat Power Limited - India
- OPG Power Generation Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tata Chemicals Ltd - India
- Kideco Jaya Agung - Indonesia
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Star Paper Mills Limited - India
- Price Waterhouse Coopers - Russia
- GMR Energy Limited - India
- Directorate General of MIneral and Coal - Indonesia
- GVK Power & Infra Limited - India
- Barasentosa Lestari - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- The Treasury - Australian Government
- Bukit Baiduri Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Mintek Dendrill Indonesia
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Medco Energi Mining Internasional
- Wood Mackenzie - Singapore
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Commonwealth Bank - Australia
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Krishnapatnam Port Company Ltd. - India
- TNB Fuel Sdn Bhd - Malaysia
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Gujarat Sidhee Cement - India
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Indian Oil Corporation Limited
- TeaM Sual Corporation - Philippines
- Economic Council, Georgia
- Ministry of Finance - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Formosa Plastics Group - Taiwan
- ICICI Bank Limited - India
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