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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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Monday, 19 November 18
SUPRAMAX: THE BSI CONTINUED TO FALL LAST WEEK, ESPECIALLY THE ASIAN ROUTES - BALTIC BRIEFING
Capesize
After a cut throat couple of weeks, the market finally appeared to have found a floor and rates ticked up. Those analysts that predict ...
Sunday, 18 November 18
COAL STOCKS IN A THIRD OF NTPC PLANTS CLOSE TO NIL - FINANCIAL EXPRESS
Coal supply shortage continues to haunt NTPC, the country’s largest power generator, with latest government data showing 31% of the company&r ...
Thursday, 15 November 18
OIL MARKET REPORT: HEEDING THE WARNINGS - IEA
In last month’s Report, we noted that since the middle of the year oil supply had increased sharply, with gains in the Middle East, Russia an ...
Wednesday, 14 November 18
BIMCO ADOPTS 2020 BUNKER CLAUSES
BIMCO has developed two 2020 bunker clauses that deal with general compliance and the transitional period for an early December release.
...
Wednesday, 14 November 18
SHIPPING MARKET INSIGHT - KONSTANTINOS KONTOMICHIS
The shipping industry is going through an interesting period across all markets. Since the end of last year, the Dry Baltic Index has been showing ...
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- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- Economic Council, Georgia
- Power Finance Corporation Ltd., India
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- Planning Commission, India
- Australian Commodity Traders Exchange
- Price Waterhouse Coopers - Russia
- Sical Logistics Limited - India
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Antam Resourcindo - Indonesia
- Vizag Seaport Private Limited - India
- Energy Link Ltd, New Zealand
- Renaissance Capital - South Africa
- Salva Resources Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Siam City Cement - Thailand
- Bharathi Cement Corporation - India
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Electricity Generating Authority of Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Romanian Commodities Exchange
- Malabar Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Energy Development Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Baramulti Group, Indonesia
- White Energy Company Limited
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- GMR Energy Limited - India
- Marubeni Corporation - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- The University of Queensland
- Interocean Group of Companies - India
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Altura Mining Limited, Indonesia
- Merrill Lynch Commodities Europe
- Kartika Selabumi Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bangladesh Power Developement Board
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- The State Trading Corporation of India Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- SMG Consultants - Indonesia
- Meenaskhi Energy Private Limited - India
- Ceylon Electricity Board - Sri Lanka
- PTC India Limited - India
- Port Waratah Coal Services - Australia
- Bukit Makmur.PT - Indonesia
- Directorate Of Revenue Intelligence - India
- Eastern Coal Council - USA
- Riau Bara Harum - Indonesia
- Aboitiz Power Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Sinarmas Energy and Mining - Indonesia
- Rio Tinto Coal - Australia
- Medco Energi Mining Internasional
- Vijayanagar Sugar Pvt Ltd - India
- Central Electricity Authority - India
- Anglo American - United Kingdom
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- IEA Clean Coal Centre - UK
- Trasteel International SA, Italy
- Ministry of Transport, Egypt
- Tata Chemicals Ltd - India
- CNBM International Corporation - China
- Edison Trading Spa - Italy
- CIMB Investment Bank - Malaysia
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Pendopo Energi Batubara - Indonesia
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- Karaikal Port Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Straits Asia Resources Limited - Singapore
- Kobexindo Tractors - Indoneisa
- Samtan Co., Ltd - South Korea
- TNB Fuel Sdn Bhd - Malaysia
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Commonwealth Bank - Australia
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- Mercator Lines Limited - India
- Carbofer General Trading SA - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Videocon Industries ltd - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Petron Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Indonesian Coal Mining Association
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Thai Mozambique Logistica
- Africa Commodities Group - South Africa
- Globalindo Alam Lestari - Indonesia
- Savvy Resources Ltd - HongKong
- Global Business Power Corporation, Philippines
- Xindia Steels Limited - India
- SN Aboitiz Power Inc, Philippines
- Agrawal Coal Company - India
- Leighton Contractors Pty Ltd - Australia
- Electricity Authority, New Zealand
- Essar Steel Hazira Ltd - India
- Heidelberg Cement - Germany
- Independent Power Producers Association of India
- Miang Besar Coal Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Latin American Coal - Colombia
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Sojitz Corporation - Japan
- India Bulls Power Limited - India
- Mercuria Energy - Indonesia
- SMC Global Power, Philippines
- Attock Cement Pakistan Limited
- Australian Coal Association
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Parliament of New Zealand
- Ministry of Finance - Indonesia
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Wood Mackenzie - Singapore
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- GVK Power & Infra Limited - India
- Jindal Steel & Power Ltd - India
- Dalmia Cement Bharat India
- Binh Thuan Hamico - Vietnam
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- New Zealand Coal & Carbon
- Maheswari Brothers Coal Limited - India
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Iligan Light & Power Inc, Philippines
- Eastern Energy - Thailand
- Deloitte Consulting - India
- Simpson Spence & Young - Indonesia
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Thiess Contractors Indonesia
- Georgia Ports Authority, United States
- ICICI Bank Limited - India
- Bukit Baiduri Energy - Indonesia
- MS Steel International - UAE
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Global Coal Blending Company Limited - Australia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Intertek Mineral Services - Indonesia
- Makarim & Taira - Indonesia
- Posco Energy - South Korea
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- OPG Power Generation Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
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