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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, 29 October 18
SUPRAMAX: THE ASIAN AREA SAW FALLING RATES, WITH A 61,000DWT FIXING DELIVERY KOHSICHANG TRIP VIA INDONESIA, REDELIVERY INDIA, AT $10,500 - BALTIC BRIEFING
Capesize
A market of two halves for most of the week with rates in the Atlantic firming and easing in the East for most of the week, but then, ...
Friday, 26 October 18
SHIP OPERATING COSTS EXPECTED TO RISE IN 2018 AND 2019 - MOORE STEPHENS
Total vessel operating costs in the shipping industry are expected to rise by 2.7% in 2018 and by 3.1% in 2019, according to our latest survey.
...
Friday, 26 October 18
SEVERAL CONTRACTIONS IN GLOBAL STEEL PRODUCTION - JEFFREY LANDSBERG
World Steel Association data released today shows that global crude steel production totaled approximately 151.7 million tons in September. T ...
Thursday, 25 October 18
WHAT DOES THE "IMO 2020" REGULATION REALLY SAY? A QUICK GUIDE - BIMCO
KNOWLEDGE TO ELEVATE
The shipping industry has all eyes firmly fixed on the topic, but what exactly do the “IMO 2020” global sulph ...
Wednesday, 24 October 18
MARKET INSIGHT - NASSOS SOULAKIS
Looking at 2018 SnP activity, it is evident that Greek, Chinese and North European (German and Norwegian) owners are the top buying nationalities, ...
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- Vijayanagar Sugar Pvt Ltd - India
- White Energy Company Limited
- Simpson Spence & Young - Indonesia
- Heidelberg Cement - Germany
- Globalindo Alam Lestari - Indonesia
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- CIMB Investment Bank - Malaysia
- Vizag Seaport Private Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Orica Mining Services - Indonesia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- McConnell Dowell - Australia
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Renaissance Capital - South Africa
- Indo Tambangraya Megah - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mercator Lines Limited - India
- Maheswari Brothers Coal Limited - India
- Borneo Indobara - Indonesia
- San Jose City I Power Corp, Philippines
- Sojitz Corporation - Japan
- Bhoruka Overseas - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Barasentosa Lestari - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Karaikal Port Pvt Ltd - India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Romanian Commodities Exchange
- Videocon Industries ltd - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Essar Steel Hazira Ltd - India
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- Savvy Resources Ltd - HongKong
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Jindal Steel & Power Ltd - India
- Wood Mackenzie - Singapore
- Meralco Power Generation, Philippines
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Energy Development Corp, Philippines
- Bulk Trading Sa - Switzerland
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- Interocean Group of Companies - India
- Gujarat Electricity Regulatory Commission - India
- Intertek Mineral Services - Indonesia
- Chamber of Mines of South Africa
- Trasteel International SA, Italy
- Aditya Birla Group - India
- Bangladesh Power Developement Board
- VISA Power Limited - India
- Aboitiz Power Corporation - Philippines
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Mercuria Energy - Indonesia
- Ministry of Mines - Canada
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- Straits Asia Resources Limited - Singapore
- Riau Bara Harum - Indonesia
- Parliament of New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- International Coal Ventures Pvt Ltd - India
- Power Finance Corporation Ltd., India
- GVK Power & Infra Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- Merrill Lynch Commodities Europe
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Indonesian Coal Mining Association
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- Lanco Infratech Ltd - India
- OPG Power Generation Pvt Ltd - India
- Indian Oil Corporation Limited
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Bahari Cakrawala Sebuku - Indonesia
- Cement Manufacturers Association - India
- PetroVietnam Power Coal Import and Supply Company
- Jorong Barutama Greston.PT - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Therma Luzon, Inc, Philippines
- Samtan Co., Ltd - South Korea
- Madhucon Powers Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Baramulti Group, Indonesia
- Posco Energy - South Korea
- Sarangani Energy Corporation, Philippines
- Larsen & Toubro Limited - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- SMC Global Power, Philippines
- PTC India Limited - India
- CNBM International Corporation - China
- Bayan Resources Tbk. - Indonesia
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Mjunction Services Limited - India
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Wilmar Investment Holdings
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Alfred C Toepfer International GmbH - Germany
- The Treasury - Australian Government
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The State Trading Corporation of India Ltd
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Indian Energy Exchange, India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Thiess Contractors Indonesia
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Bhatia International Limited - India
- Rashtriya Ispat Nigam Limited - India
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Economic Council, Georgia
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Oldendorff Carriers - Singapore
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Sical Logistics Limited - India
- Central Java Power - Indonesia
- Goldman Sachs - Singapore
- Energy Link Ltd, New Zealand
- Altura Mining Limited, Indonesia
- Singapore Mercantile Exchange
- Tata Chemicals Ltd - India
- GMR Energy Limited - India
- Kideco Jaya Agung - Indonesia
- Xindia Steels Limited - India
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
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