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Friday, 20 March 20
VOLATILITY TO INCREASE IN TANKER MARKET FOLLOWING OIL PRICE WAR - DREWRY
Crude oil prices plunged by more than a third in the past week after OPEC+ failed to agree on production cut as demand softened in the aftermath of coronavirus (COVID-19). In its recent report, the IEA estimates global oil demand at 99.9 mbpd in 2020, which is around 90,000 bpd lower than in 2019 and a sharp downgrade from the agency’s forecast in February, which predicted global oil demand will grow 825,000 bpd in 2020.
The market expected OPEC+ to cut supply as the COVID-19 epidemic has spread from China to Europe, the Americas and Middle East. However, the negotiations failed due to strong resistance from Russia, which is of the view that the policy of capping production by OPEC+ producers to support the oil price is facilitating the development of US shale oil, with Russia losing its market share to increasing exports from the US.
After the failure of production cut talks in Vienna, Saudi Arabia started a price war by slashing the official selling prices for crude for key buyers in the international market and hinted at raising crude oil production to full capacity of 12.3 mbpd from April 2020. The ‘shock and awe’ tactics of Saudi Arabia could be a move to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to renegotiate the proposed production cut and then quickly reverse the production surge and thereafter implement the production cut if a deal is reached.
However, the recent move by Saudi Arabia could lead to:
a) Renegotiation on a production cut between OPEC and Russia
b) Prolonged price war between OPEC, Russia and US producers
If there are fresh negotiations to implement a production cut by OPEC+ producers to accommodate the effect of declining oil demand, crude oil prices are expected to normalise.
But if there is a prolonged price war between Saudi Arabia, Russia and US shale oil producers, lower crude oil prices will lead to some improvement in global oil demand and refinery runs. At the same time, onshore stocking activity will also increase, especially in countries such as China as they build their Strategic Petroleum Reserve. A global supply glut is also likely to lead to an increase in floating storage especially among oil producers.
At the same time, sustained weakness in oil prices will eventually hurt US shale oil producers because of their relatively higher cost of production. In such circumstances, the market share of Middle Eastern crude will increase at the expense of US crude.
Meanwhile, tanker rates surged due to a sudden increase in VLCC chartering from Bahri, Saudi Arabia’s national shipping arm. Bahri fixed at least 18 VLCCs since the Kingdom aims to pump more crude into the market as its price war with Russia escalates. The VLCC earnings on Middle East–China (TD3C) route skyrocketed to $166,000pd on 11 March from $30,300pd on 06 March.
If Saudi Arabia manages to strike a deal with Russia to cut production in the short term, tanker rates will plummet to the pre-price war levels because of the ongoing weakness in crude oil trade on account of the spread of COVID-19 globally. On the other hand, if there is a prolonged price war, tonnage demand will rise initially with the increase in oil demand and stocking activity, which in turn will keep freight rates above pre-price war levels.
However, once sustained weakness in oil prices starts hurting US crude production, Middle Eastern crude will start displacing US crude in Asia. This in turn will squeeze tonne-mile demand for tankers as the distance between the US to Asia is almost double the distance between the Middle East to Asia. Thus we estimate that every barrel per day of annual decline in US exports to Asia at the expense of the Middle East will lead to about a 2.5% decline in overall tonne-mile demand for tankers. Freight rates in such a situation will plunge below the pre-price war levels.
Source: Drewry
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Tuesday, 09 June 20
BUNKER SUPPLY CONTRACTS - KEY CONSIDERATIONS FOR THE BUYER - GARD
KNOWLEDGE TO ELEVATE
Regardless of whether a buyer purchases fuel directly from physical suppliers or via brokers or traders and whether sale ...
Tuesday, 09 June 20
INDIA: COAL IMPORT DROPS BY 20% TO NEARLY 19 MILLION TONNES IN MAY, SAYS REPORT - HINDUSTAN TIMES
The country’s coal import dropped by 20 per cent to 18.93 million tonnes (MT) last month, industry data showed.
The government ...
Monday, 08 June 20
WOOD MACKENZIE: THE INDISPENSABLE OPEC+
Rumours of “the death of OPEC” have been circulating for almost as long as the organisation has existed. Just three years after the car ...
Monday, 08 June 20
CHINA'S COAL IMPORTS FALL NEARLY 20% IN MAY EVEN AS DEMAND RISES - REUTERS
China’s coal imports in May fell nearly 20% compared with a year earlier even as demand recovered at power plants and industrial users, custo ...
Monday, 08 June 20
JUNE 2020 INDONESIAN COAL PRICE REFERENCE HIT US$ 52.98 A TON, ITS LOWEST LEVEL SINCE AT LEAST AUGUST 2016
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
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- Directorate Of Revenue Intelligence - India
- Kaltim Prima Coal - Indonesia
- Wood Mackenzie - Singapore
- CIMB Investment Bank - Malaysia
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- ASAPP Information Group - India
- Romanian Commodities Exchange
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Semirara Mining Corp, Philippines
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Sarangani Energy Corporation, Philippines
- Thai Mozambique Logistica
- Vedanta Resources Plc - India
- White Energy Company Limited
- Sinarmas Energy and Mining - Indonesia
- Bulk Trading Sa - Switzerland
- India Bulls Power Limited - India
- The University of Queensland
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Kideco Jaya Agung - Indonesia
- Ministry of Finance - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Riau Bara Harum - Indonesia
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Binh Thuan Hamico - Vietnam
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Holcim Trading Pte Ltd - Singapore
- Sindya Power Generating Company Private Ltd
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Billiton Holdings Pty Ltd - Australia
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Straits Asia Resources Limited - Singapore
- Karaikal Port Pvt Ltd - India
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Therma Luzon, Inc, Philippines
- McConnell Dowell - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Star Paper Mills Limited - India
- Metalloyd Limited - United Kingdom
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Power Finance Corporation Ltd., India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- PTC India Limited - India
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Minerals Council of Australia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Port Waratah Coal Services - Australia
- Standard Chartered Bank - UAE
- Latin American Coal - Colombia
- Videocon Industries ltd - India
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Gujarat Sidhee Cement - India
- The State Trading Corporation of India Ltd
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Jorong Barutama Greston.PT - Indonesia
- VISA Power Limited - India
- Commonwealth Bank - Australia
- Siam City Cement PLC, Thailand
- Global Coal Blending Company Limited - Australia
- TeaM Sual Corporation - Philippines
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Cement Manufacturers Association - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Deloitte Consulting - India
- Carbofer General Trading SA - India
- Rashtriya Ispat Nigam Limited - India
- PNOC Exploration Corporation - Philippines
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- Grasim Industreis Ltd - India
- Ambuja Cements Ltd - India
- Bhatia International Limited - India
- Ind-Barath Power Infra Limited - India
- Australian Commodity Traders Exchange
- New Zealand Coal & Carbon
- Madhucon Powers Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Orica Australia Pty. Ltd.
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- Mintek Dendrill Indonesia
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Edison Trading Spa - Italy
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Bangladesh Power Developement Board
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Antam Resourcindo - Indonesia
- Baramulti Group, Indonesia
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Parliament of New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Meenaskhi Energy Private Limited - India
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Global Business Power Corporation, Philippines
- Posco Energy - South Korea
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Kapuas Tunggal Persada - Indonesia
- Georgia Ports Authority, United States
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- GAC Shipping (India) Pvt Ltd
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Australian Coal Association
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Globalindo Alam Lestari - Indonesia
- Bhoruka Overseas - Indonesia
- Coalindo Energy - Indonesia
- Sree Jayajothi Cements Limited - India
- Eastern Coal Council - USA
- Singapore Mercantile Exchange
- Mjunction Services Limited - India
- Parry Sugars Refinery, India
- Medco Energi Mining Internasional
- Attock Cement Pakistan Limited
- Makarim & Taira - Indonesia
- Pendopo Energi Batubara - Indonesia
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Marubeni Corporation - India
- Independent Power Producers Association of India
- IHS Mccloskey Coal Group - USA
- Xindia Steels Limited - India
- Indian Energy Exchange, India
- Samtan Co., Ltd - South Korea
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
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