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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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Friday, 29 May 20
KOMIPO ON BEHALF FIVE KOREAN GENCOS INVITED COAL BIDS FOR 5,700 & 4999 NCV COAL FOR AUGUST 2020 LOADING
COALspot.com: South Korea’s Korea Midland Power Co.,Ltd (KOMIPO) on behalf five (5) Korean Gencos has Issued an International Tender for tota ...
Friday, 29 May 20
DRY BULK SHIPPING: NO QUICK RECOVERY FOR THE DRY BULK MARKET AS COVID-19 DIGS DEEPER
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to wo ...
Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the com ...
Thursday, 28 May 20
OIL DEMAND RECOVERED BY 20% IN MAY AGAINST APRIL: RUSSIAN ENERGY MINISTER - TASS
Oil demand remains at a low level but the demand in May increased by 20% against April, Russian Energy Minister Alexander Novak said, cited by the ...
Thursday, 28 May 20
MARKET INSIGHT - INTERMODAL
Earlier in May, China’s top leaders convened for the annual National People's Congress, following over two months of delays due to the co ...
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- Miang Besar Coal Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Essar Steel Hazira Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- Videocon Industries ltd - India
- Central Java Power - Indonesia
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- VISA Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Chamber of Mines of South Africa
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- IEA Clean Coal Centre - UK
- Indonesian Coal Mining Association
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Port Waratah Coal Services - Australia
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Oldendorff Carriers - Singapore
- Indogreen Group - Indonesia
- Samtan Co., Ltd - South Korea
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Karaikal Port Pvt Ltd - India
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Maheswari Brothers Coal Limited - India
- Bukit Baiduri Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kalimantan Lumbung Energi - Indonesia
- Renaissance Capital - South Africa
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- International Coal Ventures Pvt Ltd - India
- Siam City Cement PLC, Thailand
- The Treasury - Australian Government
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Energy Link Ltd, New Zealand
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- Madhucon Powers Ltd - India
- Georgia Ports Authority, United States
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- AsiaOL BioFuels Corp., Philippines
- Global Green Power PLC Corporation, Philippines
- Commonwealth Bank - Australia
- Wood Mackenzie - Singapore
- Billiton Holdings Pty Ltd - Australia
- South Luzon Thermal Energy Corporation
- Gujarat Electricity Regulatory Commission - India
- Sakthi Sugars Limited - India
- Rashtriya Ispat Nigam Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Electricity Authority, New Zealand
- Barasentosa Lestari - Indonesia
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Xindia Steels Limited - India
- Lanco Infratech Ltd - India
- Parliament of New Zealand
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Holcim Trading Pte Ltd - Singapore
- GMR Energy Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- McConnell Dowell - Australia
- IHS Mccloskey Coal Group - USA
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- GAC Shipping (India) Pvt Ltd
- Indian Energy Exchange, India
- Petron Corporation, Philippines
- Tamil Nadu electricity Board
- Bulk Trading Sa - Switzerland
- Kaltim Prima Coal - Indonesia
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kartika Selabumi Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Meenaskhi Energy Private Limited - India
- Electricity Generating Authority of Thailand
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Kumho Petrochemical, South Korea
- India Bulls Power Limited - India
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Tata Chemicals Ltd - India
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Edison Trading Spa - Italy
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Cement Manufacturers Association - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Standard Chartered Bank - UAE
- New Zealand Coal & Carbon
- Deloitte Consulting - India
- Australian Commodity Traders Exchange
- Bukit Makmur.PT - Indonesia
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Minerals Council of Australia
- ASAPP Information Group - India
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Aboitiz Power Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- White Energy Company Limited
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Anglo American - United Kingdom
- Trasteel International SA, Italy
- Ind-Barath Power Infra Limited - India
- Thai Mozambique Logistica
- LBH Netherlands Bv - Netherlands
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Dalmia Cement Bharat India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- Pendopo Energi Batubara - Indonesia
- Borneo Indobara - Indonesia
- ICICI Bank Limited - India
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Cigading International Bulk Terminal - Indonesia
- Interocean Group of Companies - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Central Electricity Authority - India
- Jaiprakash Power Ventures ltd
- Jindal Steel & Power Ltd - India
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- TNB Fuel Sdn Bhd - Malaysia
- Heidelberg Cement - Germany
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Grasim Industreis Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Wilmar Investment Holdings
- Global Business Power Corporation, Philippines
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