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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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Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
Monday, 18 May 20
THERMAL COAL SPOT PRICE TUMBLES 25 PER CENT, PUTTING PRESSURE ON SOME PRODUCERS - ABC RURAL
The spot price for thermal coal has fallen 25 per cent per cent in the past month with one leading analyst saying it is because of a reduction in d ...
Monday, 18 May 20
CHINA'S COAL OUTPUT UP 1.3 PCT IN JANUARY-APRIL: XINHUA
Output of raw coal in China rose 1.3 percent year on year to 1.15 billion tonnes in the first four months this year, official data showed.
&nbs ...
Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
Capesize
A precipitous fall in the market this week had the Capesize 5TC shedding over 50 per cent in value. A small rebound at the end of the ...
Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
China’s coal consumption is expected to decline in the second quarter from a year earlier, but will see an improvement in the second half of ...
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- Jorong Barutama Greston.PT - Indonesia
- Maheswari Brothers Coal Limited - India
- Mintek Dendrill Indonesia
- Kideco Jaya Agung - Indonesia
- Price Waterhouse Coopers - Russia
- Port Waratah Coal Services - Australia
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Electricity Authority, New Zealand
- PTC India Limited - India
- LBH Netherlands Bv - Netherlands
- Banpu Public Company Limited - Thailand
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- Mercator Lines Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Miang Besar Coal Terminal - Indonesia
- The University of Queensland
- Sinarmas Energy and Mining - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Singapore Mercantile Exchange
- OPG Power Generation Pvt Ltd - India
- Vedanta Resources Plc - India
- Sakthi Sugars Limited - India
- Global Business Power Corporation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Semirara Mining Corp, Philippines
- Grasim Industreis Ltd - India
- India Bulls Power Limited - India
- Central Electricity Authority - India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Commonwealth Bank - Australia
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Star Paper Mills Limited - India
- Eastern Coal Council - USA
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Minerals Council of Australia
- Eastern Energy - Thailand
- Alfred C Toepfer International GmbH - Germany
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bulk Trading Sa - Switzerland
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Meenaskhi Energy Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kartika Selabumi Mining - Indonesia
- ASAPP Information Group - India
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Wilmar Investment Holdings
- Krishnapatnam Port Company Ltd. - India
- Larsen & Toubro Limited - India
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- White Energy Company Limited
- Ind-Barath Power Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- Jindal Steel & Power Ltd - India
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Directorate Of Revenue Intelligence - India
- GMR Energy Limited - India
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- Sarangani Energy Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Agrawal Coal Company - India
- International Coal Ventures Pvt Ltd - India
- Economic Council, Georgia
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- Dalmia Cement Bharat India
- Bukit Baiduri Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Sical Logistics Limited - India
- Manunggal Multi Energi - Indonesia
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Oldendorff Carriers - Singapore
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Therma Luzon, Inc, Philippines
- Merrill Lynch Commodities Europe
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Power Finance Corporation Ltd., India
- Toyota Tsusho Corporation, Japan
- Energy Development Corp, Philippines
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Sree Jayajothi Cements Limited - India
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Cement Manufacturers Association - India
- Makarim & Taira - Indonesia
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Videocon Industries ltd - India
- Indian Energy Exchange, India
- Iligan Light & Power Inc, Philippines
- Marubeni Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- Siam City Cement PLC, Thailand
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Indonesian Coal Mining Association
- Semirara Mining and Power Corporation, Philippines
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Kepco SPC Power Corporation, Philippines
- Coal and Oil Company - UAE
- San Jose City I Power Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Ministry of Mines - Canada
- Planning Commission, India
- CNBM International Corporation - China
- Coastal Gujarat Power Limited - India
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Orica Australia Pty. Ltd.
- Vijayanagar Sugar Pvt Ltd - India
- Latin American Coal - Colombia
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Gujarat Sidhee Cement - India
- CIMB Investment Bank - Malaysia
- Indo Tambangraya Megah - Indonesia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- London Commodity Brokers - England
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
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