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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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Wednesday, 06 May 20
KOSPO INVITED COAL BIDS FOR LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 160,000 Metric Tons (MT) Low Calorific Value Coal for J ...
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
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- Salva Resources Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- TNB Fuel Sdn Bhd - Malaysia
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Renaissance Capital - South Africa
- Ministry of Finance - Indonesia
- Borneo Indobara - Indonesia
- Xindia Steels Limited - India
- Eastern Coal Council - USA
- Sakthi Sugars Limited - India
- Commonwealth Bank - Australia
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- Bhatia International Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Pipit Mutiara Jaya. PT, Indonesia
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Bhushan Steel Limited - India
- Cement Manufacturers Association - India
- Latin American Coal - Colombia
- Kalimantan Lumbung Energi - Indonesia
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Standard Chartered Bank - UAE
- Banpu Public Company Limited - Thailand
- Meralco Power Generation, Philippines
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Intertek Mineral Services - Indonesia
- ASAPP Information Group - India
- Samtan Co., Ltd - South Korea
- Uttam Galva Steels Limited - India
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Minerals Council of Australia
- Siam City Cement PLC, Thailand
- Siam City Cement - Thailand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Jorong Barutama Greston.PT - Indonesia
- Grasim Industreis Ltd - India
- PNOC Exploration Corporation - Philippines
- Mercuria Energy - Indonesia
- Global Green Power PLC Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Neyveli Lignite Corporation Ltd, - India
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Malabar Cements Ltd - India
- Ministry of Mines - Canada
- Kartika Selabumi Mining - Indonesia
- Goldman Sachs - Singapore
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kaltim Prima Coal - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SMG Consultants - Indonesia
- International Coal Ventures Pvt Ltd - India
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- White Energy Company Limited
- Power Finance Corporation Ltd., India
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Directorate General of MIneral and Coal - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Baramulti Group, Indonesia
- Madhucon Powers Ltd - India
- Wood Mackenzie - Singapore
- Jindal Steel & Power Ltd - India
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Electricity Authority, New Zealand
- Aboitiz Power Corporation - Philippines
- Altura Mining Limited, Indonesia
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Aditya Birla Group - India
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- The University of Queensland
- Globalindo Alam Lestari - Indonesia
- ICICI Bank Limited - India
- Meenaskhi Energy Private Limited - India
- PowerSource Philippines DevCo
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Mjunction Services Limited - India
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- Directorate Of Revenue Intelligence - India
- Sree Jayajothi Cements Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Billiton Holdings Pty Ltd - Australia
- Wilmar Investment Holdings
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- SMC Global Power, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Agrawal Coal Company - India
- GN Power Mariveles Coal Plant, Philippines
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Toyota Tsusho Corporation, Japan
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Global Business Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Orica Australia Pty. Ltd.
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Sojitz Corporation - Japan
- Petron Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- Parry Sugars Refinery, India
- IEA Clean Coal Centre - UK
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vedanta Resources Plc - India
- CIMB Investment Bank - Malaysia
- Energy Link Ltd, New Zealand
- CNBM International Corporation - China
- European Bulk Services B.V. - Netherlands
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Australian Coal Association
- Ambuja Cements Ltd - India
- Oldendorff Carriers - Singapore
- Essar Steel Hazira Ltd - India
- Independent Power Producers Association of India
- Marubeni Corporation - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Metalloyd Limited - United Kingdom
- Star Paper Mills Limited - India
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Energy Development Corp, Philippines
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- PTC India Limited - India
- Therma Luzon, Inc, Philippines
- Bulk Trading Sa - Switzerland
- Kideco Jaya Agung - Indonesia
- Manunggal Multi Energi - Indonesia
- The Treasury - Australian Government
- Jaiprakash Power Ventures ltd
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- SN Aboitiz Power Inc, Philippines
- Indika Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Riau Bara Harum - Indonesia
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Mintek Dendrill Indonesia
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Miang Besar Coal Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Vijayanagar Sugar Pvt Ltd - India
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