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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, 05 May 20
SUPRAMAXES: YTD SLIDE HAS BEEN 45%, WITH THE AVERAGE FOR 2020 TCA HOLDING AT US$5,793 - ALLIED
It has been almost three months since the WHO officially categorized the current coronavirus outbreak as a global pandemic, an outbreak that has br ...
Monday, 04 May 20
U.S. ESTIMATED COAL PRODUCTION FALL 39.4% YEAR ON YEAR IN THE WEEK ENDED APRIL 25 - EIA
Estimated U.S. coal production totaled about 8.6 million short tons (MMst) For the week ended April 25, 2020, says EIA in its latest report.
E ...
Saturday, 02 May 20
SUPRAMAX: ASIA, STRONGER NUMBERS - A 55.000-DWT WAS FIXED FROM INDONESIA TO CHINA IN THE MID $6,000S - BALTIC BRIEFING
Capesize
A tepid week for the big ships, as macro concerns continued to weigh heavily on the index. All of the major voyage routes lost value, ...
Friday, 01 May 20
KOSPO INVITED OFFER FOR 5600 NCV COAL FOR Q3 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 260,000 Metric Tons (MT) steam coal for Boryeong Power ...
Friday, 01 May 20
GLOBAL COAL DEMAND TO FALL BY ABOUT 8% IN 2020,THE LARGEST DROP SINCE WORLD WAR II - IEA
We expect global coal demand to fall by about 8% in 2020, the largest drop since World War II, with coal use declining in virtually every sector of ...
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- Sakthi Sugars Limited - India
- SMC Global Power, Philippines
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Antam Resourcindo - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Global Coal Blending Company Limited - Australia
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Aditya Birla Group - India
- Indogreen Group - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Ministry of Transport, Egypt
- Maharashtra Electricity Regulatory Commission - India
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Wilmar Investment Holdings
- Eastern Energy - Thailand
- The University of Queensland
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Georgia Ports Authority, United States
- Heidelberg Cement - Germany
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- VISA Power Limited - India
- Iligan Light & Power Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Directorate General of MIneral and Coal - Indonesia
- Coastal Gujarat Power Limited - India
- The State Trading Corporation of India Ltd
- Kartika Selabumi Mining - Indonesia
- New Zealand Coal & Carbon
- Semirara Mining and Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- San Jose City I Power Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bharathi Cement Corporation - India
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- Central Java Power - Indonesia
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Central Electricity Authority - India
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Mercuria Energy - Indonesia
- CNBM International Corporation - China
- Formosa Plastics Group - Taiwan
- SN Aboitiz Power Inc, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Intertek Mineral Services - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- Global Business Power Corporation, Philippines
- Renaissance Capital - South Africa
- Metalloyd Limited - United Kingdom
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- LBH Netherlands Bv - Netherlands
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Posco Energy - South Korea
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mjunction Services Limited - India
- Orica Australia Pty. Ltd.
- Agrawal Coal Company - India
- Banpu Public Company Limited - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- International Coal Ventures Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- Toyota Tsusho Corporation, Japan
- Parliament of New Zealand
- Sojitz Corporation - Japan
- Directorate Of Revenue Intelligence - India
- GVK Power & Infra Limited - India
- Africa Commodities Group - South Africa
- European Bulk Services B.V. - Netherlands
- Indo Tambangraya Megah - Indonesia
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- Marubeni Corporation - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Coal and Oil Company - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Edison Trading Spa - Italy
- Sical Logistics Limited - India
- Goldman Sachs - Singapore
- Meenaskhi Energy Private Limited - India
- Eastern Coal Council - USA
- Thiess Contractors Indonesia
- Interocean Group of Companies - India
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Gujarat Sidhee Cement - India
- Minerals Council of Australia
- Baramulti Group, Indonesia
- Bukit Makmur.PT - Indonesia
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- MS Steel International - UAE
- GAC Shipping (India) Pvt Ltd
- Vizag Seaport Private Limited - India
- Ambuja Cements Ltd - India
- Uttam Galva Steels Limited - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Global Green Power PLC Corporation, Philippines
- Simpson Spence & Young - Indonesia
- SMG Consultants - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Grasim Industreis Ltd - India
- Electricity Generating Authority of Thailand
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Manunggal Multi Energi - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- PTC India Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Bhushan Steel Limited - India
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Alfred C Toepfer International GmbH - Germany
- Singapore Mercantile Exchange
- Kideco Jaya Agung - Indonesia
- Chamber of Mines of South Africa
- Billiton Holdings Pty Ltd - Australia
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- Bahari Cakrawala Sebuku - Indonesia
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Rio Tinto Coal - Australia
- Coalindo Energy - Indonesia
- Parry Sugars Refinery, India
- GMR Energy Limited - India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sarangani Energy Corporation, Philippines
- Independent Power Producers Association of India
- Economic Council, Georgia
- Indonesian Coal Mining Association
- Makarim & Taira - Indonesia
- Latin American Coal - Colombia
- Indika Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Mintek Dendrill Indonesia
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Romanian Commodities Exchange
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Cement Manufacturers Association - India
- The Treasury - Australian Government
- Energy Development Corp, Philippines
- McConnell Dowell - Australia
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