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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, 17 April 20
PANDEMIC TO BRING ASIA'S 2020 GROWTH TO HALT FOR 1ST TIME IN 60 YEARS - IMF: REUTERS
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented ...
Friday, 17 April 20
OPEC BRACES FOR OIL MARKET'S "HISTORIC SHOCK"
OPEC released its much anticipated April monthly report.
Crude Oil Price Movements
Crude oil prices collapsed in March 2020, rec ...
Friday, 17 April 20
SAUDI ARABIA'S MAY 2020 OSPS FOR CRUDE EXPORTS BODE WELL FOR ASIAN REFINERS - WOOD MACKENZIE
On 13 April, Saudi Arabia announced the Official Selling Prices (OSPs) for its May crude oil exports. The new OSPs speak volumes about Saudi Arabia ...
Friday, 17 April 20
SEABORNE COAL PRICES UNDER PRESSURE AS DEMAND SOFTENS IN CHINA, INDIA - CLYDE RUSSELL
Worrying signs are emerging for coal exporters to the world’s biggest markets in Asia, as top buyers China and India move to favour domestic ...
Thursday, 16 April 20
THERMAL POWER SECTOR FACES BLEAK SCENARIO POST-COVID SITUATION - THE HINDU BUSINESS LINE
The centre should take a fresh look at coal-energy value chain as the sector tops the chart on loan defaults.
Covid-19 may have serv ...
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- Xindia Steels Limited - India
- Coalindo Energy - Indonesia
- White Energy Company Limited
- Alfred C Toepfer International GmbH - Germany
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indika Energy - Indonesia
- Banpu Public Company Limited - Thailand
- Baramulti Group, Indonesia
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- India Bulls Power Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Metalloyd Limited - United Kingdom
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Bangladesh Power Developement Board
- ICICI Bank Limited - India
- Price Waterhouse Coopers - Russia
- Marubeni Corporation - India
- GMR Energy Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Sarangani Energy Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement PLC, Thailand
- Edison Trading Spa - Italy
- Port Waratah Coal Services - Australia
- Ambuja Cements Ltd - India
- Indian Oil Corporation Limited
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Uttam Galva Steels Limited - India
- European Bulk Services B.V. - Netherlands
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Carbofer General Trading SA - India
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- GN Power Mariveles Coal Plant, Philippines
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- Jaiprakash Power Ventures ltd
- Rio Tinto Coal - Australia
- SMC Global Power, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Chamber of Mines of South Africa
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Madhucon Powers Ltd - India
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- Krishnapatnam Port Company Ltd. - India
- Bhatia International Limited - India
- Holcim Trading Pte Ltd - Singapore
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- The University of Queensland
- Gujarat Mineral Development Corp Ltd - India
- Parry Sugars Refinery, India
- The State Trading Corporation of India Ltd
- Georgia Ports Authority, United States
- Kumho Petrochemical, South Korea
- Barasentosa Lestari - Indonesia
- Romanian Commodities Exchange
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thai Mozambique Logistica
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Anglo American - United Kingdom
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SMG Consultants - Indonesia
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Commonwealth Bank - Australia
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Aditya Birla Group - India
- Antam Resourcindo - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maheswari Brothers Coal Limited - India
- Siam City Cement - Thailand
- Iligan Light & Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Latin American Coal - Colombia
- Global Coal Blending Company Limited - Australia
- Economic Council, Georgia
- San Jose City I Power Corp, Philippines
- SN Aboitiz Power Inc, Philippines
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Malabar Cements Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Wood Mackenzie - Singapore
- PNOC Exploration Corporation - Philippines
- Sojitz Corporation - Japan
- Indian Energy Exchange, India
- Independent Power Producers Association of India
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Indonesian Coal Mining Association
- Ind-Barath Power Infra Limited - India
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Sree Jayajothi Cements Limited - India
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Intertek Mineral Services - Indonesia
- Vizag Seaport Private Limited - India
- Kobexindo Tractors - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- Indo Tambangraya Megah - Indonesia
- Globalindo Alam Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Grasim Industreis Ltd - India
- Videocon Industries ltd - India
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- Heidelberg Cement - Germany
- Medco Energi Mining Internasional
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Ministry of Transport, Egypt
- Global Business Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Goldman Sachs - Singapore
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Posco Energy - South Korea
- Sical Logistics Limited - India
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Orica Mining Services - Indonesia
- Merrill Lynch Commodities Europe
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Australian Commodity Traders Exchange
- Riau Bara Harum - Indonesia
- Sindya Power Generating Company Private Ltd
- Petron Corporation, Philippines
- Orica Australia Pty. Ltd.
- Australian Coal Association
- Binh Thuan Hamico - Vietnam
- Star Paper Mills Limited - India
- Manunggal Multi Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- ASAPP Information Group - India
- New Zealand Coal & Carbon
- Minerals Council of Australia
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Chettinad Cement Corporation Ltd - India
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Mercuria Energy - Indonesia
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