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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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- Chamber of Mines of South Africa
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Madhucon Powers Ltd - India
- Aboitiz Power Corporation - Philippines
- Eastern Coal Council - USA
- Carbofer General Trading SA - India
- White Energy Company Limited
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- ICICI Bank Limited - India
- VISA Power Limited - India
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Cement Manufacturers Association - India
- Videocon Industries ltd - India
- Bhoruka Overseas - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kohat Cement Company Ltd. - Pakistan
- McConnell Dowell - Australia
- Karaikal Port Pvt Ltd - India
- Ministry of Mines - Canada
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bharathi Cement Corporation - India
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- ASAPP Information Group - India
- Krishnapatnam Port Company Ltd. - India
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Port Waratah Coal Services - Australia
- Sree Jayajothi Cements Limited - India
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Toyota Tsusho Corporation, Japan
- Simpson Spence & Young - Indonesia
- Oldendorff Carriers - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Sarangani Energy Corporation, Philippines
- IEA Clean Coal Centre - UK
- Indian Oil Corporation Limited
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Edison Trading Spa - Italy
- Rio Tinto Coal - Australia
- Timah Investasi Mineral - Indoneisa
- Holcim Trading Pte Ltd - Singapore
- Tamil Nadu electricity Board
- Kapuas Tunggal Persada - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- Africa Commodities Group - South Africa
- Directorate Of Revenue Intelligence - India
- Sakthi Sugars Limited - India
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- Globalindo Alam Lestari - Indonesia
- Sojitz Corporation - Japan
- Coastal Gujarat Power Limited - India
- Electricity Generating Authority of Thailand
- Thai Mozambique Logistica
- Xindia Steels Limited - India
- Miang Besar Coal Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Ministry of Transport, Egypt
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Central Electricity Authority - India
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Energy Development Corp, Philippines
- GMR Energy Limited - India
- India Bulls Power Limited - India
- GAC Shipping (India) Pvt Ltd
- Eastern Energy - Thailand
- PetroVietnam Power Coal Import and Supply Company
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- Semirara Mining Corp, Philippines
- Riau Bara Harum - Indonesia
- San Jose City I Power Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Essar Steel Hazira Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Grasim Industreis Ltd - India
- Standard Chartered Bank - UAE
- Directorate General of MIneral and Coal - Indonesia
- Star Paper Mills Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Global Business Power Corporation, Philippines
- SMC Global Power, Philippines
- Meralco Power Generation, Philippines
- Iligan Light & Power Inc, Philippines
- Intertek Mineral Services - Indonesia
- Formosa Plastics Group - Taiwan
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Thiess Contractors Indonesia
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Price Waterhouse Coopers - Russia
- Antam Resourcindo - Indonesia
- Jindal Steel & Power Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Cigading International Bulk Terminal - Indonesia
- Bhatia International Limited - India
- PTC India Limited - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- LBH Netherlands Bv - Netherlands
- Medco Energi Mining Internasional
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Vedanta Resources Plc - India
- Chettinad Cement Corporation Ltd - India
- Kideco Jaya Agung - Indonesia
- Minerals Council of Australia
- Parliament of New Zealand
- MS Steel International - UAE
- Australian Commodity Traders Exchange
- Latin American Coal - Colombia
- Maheswari Brothers Coal Limited - India
- Mercuria Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Indian Energy Exchange, India
- Economic Council, Georgia
- Petron Corporation, Philippines
- Goldman Sachs - Singapore
- Planning Commission, India
- Romanian Commodities Exchange
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Bahari Cakrawala Sebuku - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The Treasury - Australian Government
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Metalloyd Limited - United Kingdom
- Gujarat Mineral Development Corp Ltd - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Makarim & Taira - Indonesia
- Kobexindo Tractors - Indoneisa
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Global Coal Blending Company Limited - Australia
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