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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, 03 April 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Wednesday, 01 April 20
TRADERS SCRAMBLE TO SELL CHEAP CRUDE CARGOES AS GLUT GROWS - REUTERS
Oil traders across the globe are offering cargoes far in advance as rapidly vanishing demand drives key physical crude prices to multi-decade lows, ...
Wednesday, 01 April 20
MARKET INSIGHT - INTERMODAL
There is an old, allegedly Chinese, saying suggesting that living in “interesting” times usually refers to times of trouble. The latest ...
Tuesday, 31 March 20
FREIGHT MARKET: DRY BULKERS - SPOT MARKET 23-29 MARCH 2020
Capesize
The rebound in freight rates resumed this past week, with rates man-aging to post further gains by week’s end. The BCI is in negat ...
Tuesday, 31 March 20
DRY BULK: Q1 HAS BEEN THE WORST QUARTER NOTED FOR MORE THAN 3 YEARS NOW - ALLIED RESEARCH
At this point, the Covid-19 pandemic seems to be monopolizing all market (as well as all other) discussions across the world and any market insight ...
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- Energy Development Corp, Philippines
- London Commodity Brokers - England
- Bhoruka Overseas - Indonesia
- Interocean Group of Companies - India
- Coal and Oil Company - UAE
- Tamil Nadu electricity Board
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- The University of Queensland
- Baramulti Group, Indonesia
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Wood Mackenzie - Singapore
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- International Coal Ventures Pvt Ltd - India
- Cement Manufacturers Association - India
- Indika Energy - Indonesia
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Savvy Resources Ltd - HongKong
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Indian Oil Corporation Limited
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Dalmia Cement Bharat India
- New Zealand Coal & Carbon
- Price Waterhouse Coopers - Russia
- Planning Commission, India
- Posco Energy - South Korea
- Mercuria Energy - Indonesia
- Electricity Authority, New Zealand
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Coalindo Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Therma Luzon, Inc, Philippines
- Aditya Birla Group - India
- Chettinad Cement Corporation Ltd - India
- Parliament of New Zealand
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Kapuas Tunggal Persada - Indonesia
- Lanco Infratech Ltd - India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Romanian Commodities Exchange
- AsiaOL BioFuels Corp., Philippines
- Attock Cement Pakistan Limited
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Star Paper Mills Limited - India
- Siam City Cement PLC, Thailand
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- Sojitz Corporation - Japan
- Xindia Steels Limited - India
- Kobexindo Tractors - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Carbofer General Trading SA - India
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- PNOC Exploration Corporation - Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Bahari Cakrawala Sebuku - Indonesia
- Independent Power Producers Association of India
- PowerSource Philippines DevCo
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Global Business Power Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Semirara Mining and Power Corporation, Philippines
- India Bulls Power Limited - India
- Standard Chartered Bank - UAE
- Pipit Mutiara Jaya. PT, Indonesia
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Mjunction Services Limited - India
- Uttam Galva Steels Limited - India
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Rio Tinto Coal - Australia
- Altura Mining Limited, Indonesia
- Karaikal Port Pvt Ltd - India
- Pendopo Energi Batubara - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Energy Link Ltd, New Zealand
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Central Electricity Authority - India
- Minerals Council of Australia
- Binh Thuan Hamico - Vietnam
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kaltim Prima Coal - Indonesia
- Simpson Spence & Young - Indonesia
- Trasteel International SA, Italy
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Eastern Energy - Thailand
- GAC Shipping (India) Pvt Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- VISA Power Limited - India
- ASAPP Information Group - India
- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- CIMB Investment Bank - Malaysia
- Bukit Baiduri Energy - Indonesia
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Sindya Power Generating Company Private Ltd
- Ind-Barath Power Infra Limited - India
- Power Finance Corporation Ltd., India
- Gujarat Mineral Development Corp Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- MS Steel International - UAE
- Georgia Ports Authority, United States
- Maharashtra Electricity Regulatory Commission - India
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- SMC Global Power, Philippines
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Jindal Steel & Power Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- Commonwealth Bank - Australia
- Bhatia International Limited - India
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Indo Tambangraya Megah - Indonesia
- Marubeni Corporation - India
- GMR Energy Limited - India
- TeaM Sual Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Coastal Gujarat Power Limited - India
- Ministry of Finance - Indonesia
- Sical Logistics Limited - India
- Economic Council, Georgia
- Vedanta Resources Plc - India
- PTC India Limited - India
- Meralco Power Generation, Philippines
- Goldman Sachs - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Chamber of Mines of South Africa
- The State Trading Corporation of India Ltd
- Antam Resourcindo - Indonesia
- Electricity Generating Authority of Thailand
- Banpu Public Company Limited - Thailand
- McConnell Dowell - Australia
- Essar Steel Hazira Ltd - India
- Petron Corporation, Philippines
- Ministry of Mines - Canada
- Formosa Plastics Group - Taiwan
- Ministry of Transport, Egypt
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
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