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