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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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Saturday, 28 March 20
ASIA'S COAL MARKETS DIVERGE ON QUALITY LINES AS CORONAVIRUS HITS INDIA - REUTERS
Asia’s seaborne coal market is increasingly diverging between higher-quality Australian coal, where prices are holding up despite the economi ...
Friday, 27 March 20
CHINA'S BULKS: THE SENTIMENT GAP BETWEEN STEEL AND COAL WIDENS - WOOD MACKENZIE
China seems to be containing its local coronavirus situation, with imported cases now posing the greater threat. While quarantine measures remain t ...
Friday, 27 March 20
S.KOREA Q1 THERMAL COAL IMPORTS SET FOR 10-YR LOW ON ANTI-POLLUTION MEASURES - REUTERS
South Korea’s first-quarter thermal coal imports are set to fall to a decade-low due to stricter air pollution measures, while the coronaviru ...
Friday, 27 March 20
PORT OF NEWCASTLE OPERATIONS CONTINUE WITH COVID-19 RESPONSE MEASURES IN PLACE
Port of Newcastle, like many organisations, is taking a precautionary approach to help manage COVID-19 risks in the community. Our focus is on ensu ...
Thursday, 26 March 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 ...
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- Salva Resources Pvt Ltd - India
- MS Steel International - UAE
- Tata Chemicals Ltd - India
- Intertek Mineral Services - Indonesia
- Aditya Birla Group - India
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Electricity Authority, New Zealand
- Formosa Plastics Group - Taiwan
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Orica Australia Pty. Ltd.
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maheswari Brothers Coal Limited - India
- Port Waratah Coal Services - Australia
- Ceylon Electricity Board - Sri Lanka
- Samtan Co., Ltd - South Korea
- International Coal Ventures Pvt Ltd - India
- The Treasury - Australian Government
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Deloitte Consulting - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Indika Energy - Indonesia
- New Zealand Coal & Carbon
- Binh Thuan Hamico - Vietnam
- Bukit Makmur.PT - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Posco Energy - South Korea
- Sojitz Corporation - Japan
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- Interocean Group of Companies - India
- Medco Energi Mining Internasional
- Makarim & Taira - Indonesia
- Africa Commodities Group - South Africa
- Indian Energy Exchange, India
- Bangladesh Power Developement Board
- Independent Power Producers Association of India
- Planning Commission, India
- PTC India Limited - India
- Metalloyd Limited - United Kingdom
- Bhatia International Limited - India
- Wood Mackenzie - Singapore
- Central Java Power - Indonesia
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Global Coal Blending Company Limited - Australia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- Renaissance Capital - South Africa
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- Coalindo Energy - Indonesia
- Siam City Cement - Thailand
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PNOC Exploration Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Banpu Public Company Limited - Thailand
- Indogreen Group - Indonesia
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- ICICI Bank Limited - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Essar Steel Hazira Ltd - India
- India Bulls Power Limited - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- ASAPP Information Group - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Holcim Trading Pte Ltd - Singapore
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Ministry of Transport, Egypt
- Attock Cement Pakistan Limited
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Energy Development Corp, Philippines
- London Commodity Brokers - England
- SMG Consultants - Indonesia
- Semirara Mining and Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Thiess Contractors Indonesia
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Global Green Power PLC Corporation, Philippines
- Price Waterhouse Coopers - Russia
- The University of Queensland
- Borneo Indobara - Indonesia
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMC Global Power, Philippines
- Kideco Jaya Agung - Indonesia
- Singapore Mercantile Exchange
- European Bulk Services B.V. - Netherlands
- Antam Resourcindo - Indonesia
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Mintek Dendrill Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Lanco Infratech Ltd - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- Economic Council, Georgia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Grasim Industreis Ltd - India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Karaikal Port Pvt Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Pendopo Energi Batubara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Sarangani Energy Corporation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Latin American Coal - Colombia
- Dalmia Cement Bharat India
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Indonesian Coal Mining Association
- Meenaskhi Energy Private Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Parliament of New Zealand
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Coal and Oil Company - UAE
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- VISA Power Limited - India
- Edison Trading Spa - Italy
- Xindia Steels Limited - India
- Indian Oil Corporation Limited
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- Commonwealth Bank - Australia
- Sakthi Sugars Limited - India
- Miang Besar Coal Terminal - Indonesia
- PowerSource Philippines DevCo
- Anglo American - United Kingdom
- Indo Tambangraya Megah - Indonesia
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Baiduri Energy - Indonesia
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Sical Logistics Limited - India
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Baramulti Group, Indonesia
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Kumho Petrochemical, South Korea
- Australian Commodity Traders Exchange
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Toyota Tsusho Corporation, Japan
- Semirara Mining Corp, Philippines
- Malabar Cements Ltd - India
- Vizag Seaport Private Limited - India
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Siam City Cement PLC, Thailand
- Merrill Lynch Commodities Europe
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