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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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Wednesday, 25 March 20
CORONAVIRUS CRISIS IS CRUSHING GLOBAL GDP GROWTH - FITCH RATINGS
The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly “Global Economic Outlook” (GEO) ...
Wednesday, 25 March 20
MARKET INSIGHT - INTERMODAL
There is no doubt that the Covid-19 pandemic crisis is a world-shattering event that will change the world as we know it. Societies are facing chal ...
Wednesday, 25 March 20
INDONESIA TO CANCEL RULES REQUIRING DOMESTIC SHIPS FOR COAL, PALM EXPORTS : REFINITIV
Indonesia's government will revoke rules requiring exporters of coal and palm oil to use domestic shipping companies for shipments, Coordinatin ...
Wednesday, 25 March 20
JAN-FEB 2020, INDONESIA SHIPPED 64.5 MLN TONNES OF COAL, UP +3.4% YOY - BANCHERO COSTA
In the 12 months of calendar 2019, Indonesia exported 386.4 mln tonnes of coal, according to vessel tracking data from Refinitiv. This represents a ...
Tuesday, 24 March 20
MARKET ANALYSIS - ALLIED
As countries around the world struggle to take back control of the ongoing COVID-19 pandemic the global economy shuts down bit by bit, leaving only ...
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- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Bhatia International Limited - India
- Eastern Energy - Thailand
- Bukit Makmur.PT - Indonesia
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Independent Power Producers Association of India
- Latin American Coal - Colombia
- The University of Queensland
- LBH Netherlands Bv - Netherlands
- Xindia Steels Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Coalindo Energy - Indonesia
- Indogreen Group - Indonesia
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Borneo Indobara - Indonesia
- Indian Energy Exchange, India
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Timah Investasi Mineral - Indoneisa
- Thai Mozambique Logistica
- Larsen & Toubro Limited - India
- Gujarat Electricity Regulatory Commission - India
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- AsiaOL BioFuels Corp., Philippines
- Essar Steel Hazira Ltd - India
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Meenaskhi Energy Private Limited - India
- Deloitte Consulting - India
- Holcim Trading Pte Ltd - Singapore
- Simpson Spence & Young - Indonesia
- Planning Commission, India
- Meralco Power Generation, Philippines
- Makarim & Taira - Indonesia
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Global Green Power PLC Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Madhucon Powers Ltd - India
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- South Luzon Thermal Energy Corporation
- SN Aboitiz Power Inc, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Pendopo Energi Batubara - Indonesia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Mintek Dendrill Indonesia
- Sree Jayajothi Cements Limited - India
- Economic Council, Georgia
- Directorate Of Revenue Intelligence - India
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Barasentosa Lestari - Indonesia
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Uttam Galva Steels Limited - India
- Global Business Power Corporation, Philippines
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Medco Energi Mining Internasional
- PNOC Exploration Corporation - Philippines
- Central Electricity Authority - India
- Baramulti Group, Indonesia
- Aditya Birla Group - India
- Attock Cement Pakistan Limited
- PowerSource Philippines DevCo
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Heidelberg Cement - Germany
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Trasteel International SA, Italy
- Formosa Plastics Group - Taiwan
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- CNBM International Corporation - China
- Minerals Council of Australia
- Siam City Cement - Thailand
- White Energy Company Limited
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Lanco Infratech Ltd - India
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Krishnapatnam Port Company Ltd. - India
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Therma Luzon, Inc, Philippines
- SMG Consultants - Indonesia
- Australian Coal Association
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- ICICI Bank Limited - India
- Videocon Industries ltd - India
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- European Bulk Services B.V. - Netherlands
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- GMR Energy Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- IEA Clean Coal Centre - UK
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Standard Chartered Bank - UAE
- Toyota Tsusho Corporation, Japan
- Metalloyd Limited - United Kingdom
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Dalmia Cement Bharat India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Star Paper Mills Limited - India
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Vedanta Resources Plc - India
- Georgia Ports Authority, United States
- Bayan Resources Tbk. - Indonesia
- Orica Australia Pty. Ltd.
- Jaiprakash Power Ventures ltd
- Eastern Coal Council - USA
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Wilmar Investment Holdings
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- Romanian Commodities Exchange
- Posco Energy - South Korea
- Ministry of Finance - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- TeaM Sual Corporation - Philippines
- Petron Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Energy Link Ltd, New Zealand
- Indonesian Coal Mining Association
- VISA Power Limited - India
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Indika Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Energy Development Corp, Philippines
- Samtan Co., Ltd - South Korea
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