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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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Tuesday, 24 March 20
THE TRIPLE SHOCK OF CORONAVIRUS IN SHIPPING: WILL IT LAST? - DREWRY
Transport capacity shortages, disruptions to supply chains and inability to plan since late January have been a dangerous combination. But will all ...
Tuesday, 24 March 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.28 PCT - XINHUA
China Taiyuan coal transaction price index stood at 132.74 points Monday, down 0.28 percent week on week.
The index, released by Chi ...
Monday, 23 March 20
CHARTERPARTY REQUIREMENTS TO NOTIFY CLAIMS - TAKE CARE! - WFW
KNOWLEDGE TO ELEVATE
Voyage charterparties frequently require the owner to notify any claim with supporting documents within a relatively shor ...
Monday, 23 March 20
COAL INDIA LIMITED'S ONE-DAY OUTPUT PEAKS AT 3.17 MT - THE HINDU
Coal India Limited (CIL) output peaked at a new high of 3.17 million tonnes (MT) on March 20, overtaking the 3.14 MT production recorded on March 2 ...
Monday, 23 March 20
KOMIPO INVITED BIDS FOR 1.45 MILLION TONS OF COAL FOR JUNE & JULY 2020 LOADING
COALspot.com: Korea Midland Power Co.,Ltd (KOMIPO), on behalf of five Korean Gencos, has issued an international tender for total 1,450,000 MT (&pl ...
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- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Indika Energy - Indonesia
- White Energy Company Limited
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Anglo American - United Kingdom
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- Indonesian Coal Mining Association
- Ministry of Transport, Egypt
- Pendopo Energi Batubara - Indonesia
- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Manunggal Multi Energi - Indonesia
- Central Electricity Authority - India
- Wilmar Investment Holdings
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Central Java Power - Indonesia
- ASAPP Information Group - India
- Antam Resourcindo - Indonesia
- Kartika Selabumi Mining - Indonesia
- Vizag Seaport Private Limited - India
- IHS Mccloskey Coal Group - USA
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- European Bulk Services B.V. - Netherlands
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Chamber of Mines of South Africa
- Metalloyd Limited - United Kingdom
- CIMB Investment Bank - Malaysia
- Australian Coal Association
- Bhushan Steel Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Formosa Plastics Group - Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Xindia Steels Limited - India
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- Leighton Contractors Pty Ltd - Australia
- Sindya Power Generating Company Private Ltd
- Directorate Of Revenue Intelligence - India
- PowerSource Philippines DevCo
- Billiton Holdings Pty Ltd - Australia
- Ambuja Cements Ltd - India
- Videocon Industries ltd - India
- Orica Mining Services - Indonesia
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Mjunction Services Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Power Finance Corporation Ltd., India
- Semirara Mining and Power Corporation, Philippines
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Binh Thuan Hamico - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- Ceylon Electricity Board - Sri Lanka
- Kideco Jaya Agung - Indonesia
- Grasim Industreis Ltd - India
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Energy - Thailand
- Essar Steel Hazira Ltd - India
- Electricity Generating Authority of Thailand
- Kapuas Tunggal Persada - Indonesia
- Petron Corporation, Philippines
- Cement Manufacturers Association - India
- GN Power Mariveles Coal Plant, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- Heidelberg Cement - Germany
- CNBM International Corporation - China
- Karaikal Port Pvt Ltd - India
- Thai Mozambique Logistica
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Mercator Lines Limited - India
- GVK Power & Infra Limited - India
- Commonwealth Bank - Australia
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Altura Mining Limited, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Rashtriya Ispat Nigam Limited - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Dalmia Cement Bharat India
- Cigading International Bulk Terminal - Indonesia
- Energy Development Corp, Philippines
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- ICICI Bank Limited - India
- Aditya Birla Group - India
- New Zealand Coal & Carbon
- Savvy Resources Ltd - HongKong
- SN Aboitiz Power Inc, Philippines
- Borneo Indobara - Indonesia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Coastal Gujarat Power Limited - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Ministry of Mines - Canada
- Edison Trading Spa - Italy
- Sakthi Sugars Limited - India
- The Treasury - Australian Government
- Global Business Power Corporation, Philippines
- McConnell Dowell - Australia
- Coal and Oil Company - UAE
- Interocean Group of Companies - India
- Australian Commodity Traders Exchange
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Neyveli Lignite Corporation Ltd, - India
- Pipit Mutiara Jaya. PT, Indonesia
- Makarim & Taira - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Global Green Power PLC Corporation, Philippines
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- VISA Power Limited - India
- Banpu Public Company Limited - Thailand
- Miang Besar Coal Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Sarangani Energy Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Asmin Koalindo Tuhup - Indonesia
- Renaissance Capital - South Africa
- PetroVietnam Power Coal Import and Supply Company
- Simpson Spence & Young - Indonesia
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Salva Resources Pvt Ltd - India
- Electricity Authority, New Zealand
- Sinarmas Energy and Mining - Indonesia
- Global Coal Blending Company Limited - Australia
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Vedanta Resources Plc - India
- Vijayanagar Sugar Pvt Ltd - India
- Marubeni Corporation - India
- San Jose City I Power Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Planning Commission, India
- Trasteel International SA, Italy
- Georgia Ports Authority, United States
- Jorong Barutama Greston.PT - Indonesia
- Siam City Cement PLC, Thailand
- PTC India Limited - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- The State Trading Corporation of India Ltd
- Toyota Tsusho Corporation, Japan
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Iligan Light & Power Inc, Philippines
- Indian Energy Exchange, India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Indo Tambangraya Megah - Indonesia
- Barasentosa Lestari - Indonesia
- Wood Mackenzie - Singapore
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