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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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Thursday, 19 March 20
BIMCO REVISES 2020 FORECAST FOR MAIN SHIPPING MARKETS
The coronavirus pandemic is impacting global shipping demand for 2020 negatively. The speed of the virus spread makes it difficult to assess the fu ...
Thursday, 19 March 20
U.S. COAL EXPORTS DECLINED IN 2019 - EIA
In 2019, U.S. coal exports declined to 93 million short tons (MMst), a 20% decrease from the previous year, according to the U.S. Energy Informatio ...
Thursday, 19 March 20
SOUTH KOREA'S KOSPO INVITED BIDS FOR MIN 3,700 OR MIN 4,200 NCV LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO), has issued an international tender for total 160,000 MT (±10%) (80,000 x 2 Panamax) of ...
Wednesday, 18 March 20
DRY BULK: INDONESIAN COAL CARGOES PROVIDING A BIG BOOST IN THE EAST WHERE SENTIMENT FOR HANDIES ALSO STARTED IMPROVING - INTERMODAL
The BDI ended last week with small gains on the back of an encouraging number of cargoes out of key trading regions that helped sustain the reserve ...
Wednesday, 18 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
Despite we all knew about the Covid-19 weeks ago, few could realize the size of the thread until the last few days. The examples of China and Italy ...
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- The Treasury - Australian Government
- Parry Sugars Refinery, India
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- ICICI Bank Limited - India
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Indo Tambangraya Megah - Indonesia
- Straits Asia Resources Limited - Singapore
- Anglo American - United Kingdom
- Bulk Trading Sa - Switzerland
- Intertek Mineral Services - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- CNBM International Corporation - China
- Electricity Generating Authority of Thailand
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Larsen & Toubro Limited - India
- Australian Coal Association
- Maheswari Brothers Coal Limited - India
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Xindia Steels Limited - India
- Leighton Contractors Pty Ltd - Australia
- SMC Global Power, Philippines
- Uttam Galva Steels Limited - India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Petron Corporation, Philippines
- Siam City Cement PLC, Thailand
- Madhucon Powers Ltd - India
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Indian Oil Corporation Limited
- Jorong Barutama Greston.PT - Indonesia
- McConnell Dowell - Australia
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- CIMB Investment Bank - Malaysia
- Kumho Petrochemical, South Korea
- Directorate Of Revenue Intelligence - India
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- SMG Consultants - Indonesia
- Mercuria Energy - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- Energy Development Corp, Philippines
- Africa Commodities Group - South Africa
- Sindya Power Generating Company Private Ltd
- Ambuja Cements Ltd - India
- Semirara Mining Corp, Philippines
- Deloitte Consulting - India
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- European Bulk Services B.V. - Netherlands
- Minerals Council of Australia
- Dalmia Cement Bharat India
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Timah Investasi Mineral - Indoneisa
- Singapore Mercantile Exchange
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- VISA Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Global Green Power PLC Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Salva Resources Pvt Ltd - India
- Ministry of Mines - Canada
- Karaikal Port Pvt Ltd - India
- Central Electricity Authority - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bharathi Cement Corporation - India
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parliament of New Zealand
- Siam City Cement - Thailand
- IEA Clean Coal Centre - UK
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Kepco SPC Power Corporation, Philippines
- Indonesian Coal Mining Association
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Lanco Infratech Ltd - India
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- Miang Besar Coal Terminal - Indonesia
- Bhushan Steel Limited - India
- Sinarmas Energy and Mining - Indonesia
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- The State Trading Corporation of India Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Attock Cement Pakistan Limited
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Electricity Authority, New Zealand
- Meenaskhi Energy Private Limited - India
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Sical Logistics Limited - India
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Edison Trading Spa - Italy
- Chamber of Mines of South Africa
- Marubeni Corporation - India
- Tata Chemicals Ltd - India
- Latin American Coal - Colombia
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Star Paper Mills Limited - India
- PTC India Limited - India
- MS Steel International - UAE
- Mercator Lines Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Posco Energy - South Korea
- Carbofer General Trading SA - India
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Globalindo Alam Lestari - Indonesia
- Ministry of Finance - Indonesia
- Interocean Group of Companies - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sojitz Corporation - Japan
- Antam Resourcindo - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Videocon Industries ltd - India
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- Indika Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Simpson Spence & Young - Indonesia
- Price Waterhouse Coopers - Russia
- Cement Manufacturers Association - India
- Orica Australia Pty. Ltd.
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Commonwealth Bank - Australia
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Eastern Energy - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- PNOC Exploration Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Eastern Coal Council - USA
- Rio Tinto Coal - Australia
- South Luzon Thermal Energy Corporation
- White Energy Company Limited
- ASAPP Information Group - India
- Goldman Sachs - Singapore
- Renaissance Capital - South Africa
- Independent Power Producers Association of India
- San Jose City I Power Corp, Philippines
- Riau Bara Harum - Indonesia
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Cigading International Bulk Terminal - Indonesia
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
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