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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, 11 March 20
SHIPPING MARKET INSIGHT - INTERMODAL
On the 4th of September the Baltic Dry Index marked its highest level for 2019, reaching 2,518 points, while the rest of the dry indices also recor ...
Tuesday, 10 March 20
SHIPPING MARKET ANALYSIS
It might be already overstated, but it seems to be important to point out once again how peculiar the current circumstances are.
Before the st ...
Tuesday, 10 March 20
EIA FORECASTS U.S ELECTRIC POWER SECTOR DEMAND FOR COAL WILL FALL BY 81 MMST (15%) IN 2020
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019. According to EIA's Shor ...
Tuesday, 10 March 20
CORONAVIRUS: DEMAND DOWNGRADES FOR BULK COMMODITIES - WOOD MACKENZIE
The coronavirus outbreak is a rapidly evolving news story – and a real wildcard for bulks demand. Our global experts are monitoring the impac ...
Tuesday, 10 March 20
CHINA'S COAL-RICH PROVINCE ENSURES ENERGY SUPPLY AMID EPIDEMIC - XINHUA
China’s coal-rich province of Shanxi has seen more than 500 coal mines resume production in February, which ensured energy supply amid the ou ...
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- GVK Power & Infra Limited - India
- Bukit Makmur.PT - Indonesia
- Samtan Co., Ltd - South Korea
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- SMC Global Power, Philippines
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Wood Mackenzie - Singapore
- Barasentosa Lestari - Indonesia
- Kideco Jaya Agung - Indonesia
- Indian Energy Exchange, India
- SN Aboitiz Power Inc, Philippines
- Bharathi Cement Corporation - India
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- White Energy Company Limited
- Global Business Power Corporation, Philippines
- Aditya Birla Group - India
- Madhucon Powers Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- Dalmia Cement Bharat India
- The Treasury - Australian Government
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Carbofer General Trading SA - India
- Indika Energy - Indonesia
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Kaltim Prima Coal - Indonesia
- The University of Queensland
- Cement Manufacturers Association - India
- Chettinad Cement Corporation Ltd - India
- Energy Link Ltd, New Zealand
- Power Finance Corporation Ltd., India
- Trasteel International SA, Italy
- Alfred C Toepfer International GmbH - Germany
- Sical Logistics Limited - India
- Sojitz Corporation - Japan
- PTC India Limited - India
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Meralco Power Generation, Philippines
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Karaikal Port Pvt Ltd - India
- ASAPP Information Group - India
- VISA Power Limited - India
- Manunggal Multi Energi - Indonesia
- Coastal Gujarat Power Limited - India
- San Jose City I Power Corp, Philippines
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Meenaskhi Energy Private Limited - India
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- Attock Cement Pakistan Limited
- Vedanta Resources Plc - India
- Ministry of Transport, Egypt
- Gujarat Sidhee Cement - India
- Heidelberg Cement - Germany
- Pendopo Energi Batubara - Indonesia
- The State Trading Corporation of India Ltd
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Economic Council, Georgia
- Sarangani Energy Corporation, Philippines
- Standard Chartered Bank - UAE
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Deloitte Consulting - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Timah Investasi Mineral - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Electricity Authority, New Zealand
- Interocean Group of Companies - India
- Vizag Seaport Private Limited - India
- Indonesian Coal Mining Association
- Price Waterhouse Coopers - Russia
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Straits Asia Resources Limited - Singapore
- Merrill Lynch Commodities Europe
- Tata Chemicals Ltd - India
- Baramulti Group, Indonesia
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- PowerSource Philippines DevCo
- Riau Bara Harum - Indonesia
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Indian Oil Corporation Limited
- Toyota Tsusho Corporation, Japan
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Essar Steel Hazira Ltd - India
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Ceylon Electricity Board - Sri Lanka
- Metalloyd Limited - United Kingdom
- Mjunction Services Limited - India
- Posco Energy - South Korea
- Jindal Steel & Power Ltd - India
- Parry Sugars Refinery, India
- Videocon Industries ltd - India
- New Zealand Coal & Carbon
- Marubeni Corporation - India
- Holcim Trading Pte Ltd - Singapore
- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- MS Steel International - UAE
- Eastern Coal Council - USA
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Anglo American - United Kingdom
- IEA Clean Coal Centre - UK
- Orica Australia Pty. Ltd.
- Miang Besar Coal Terminal - Indonesia
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- Bukit Baiduri Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Commonwealth Bank - Australia
- Directorate Of Revenue Intelligence - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Globalindo Alam Lestari - Indonesia
- Mercator Lines Limited - India
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Sakthi Sugars Limited - India
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- Coalindo Energy - Indonesia
- Medco Energi Mining Internasional
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Indogreen Group - Indonesia
- Formosa Plastics Group - Taiwan
- Gujarat Electricity Regulatory Commission - India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- CNBM International Corporation - China
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- LBH Netherlands Bv - Netherlands
- Rio Tinto Coal - Australia
- Eastern Energy - Thailand
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Bhoruka Overseas - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Cigading International Bulk Terminal - Indonesia
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Xindia Steels Limited - India
- Coal and Oil Company - UAE
- Orica Mining Services - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Singapore Mercantile Exchange
- Semirara Mining Corp, Philippines
- Kobexindo Tractors - Indoneisa
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