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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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Friday, 06 March 20
SOLID BACKING FOR LNG AS A MARINE FUEL - BALTIC EXCHANGE
When it comes to choosing the best fuel on the near horizon to help the international shipping industry shrink its carbon intensity by 2050, DNV GL ...
Friday, 06 March 20
INDONESIA COAL PRICE REFERENCE UP AGAIN THIS MONTH
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Thursday, 05 March 20
PANAMAX: SHIP-OWNERS HAVE MOSTLY BEEN GETTING HIGHER RATES THAN THE LAST DONE - FEARNLEYS
Cape
There is still limited amount of positive news around, with the effects of Corona virus hurting world economy. However, overall average in ...
Thursday, 05 March 20
COAL IMPORTS DOWN IN MAJOR ASIAN MARKETS, AND CORONAVIRUS NOT THE DRIVING FORCE - CLYDE RUSSELL
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
Thursday, 05 March 20
SEABORNE COAL'S STRUGGLES IN ASIA ARE MORE THAN JUST CHINA CORONAVIRUS - REUTERS
Asia’s seaborne coal markets stumbled in February and it appears the coronavirus outbreak in China may dodge most of the blame, with the weak ...
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- Bukit Baiduri Energy - Indonesia
- Bharathi Cement Corporation - India
- Semirara Mining and Power Corporation, Philippines
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Directorate General of MIneral and Coal - Indonesia
- Orica Mining Services - Indonesia
- Chamber of Mines of South Africa
- SN Aboitiz Power Inc, Philippines
- Planning Commission, India
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Bukit Makmur.PT - Indonesia
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- MS Steel International - UAE
- Trasteel International SA, Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Timah Investasi Mineral - Indoneisa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kobexindo Tractors - Indoneisa
- Price Waterhouse Coopers - Russia
- TeaM Sual Corporation - Philippines
- Tata Chemicals Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Posco Energy - South Korea
- Kideco Jaya Agung - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Altura Mining Limited, Indonesia
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- PTC India Limited - India
- Savvy Resources Ltd - HongKong
- Coal and Oil Company - UAE
- Kepco SPC Power Corporation, Philippines
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Mintek Dendrill Indonesia
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Videocon Industries ltd - India
- Meenaskhi Energy Private Limited - India
- Wood Mackenzie - Singapore
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Bangladesh Power Developement Board
- Directorate Of Revenue Intelligence - India
- Thiess Contractors Indonesia
- Anglo American - United Kingdom
- GMR Energy Limited - India
- Karbindo Abesyapradhi - Indoneisa
- International Coal Ventures Pvt Ltd - India
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- LBH Netherlands Bv - Netherlands
- VISA Power Limited - India
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Attock Cement Pakistan Limited
- Ind-Barath Power Infra Limited - India
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Gujarat Sidhee Cement - India
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Parry Sugars Refinery, India
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Uttam Galva Steels Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Thai Mozambique Logistica
- Renaissance Capital - South Africa
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Iligan Light & Power Inc, Philippines
- Africa Commodities Group - South Africa
- Central Electricity Authority - India
- Madhucon Powers Ltd - India
- European Bulk Services B.V. - Netherlands
- Ministry of Finance - Indonesia
- Petron Corporation, Philippines
- Port Waratah Coal Services - Australia
- Singapore Mercantile Exchange
- Oldendorff Carriers - Singapore
- Economic Council, Georgia
- Cigading International Bulk Terminal - Indonesia
- Eastern Coal Council - USA
- Edison Trading Spa - Italy
- Alfred C Toepfer International GmbH - Germany
- Holcim Trading Pte Ltd - Singapore
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Sarangani Energy Corporation, Philippines
- The Treasury - Australian Government
- Miang Besar Coal Terminal - Indonesia
- India Bulls Power Limited - India
- Medco Energi Mining Internasional
- Georgia Ports Authority, United States
- Kaltim Prima Coal - Indonesia
- Manunggal Multi Energi - Indonesia
- Metalloyd Limited - United Kingdom
- Siam City Cement PLC, Thailand
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Marubeni Corporation - India
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- GVK Power & Infra Limited - India
- Goldman Sachs - Singapore
- Australian Coal Association
- Leighton Contractors Pty Ltd - Australia
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- Ambuja Cements Ltd - India
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- IHS Mccloskey Coal Group - USA
- Kapuas Tunggal Persada - Indonesia
- OPG Power Generation Pvt Ltd - India
- Wilmar Investment Holdings
- Intertek Mineral Services - Indonesia
- Aboitiz Power Corporation - Philippines
- Meralco Power Generation, Philippines
- Sindya Power Generating Company Private Ltd
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Samtan Co., Ltd - South Korea
- McConnell Dowell - Australia
- The State Trading Corporation of India Ltd
- San Jose City I Power Corp, Philippines
- Ministry of Mines - Canada
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Lanco Infratech Ltd - India
- Romanian Commodities Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Coalindo Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Maheswari Brothers Coal Limited - India
- Grasim Industreis Ltd - India
- Indika Energy - Indonesia
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- Banpu Public Company Limited - Thailand
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Jorong Barutama Greston.PT - Indonesia
- Makarim & Taira - Indonesia
- Krishnapatnam Port Company Ltd. - India
- The University of Queensland
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Star Paper Mills Limited - India
- Pendopo Energi Batubara - Indonesia
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Malabar Cements Ltd - India
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- GAC Shipping (India) Pvt Ltd
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
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