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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, 05 March 20
INDONESIA'S BUKIT ASAM 2019 OUTPUT RISES 10.2% Y/Y - REUTERS
PT Bukit Asam, Indonesia’s state-owned coal miner, said on Wednesday its output in 2019 rose 10.2% to 29.1 million tonnes.
Coa ...
Thursday, 05 March 20
SEEING REMOTELY - IN SAFETY: BUREAU VERITAS PERFORMS FIRST SURVEY BY DRONE - BUREAU VERITAS
Bureau Veritas Marine & Offshore (BV), a world leader in testing, inspection and certification (TIC) services has completed its first survey by ...
Wednesday, 04 March 20
AN EPIDEMIC OF UNCERTAINTY - THE CORONAVIRUS AND FORCE MAJEURE - WFW
KNOWLEDGE TO ELEVATE
Do the effects of the coronavirus give rise to legitimate force majeure claims in connection with shipbuilding contracts ...
Wednesday, 04 March 20
CHINA IMPORTED 76.8 MLN TONNES OF CRUDE OIL FOR JANUARY & FEBRUARY 2020; UP 3.4% YOY - REFINITIV | BC
The COVID-19 crisis has been gripping China already for almost two months now. It’s having a huge negative impact on the economy, and this is ...
Wednesday, 04 March 20
MARKET INSIGHT - INTERMODAL
As it was expected, the whole world has been focusing on the spread of the Coronavirus, with the fast outbreak being primarily a massive humanitari ...
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- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- SN Aboitiz Power Inc, Philippines
- TeaM Sual Corporation - Philippines
- Antam Resourcindo - Indonesia
- Bhushan Steel Limited - India
- Altura Mining Limited, Indonesia
- AsiaOL BioFuels Corp., Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Billiton Holdings Pty Ltd - Australia
- Formosa Plastics Group - Taiwan
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- CIMB Investment Bank - Malaysia
- GVK Power & Infra Limited - India
- Sarangani Energy Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Indika Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Global Business Power Corporation, Philippines
- Electricity Generating Authority of Thailand
- Ceylon Electricity Board - Sri Lanka
- LBH Netherlands Bv - Netherlands
- Directorate Of Revenue Intelligence - India
- Anglo American - United Kingdom
- ICICI Bank Limited - India
- Australian Coal Association
- Sinarmas Energy and Mining - Indonesia
- Indian Energy Exchange, India
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Mercator Lines Limited - India
- Heidelberg Cement - Germany
- Wood Mackenzie - Singapore
- Georgia Ports Authority, United States
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Price Waterhouse Coopers - Russia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- OPG Power Generation Pvt Ltd - India
- Lanco Infratech Ltd - India
- Meenaskhi Energy Private Limited - India
- Agrawal Coal Company - India
- Independent Power Producers Association of India
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Orica Mining Services - Indonesia
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- Indogreen Group - Indonesia
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement PLC, Thailand
- PowerSource Philippines DevCo
- Chettinad Cement Corporation Ltd - India
- Globalindo Alam Lestari - Indonesia
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- TNB Fuel Sdn Bhd - Malaysia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Thai Mozambique Logistica
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Mjunction Services Limited - India
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Makarim & Taira - Indonesia
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Larsen & Toubro Limited - India
- Kumho Petrochemical, South Korea
- White Energy Company Limited
- Siam City Cement - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Planning Commission, India
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Baramulti Group, Indonesia
- Ministry of Mines - Canada
- Salva Resources Pvt Ltd - India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- Central Electricity Authority - India
- Singapore Mercantile Exchange
- Kartika Selabumi Mining - Indonesia
- Borneo Indobara - Indonesia
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Banpu Public Company Limited - Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Bayan Resources Tbk. - Indonesia
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Marubeni Corporation - India
- Rio Tinto Coal - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Eastern Energy - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- Kepco SPC Power Corporation, Philippines
- VISA Power Limited - India
- Dalmia Cement Bharat India
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- Posco Energy - South Korea
- Trasteel International SA, Italy
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Kalimantan Lumbung Energi - Indonesia
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Uttam Galva Steels Limited - India
- Indian Oil Corporation Limited
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Semirara Mining and Power Corporation, Philippines
- Sakthi Sugars Limited - India
- Malabar Cements Ltd - India
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Central Java Power - Indonesia
- Tata Chemicals Ltd - India
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Samtan Co., Ltd - South Korea
- Bharathi Cement Corporation - India
- Jindal Steel & Power Ltd - India
- Goldman Sachs - Singapore
- Intertek Mineral Services - Indonesia
- GMR Energy Limited - India
- The University of Queensland
- Jorong Barutama Greston.PT - Indonesia
- Wilmar Investment Holdings
- Holcim Trading Pte Ltd - Singapore
- Coastal Gujarat Power Limited - India
- International Coal Ventures Pvt Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Transport, Egypt
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- Ministry of Finance - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- SMC Global Power, Philippines
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Carbofer General Trading SA - India
- Straits Asia Resources Limited - Singapore
- Eastern Coal Council - USA
- MS Steel International - UAE
- PTC India Limited - India
- Tamil Nadu electricity Board
- ASAPP Information Group - India
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Rashtriya Ispat Nigam Limited - India
- Videocon Industries ltd - India
- Parliament of New Zealand
- Minerals Council of Australia
- Merrill Lynch Commodities Europe
- Sindya Power Generating Company Private Ltd
- Savvy Resources Ltd - HongKong
- Power Finance Corporation Ltd., India
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
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