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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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Sunday, 23 February 20
SHIPPING INDUSTRY FACES $370 MILLION HIT FROM NEW PANAMA CANAL CHARGE - REUTERS
A new “freshwater” charge that came in this month to help the Panama Canal cope with climate change will cost the shipping industry up ...
Sunday, 23 February 20
A 57,000DWT SHIP FIXING DELIVERY SOUTH KALIMANTAN TRIP, REDELIVERY CJK, AT $7,600 - BALTIC BRIEFING
Capesize
The Capesize market found little to cheer about this week as it again endured remarkable lows. The Atlantic continued to improve, with ...
Saturday, 22 February 20
THE SURPRISING MOVE IN MARINE FUEL SPREADS - ING
Middle distillates tank
One of the biggest surprises since the implementation of new International Maritime Organization (IMO) sulphur regulati ...
Friday, 21 February 20
CAPE: AVERAGE NOMINAL DAILY EARNINGS STILL ADMITTEDLY UNCHANGED W-O-W AT BELOW US$3000 - FEARNLEYS
CAPE
The worst may just about be over for the big ships. Average nominal daily earnings still admittedly unchanged w-o-w at below US$3k, but sent ...
Friday, 21 February 20
INDIA: POTENTIAL INVESTORS SEEK MORE CLARITY ON COMMERCIAL COAL MINING NORMS - FINANCIAL EXPRESS
Potential private investors have sought more clarity on the pricing mechanism proposed for the much-anticipated auction for commercial coal mining. ...
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- White Energy Company Limited
- Maharashtra Electricity Regulatory Commission - India
- PNOC Exploration Corporation - Philippines
- McConnell Dowell - Australia
- Siam City Cement PLC, Thailand
- Global Green Power PLC Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- CNBM International Corporation - China
- Jaiprakash Power Ventures ltd
- India Bulls Power Limited - India
- Parliament of New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Bukit Asam (Persero) Tbk - Indonesia
- ASAPP Information Group - India
- Coalindo Energy - Indonesia
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Baramulti Group, Indonesia
- Carbofer General Trading SA - India
- Minerals Council of Australia
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Mintek Dendrill Indonesia
- Romanian Commodities Exchange
- Bhoruka Overseas - Indonesia
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Electricity Authority, New Zealand
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- IHS Mccloskey Coal Group - USA
- Savvy Resources Ltd - HongKong
- Agrawal Coal Company - India
- Cement Manufacturers Association - India
- Gujarat Mineral Development Corp Ltd - India
- South Luzon Thermal Energy Corporation
- Planning Commission, India
- European Bulk Services B.V. - Netherlands
- Rio Tinto Coal - Australia
- MS Steel International - UAE
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Indian Energy Exchange, India
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Toyota Tsusho Corporation, Japan
- Vizag Seaport Private Limited - India
- Vedanta Resources Plc - India
- Sical Logistics Limited - India
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Energy Link Ltd, New Zealand
- CIMB Investment Bank - Malaysia
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- PowerSource Philippines DevCo
- Heidelberg Cement - Germany
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Coastal Gujarat Power Limited - India
- Ceylon Electricity Board - Sri Lanka
- TeaM Sual Corporation - Philippines
- Thai Mozambique Logistica
- Tamil Nadu electricity Board
- Eastern Coal Council - USA
- SMC Global Power, Philippines
- SMG Consultants - Indonesia
- Posco Energy - South Korea
- Riau Bara Harum - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Gujarat Sidhee Cement - India
- Central Java Power - Indonesia
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- LBH Netherlands Bv - Netherlands
- Lanco Infratech Ltd - India
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- SN Aboitiz Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Indo Tambangraya Megah - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Standard Chartered Bank - UAE
- Electricity Generating Authority of Thailand
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- OPG Power Generation Pvt Ltd - India
- Chamber of Mines of South Africa
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Xindia Steels Limited - India
- Grasim Industreis Ltd - India
- Sojitz Corporation - Japan
- Kapuas Tunggal Persada - Indonesia
- Mercator Lines Limited - India
- Oldendorff Carriers - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Dalmia Cement Bharat India
- Holcim Trading Pte Ltd - Singapore
- Karaikal Port Pvt Ltd - India
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Indian Oil Corporation Limited
- Salva Resources Pvt Ltd - India
- Globalindo Alam Lestari - Indonesia
- Borneo Indobara - Indonesia
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- PTC India Limited - India
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- London Commodity Brokers - England
- Intertek Mineral Services - Indonesia
- Ministry of Mines - Canada
- Timah Investasi Mineral - Indoneisa
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- GVK Power & Infra Limited - India
- Meenaskhi Energy Private Limited - India
- Videocon Industries ltd - India
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Indika Energy - Indonesia
- Trasteel International SA, Italy
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Parry Sugars Refinery, India
- Bukit Makmur.PT - Indonesia
- The State Trading Corporation of India Ltd
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Eastern Energy - Thailand
- Bharathi Cement Corporation - India
- Malabar Cements Ltd - India
- Aditya Birla Group - India
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- GAC Shipping (India) Pvt Ltd
- San Jose City I Power Corp, Philippines
- Indonesian Coal Mining Association
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Bangladesh Power Developement Board
- Star Paper Mills Limited - India
- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- The University of Queensland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Africa Commodities Group - South Africa
- Port Waratah Coal Services - Australia
- Central Electricity Authority - India
- Petron Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Uttam Galva Steels Limited - India
- Therma Luzon, Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Wilmar Investment Holdings
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