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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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Saturday, 15 February 20
AFRAMAX: A MORE POSITIVE ATTITUDE EXISTED IN THIS SECTOR WITH RATES IMPROVING ON ALL ROUTES - BALTIC BRIEFING
VLCC
The market in the Middle East was unmoved this week, with Chinese refiners continuing to slow imports, allied with the impact of the Coron ...
Saturday, 15 February 20
A 56,000DWT VESSEL WAS CONCLUDED BASIS DELIVERY SINGAPORE VIA INDONESIA REDELIVERY CHINA IN THE LOW $6,000S - BALTIC BRIEFING
Capesize
Riding the downward momentum of the previous week, the market was always going to be hard pressed to make any sort of revival. With mu ...
Saturday, 15 February 20
U.S. COAL PRODUCTION WILL TOTAL 595 MMST IN 2020, DOWN 14% FROM 2019 - EIA
EIA forecasts that U.S. coal production will total 595 million short tons (MMst) in 2020, down 95 MMst (14%) from 2019.
Lower ...
Friday, 14 February 20
WHY THE WORLD ECONOMY WILL BE FACING CHINA'S CORONAVIRUS FOR A LONG TIME - CNBC
Everywhere we look we see the headlines and commentators talking about the coronavirus and its impact on tourism, trade and investment between Chin ...
Friday, 14 February 20
KOWEPO INVITED BIDS FOR 1.275 MILLION TONS OF MIN. 5,600 NCV COAL
COALspot.com: Korea Western Power Co. Ltd (KOWEPO). as a representative of five Korean Gencos has issued an international tender for total 1,275,00 ...
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- Kaltim Prima Coal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Electricity Generating Authority of Thailand
- Bhoruka Overseas - Indonesia
- Metalloyd Limited - United Kingdom
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Sinarmas Energy and Mining - Indonesia
- Semirara Mining Corp, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kobexindo Tractors - Indoneisa
- Chettinad Cement Corporation Ltd - India
- Uttam Galva Steels Limited - India
- Tata Chemicals Ltd - India
- Banpu Public Company Limited - Thailand
- Ind-Barath Power Infra Limited - India
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Krishnapatnam Port Company Ltd. - India
- Meralco Power Generation, Philippines
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Aboitiz Power Corporation - Philippines
- Standard Chartered Bank - UAE
- Coal and Oil Company - UAE
- Coalindo Energy - Indonesia
- Posco Energy - South Korea
- Billiton Holdings Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Cement Manufacturers Association - India
- Sojitz Corporation - Japan
- Toyota Tsusho Corporation, Japan
- Heidelberg Cement - Germany
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- London Commodity Brokers - England
- Cigading International Bulk Terminal - Indonesia
- Georgia Ports Authority, United States
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Altura Mining Limited, Indonesia
- The Treasury - Australian Government
- VISA Power Limited - India
- Bhushan Steel Limited - India
- PowerSource Philippines DevCo
- European Bulk Services B.V. - Netherlands
- Bank of Tokyo Mitsubishi UFJ Ltd
- Economic Council, Georgia
- Jindal Steel & Power Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Petron Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Interocean Group of Companies - India
- Rashtriya Ispat Nigam Limited - India
- Orica Australia Pty. Ltd.
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Indogreen Group - Indonesia
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
- Sarangani Energy Corporation, Philippines
- Savvy Resources Ltd - HongKong
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Medco Energi Mining Internasional
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- PetroVietnam Power Coal Import and Supply Company
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kepco SPC Power Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Singapore Mercantile Exchange
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Manunggal Multi Energi - Indonesia
- Deloitte Consulting - India
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- Thiess Contractors Indonesia
- Thai Mozambique Logistica
- Karaikal Port Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- Price Waterhouse Coopers - Russia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Vedanta Resources Plc - India
- Planning Commission, India
- Larsen & Toubro Limited - India
- Intertek Mineral Services - Indonesia
- Antam Resourcindo - Indonesia
- Power Finance Corporation Ltd., India
- ASAPP Information Group - India
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Asia Pacific Energy Resources Ventures Inc, Philippines
- PTC India Limited - India
- San Jose City I Power Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Mjunction Services Limited - India
- Indian Energy Exchange, India
- Kalimantan Lumbung Energi - Indonesia
- Rio Tinto Coal - Australia
- Kartika Selabumi Mining - Indonesia
- Ministry of Transport, Egypt
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Bhatia International Limited - India
- Goldman Sachs - Singapore
- Bulk Trading Sa - Switzerland
- Karbindo Abesyapradhi - Indoneisa
- Romanian Commodities Exchange
- Therma Luzon, Inc, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Renaissance Capital - South Africa
- India Bulls Power Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- Indonesian Coal Mining Association
- Gujarat Electricity Regulatory Commission - India
- The University of Queensland
- The State Trading Corporation of India Ltd
- Global Business Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Riau Bara Harum - Indonesia
- Mercator Lines Limited - India
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- Formosa Plastics Group - Taiwan
- Australian Commodity Traders Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Mintek Dendrill Indonesia
- AsiaOL BioFuels Corp., Philippines
- Sindya Power Generating Company Private Ltd
- Energy Development Corp, Philippines
- Kumho Petrochemical, South Korea
- Semirara Mining and Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Energy Link Ltd, New Zealand
- Indika Energy - Indonesia
- Bangladesh Power Developement Board
- Commonwealth Bank - Australia
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Maheswari Brothers Coal Limited - India
- IEA Clean Coal Centre - UK
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Global Coal Blending Company Limited - Australia
- Chamber of Mines of South Africa
- Bukit Asam (Persero) Tbk - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- MS Steel International - UAE
- Xindia Steels Limited - India
- Globalindo Alam Lestari - Indonesia
- Sree Jayajothi Cements Limited - India
- Independent Power Producers Association of India
- GN Power Mariveles Coal Plant, Philippines
- SMC Global Power, Philippines
- Samtan Co., Ltd - South Korea
- Salva Resources Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bayan Resources Tbk. - Indonesia
- Sical Logistics Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Java Power - Indonesia
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Port Waratah Coal Services - Australia
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