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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, 14 February 20
IS THE US COAL INDUSTRY COMPLETELY BURNED OUT? -FORBES
This is the fourth of a multi-part series on the state of the main sources of energy in the US and how they compare globally. The series will cover ...
Friday, 14 February 20
FITCH RTGS: GLOBAL PORTS VULNERABLE TO CORONAVIRUS - RELATED VOLUME DECLINES
Global ports will see reduced trade volumes as a result of the coronavirus, COVID-19, which would become more severe should Chinese production take ...
Thursday, 13 February 20
INDIA: MAJOR PORTS SHOW MUTED GROWTH IN CARGO AS THERMAL COAL VOLUME SLIDES 15% - BUSINESS STANDARD
A sharp slide of 15 per cent in thermal coal volumes weighed on the performance of major ports during the period of April-January of FY20. The majo ...
Wednesday, 12 February 20
REFINING SET FOR A CHALLENGING 2020 - WOOD MACKENZIE
Downstream isn’t the glamorous end of the oil business. And in Big Oil, it’s typically dwarfed by upstream. Yet having been forced to r ...
Wednesday, 12 February 20
COAL INDIA WILL EXCEED LAST YEAR'S PRODUCTION FIGURES: OFFICIAL - PTI
Despite coal production being hampered at Dipka mines due to prolonged rains, Coal India Ltd will exceed last year’s production figures, a to ...
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- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Bangladesh Power Developement Board
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Romanian Commodities Exchange
- Price Waterhouse Coopers - Russia
- Electricity Generating Authority of Thailand
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- Energy Development Corp, Philippines
- Sinarmas Energy and Mining - Indonesia
- Indian Oil Corporation Limited
- Kapuas Tunggal Persada - Indonesia
- Trasteel International SA, Italy
- Pipit Mutiara Jaya. PT, Indonesia
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Toyota Tsusho Corporation, Japan
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GVK Power & Infra Limited - India
- Petron Corporation, Philippines
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Coal and Oil Company - UAE
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- ICICI Bank Limited - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Krishnapatnam Port Company Ltd. - India
- Karbindo Abesyapradhi - Indoneisa
- Jaiprakash Power Ventures ltd
- Antam Resourcindo - Indonesia
- Australian Commodity Traders Exchange
- Dalmia Cement Bharat India
- PowerSource Philippines DevCo
- India Bulls Power Limited - India
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Larsen & Toubro Limited - India
- Africa Commodities Group - South Africa
- VISA Power Limited - India
- Thiess Contractors Indonesia
- International Coal Ventures Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Bhatia International Limited - India
- San Jose City I Power Corp, Philippines
- Intertek Mineral Services - Indonesia
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vizag Seaport Private Limited - India
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Baramulti Group, Indonesia
- LBH Netherlands Bv - Netherlands
- Chettinad Cement Corporation Ltd - India
- Vedanta Resources Plc - India
- Agrawal Coal Company - India
- Uttam Galva Steels Limited - India
- Eastern Coal Council - USA
- Sical Logistics Limited - India
- Indo Tambangraya Megah - Indonesia
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Makarim & Taira - Indonesia
- Mintek Dendrill Indonesia
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Alfred C Toepfer International GmbH - Germany
- Central Electricity Authority - India
- Barasentosa Lestari - Indonesia
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Electricity Authority, New Zealand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- European Bulk Services B.V. - Netherlands
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- The University of Queensland
- Minerals Council of Australia
- Star Paper Mills Limited - India
- Mercator Lines Limited - India
- Ceylon Electricity Board - Sri Lanka
- Coalindo Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- PTC India Limited - India
- Rio Tinto Coal - Australia
- Malabar Cements Ltd - India
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Sojitz Corporation - Japan
- Timah Investasi Mineral - Indoneisa
- Gujarat Sidhee Cement - India
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Latin American Coal - Colombia
- Kumho Petrochemical, South Korea
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- AsiaOL BioFuels Corp., Philippines
- IEA Clean Coal Centre - UK
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- Bulk Trading Sa - Switzerland
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- MS Steel International - UAE
- Vijayanagar Sugar Pvt Ltd - India
- Thai Mozambique Logistica
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Semirara Mining and Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Carbofer General Trading SA - India
- Salva Resources Pvt Ltd - India
- London Commodity Brokers - England
- Holcim Trading Pte Ltd - Singapore
- Sree Jayajothi Cements Limited - India
- Global Coal Blending Company Limited - Australia
- Karaikal Port Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Madhucon Powers Ltd - India
- Savvy Resources Ltd - HongKong
- Globalindo Alam Lestari - Indonesia
- CIMB Investment Bank - Malaysia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Australian Coal Association
- Grasim Industreis Ltd - India
- Commonwealth Bank - Australia
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- TeaM Sual Corporation - Philippines
- The Treasury - Australian Government
- IHS Mccloskey Coal Group - USA
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Tamil Nadu electricity Board
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Indogreen Group - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Transport, Egypt
- Straits Asia Resources Limited - Singapore
- Standard Chartered Bank - UAE
- Bhushan Steel Limited - India
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Chamber of Mines of South Africa
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Rashtriya Ispat Nigam Limited - India
- Indian Energy Exchange, India
- Kartika Selabumi Mining - Indonesia
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- Orica Mining Services - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- The State Trading Corporation of India Ltd
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Kepco SPC Power Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- CNBM International Corporation - China
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Bhoruka Overseas - Indonesia
- Singapore Mercantile Exchange
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Aditya Birla Group - India
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Wood Mackenzie - Singapore
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