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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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Wednesday, 05 February 20
CORONAVIRUS AND THE SHIPPING INDUSTRY - WATSON, FARLEY & WILLIAMS
The continued spread of Coronavirus and governmental measures to minimise the impact is likely to affect the shipping industry and supply chain.
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Wednesday, 05 February 20
INDONESIA'S COAL PRICE REFERENCE UP 1.46% IN FEBRUARY
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised up the benchmark price of Indonesian thermal co ...
Wednesday, 05 February 20
MARKET INSIGHT - INTERMODAL
The oil and gas industry benefitted from a strong and solid ground in the previous year. We witnessed a slow but steady increase in bunker’s ...
Wednesday, 05 February 20
RUSSIA EXPORTED 28.6 MLN TONNES OF LNG IN 2019 - REFINITIV
A lot of attention has been paid recently on the surge in LNG exports from the United States. However, another country which is seeing truly expone ...
Tuesday, 04 February 20
CAPE: THE AVERAGE EARNINGS PER DAY FELL BENEATH THE USD 4,000, A LEVEL CONSIDERABLY BELOW EVEN THE MOST CONSERVATIVE OPEX LEVELS - ALLIED
The recent slump in the dry bulk freight market may well have been expected to some degree, but despite this the shock was still overwhelming when ...
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- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Karaikal Port Pvt Ltd - India
- Merrill Lynch Commodities Europe
- Interocean Group of Companies - India
- Meenaskhi Energy Private Limited - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Oldendorff Carriers - Singapore
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Sree Jayajothi Cements Limited - India
- Directorate Of Revenue Intelligence - India
- Ceylon Electricity Board - Sri Lanka
- Videocon Industries ltd - India
- VISA Power Limited - India
- Electricity Authority, New Zealand
- Maheswari Brothers Coal Limited - India
- Rashtriya Ispat Nigam Limited - India
- Vedanta Resources Plc - India
- TNB Fuel Sdn Bhd - Malaysia
- Jorong Barutama Greston.PT - Indonesia
- Bukit Baiduri Energy - Indonesia
- Parry Sugars Refinery, India
- Kapuas Tunggal Persada - Indonesia
- Essar Steel Hazira Ltd - India
- Anglo American - United Kingdom
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Tamil Nadu electricity Board
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Vizag Seaport Private Limited - India
- Orica Mining Services - Indonesia
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Kumho Petrochemical, South Korea
- Global Business Power Corporation, Philippines
- GMR Energy Limited - India
- Semirara Mining and Power Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Coal and Oil Company - UAE
- PetroVietnam Power Coal Import and Supply Company
- Globalindo Alam Lestari - Indonesia
- Planning Commission, India
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Malabar Cements Ltd - India
- Standard Chartered Bank - UAE
- Kaltim Prima Coal - Indonesia
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Kepco SPC Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- IHS Mccloskey Coal Group - USA
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Commonwealth Bank - Australia
- Iligan Light & Power Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Energy Link Ltd, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- Therma Luzon, Inc, Philippines
- Heidelberg Cement - Germany
- Maharashtra Electricity Regulatory Commission - India
- Xindia Steels Limited - India
- Wood Mackenzie - Singapore
- London Commodity Brokers - England
- McConnell Dowell - Australia
- PNOC Exploration Corporation - Philippines
- Kalimantan Lumbung Energi - Indonesia
- Aboitiz Power Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Mjunction Services Limited - India
- Energy Development Corp, Philippines
- Jaiprakash Power Ventures ltd
- Altura Mining Limited, Indonesia
- San Jose City I Power Corp, Philippines
- Larsen & Toubro Limited - India
- Thiess Contractors Indonesia
- Chettinad Cement Corporation Ltd - India
- ICICI Bank Limited - India
- White Energy Company Limited
- Baramulti Group, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- PTC India Limited - India
- South Luzon Thermal Energy Corporation
- TeaM Sual Corporation - Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bayan Resources Tbk. - Indonesia
- Power Finance Corporation Ltd., India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Mercuria Energy - Indonesia
- Salva Resources Pvt Ltd - India
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Indo Tambangraya Megah - Indonesia
- Aditya Birla Group - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- CNBM International Corporation - China
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Bhushan Steel Limited - India
- Sarangani Energy Corporation, Philippines
- SMG Consultants - Indonesia
- Agrawal Coal Company - India
- Chamber of Mines of South Africa
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- Indogreen Group - Indonesia
- Straits Asia Resources Limited - Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Madhucon Powers Ltd - India
- Bangladesh Power Developement Board
- Bukit Makmur.PT - Indonesia
- Ambuja Cements Ltd - India
- Independent Power Producers Association of India
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Makarim & Taira - Indonesia
- The University of Queensland
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Economic Council, Georgia
- Indian Oil Corporation Limited
- Renaissance Capital - South Africa
- GN Power Mariveles Coal Plant, Philippines
- The State Trading Corporation of India Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Samtan Co., Ltd - South Korea
- Central Java Power - Indonesia
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- ASAPP Information Group - India
- Singapore Mercantile Exchange
- Holcim Trading Pte Ltd - Singapore
- Ministry of Finance - Indonesia
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- IEA Clean Coal Centre - UK
- Carbofer General Trading SA - India
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Billiton Holdings Pty Ltd - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Intertek Mineral Services - Indonesia
- Global Green Power PLC Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Wilmar Investment Holdings
- Banpu Public Company Limited - Thailand
- Indika Energy - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- PowerSource Philippines DevCo
- Toyota Tsusho Corporation, Japan
- Ministry of Transport, Egypt
- Star Paper Mills Limited - India
- Georgia Ports Authority, United States
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- Siam City Cement PLC, Thailand
- Bhoruka Overseas - Indonesia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Meralco Power Generation, Philippines
- Australian Coal Association
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Bhatia International Limited - India
- Bharathi Cement Corporation - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Australian Commodity Traders Exchange
- GVK Power & Infra Limited - India
- International Coal Ventures Pvt Ltd - India
- Lanco Infratech Ltd - India
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- India Bulls Power Limited - India
- Sakthi Sugars Limited - India
- Barasentosa Lestari - Indonesia
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