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Thursday, 16 April 20
MARKET INSIGHT - INTERMODAL
 As everyone anticipated the results of the OPEC + G20 meeting last week, it was very interesting to watch the reaction of tanker rates that were in a bull run lately. Amidst an oversupplied oil market and expectations of production cuts and consequent oil price hikes, the large contango effect has made profitable several storage plays during the past couple of months, occupying a lot of ships as a result, while in addition to that, several countries decided (amid bottoming oil prices and the Coronavirus pandemic emergency) to increase to the maximum their strategic petroleum reserves (e.g. the US SPR already has 634 million barrels in storage vs. a total capacity of 713 million barrels).
Key stakeholders in the industry created an additional hype by characterizing this meeting as one of the most important and historic events in the last two decades, creating expectations that any deal would lead to a further spike in short-term activity. There were of course also some less optimistic voices in the industry insisting that deal or no-deal the tanker market remained fundamentally weak in the long term, with the pandemic restrictive measures around the world already leading to a 25-35 million b/d or 30% decrease in demand. Following the end of the meeting, OPEC+ announced output cuts of 9.7m b/d for May and June, 8m b/d for the remainder of 2020 and 6 million b/d for the period January 2021-April 2022. The record cuts we are about to witness in the next couple of months are almost equal to 10% of global supply, while together with non-OPEC+ member cuts the figure could even reach the equivalent of 1/5 of global supply.
This means that May onwards cargo loadings will definitely see significant declines and this will most likely have a negative impact on the tanker freight market. Because of this expectation, we could possibly see producing countries trying to pump out as much product as possible before the agreement enters into effect, which could offer some support to the tanker market before we reach May 1st.
Looking further ahead and as “expecting the unexpected” is something everyone must have gotten used to by now, I’d say that there are a few possible scenarios in which neither the oil market dries up, nor prices manage to stabilize at much higher levels and push freights down. We have seen many times during previous output cuts that there have been some non-compliant members and we won’t be surprised to see certain producing countries eventually ramping up production above what was agreed this time as well.
Not only would such a development restore part of the cargoes lost, but it would also cause great dissatisfaction to compliant members that would start losing market share due to non-compliance and this could eventually lead to a new price war as a result. In addition to that, global demand for oil will gradually begin to increase as countries around the world eventually start to exit the pandemic emergency state and return to normality, while let’s not forget the amount of tonnage that has been used for storage and will not be competing for business in the tanker market.
By Ilias M. Lalaounis
SnP Broker
Compiled by:
Intermodal Research & Valuations
Analysts:
Ms Eva Tzima
Mr.George Panagopoulos
Disclaimer and legal disclosure: For any further queries please do not hesitate to contact our Research & Valuations Department. The information contained in this report has been obtained from various sources, as reported in the market. Intermodal Shipbrokers Co. believes such information to be factual and reliable without making guarantees regarding its accuracy or completeness. Whilst every care has been taken in the production of the above review, no liability can be accepted for any loss or damage incurred in any way whatsoever by any person who may seek to rely on the information and views contained in this material. This report is being produced for the internal use of the intended recipients only and no reproducing is allowed, without the prior written authorization of Intermodal Shipbrokers Co.
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Wednesday, 06 May 20
KOSPO INVITED COAL BIDS FOR LOW CALORIFIC VALUE COAL
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 160,000 Metric Tons (MT) Low Calorific Value Coal for J ...
Wednesday, 06 May 20
COST CHALLENGES IN A US$20/BBL WORLD - WOOD MACKENZIE
A new approach is needed to ensure supply sector resilience
How will US$20/bbl affect the oil and gas supply chain?
It’s going to g ...
Wednesday, 06 May 20
MARKET INSIGHT - INTERMODAL
It comes as no surprise that activity in the dry bulk SnP market remains soft, with asset values caught in the downward spiral generated by the Cov ...
Wednesday, 06 May 20
FLOATING STORAGE OF OIL CARGOES - STANDARD CLUB
KNOWLEDGE TO ELEVATE
Due to a combination of circumstances there is now a worldwide shortage of storage space ashore for both unrefi ...
Wednesday, 06 May 20
IRON ORE TRADE REMAINS REMARKABLY RESILIENT THIS YEAR, AT LEAST IN ASIA - BANCHERO COSTA
Iron ore trade remains remarkably resilient this year, at least in Asia, despite the global economic impact from COVID-19. In the first 4 months of ...
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- Billiton Holdings Pty Ltd - Australia
- India Bulls Power Limited - India
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- Parry Sugars Refinery, India
- Indonesian Coal Mining Association
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- Sical Logistics Limited - India
- Ministry of Mines - Canada
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- Dong Bac Coal Mineral Investment Coporation - Vietnam
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- Thai Mozambique Logistica
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- White Energy Company Limited
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- MS Steel International - UAE
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- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
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- Altura Mining Limited, Indonesia
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Parliament of New Zealand
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- Price Waterhouse Coopers - Russia
- Mercuria Energy - Indonesia
- Energy Development Corp, Philippines
- SMG Consultants - Indonesia
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- Bukit Makmur.PT - Indonesia
- Makarim & Taira - Indonesia
- Economic Council, Georgia
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- Africa Commodities Group - South Africa
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- Global Business Power Corporation, Philippines
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- Indian Energy Exchange, India
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- Ministry of Transport, Egypt
- TNB Fuel Sdn Bhd - Malaysia
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- VISA Power Limited - India
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- Neyveli Lignite Corporation Ltd, - India
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- Bangladesh Power Developement Board
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- Indian Oil Corporation Limited
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- Madhucon Powers Ltd - India
- Latin American Coal - Colombia
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- PTC India Limited - India
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- Semirara Mining Corp, Philippines
- Kohat Cement Company Ltd. - Pakistan
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- GAC Shipping (India) Pvt Ltd
- Petron Corporation, Philippines
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- San Jose City I Power Corp, Philippines
- Antam Resourcindo - Indonesia
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- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Medco Energi Mining Internasional
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- Romanian Commodities Exchange
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- The State Trading Corporation of India Ltd
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- Gujarat Mineral Development Corp Ltd - India
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- Therma Luzon, Inc, Philippines
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- Bhoruka Overseas - Indonesia
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- Wood Mackenzie - Singapore
- Edison Trading Spa - Italy
- Borneo Indobara - Indonesia
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