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Saturday, 11 December 21
BUNKER BUYERS LOSE UP TO $5/MT FOR NOT COVERING ENOUGH SUPPLIERS - INTEGR8 FUELS
With the Brent price recently touching the $80 mark and before the Omicron variant concerns pushed it lower, bunker prices reached levels not seen since early 2020. Following the OPEC+ decision not to release additional crude oil volumes on the market and continuing to add to existing supply gradually, we may see more oil price increases going forward, particularly if Omicron proves to be less deadly as initially thought and given the current tight oil supply and demand balance.
The process of buying bunker fuel is essentially a reverse auction where more participants often mean a better price achieved, which is particularly important in the high oil price environment. In this article, we discuss the reasons and quantify the impact of low supplier coverage and response rate on the price paid and look into the ways to get more suppliers to quote.
More suppliers quoting means lower price paid…
We analysed a sample of over 250 Integr8 Fuels stems fixed so far in 2021 covering the hubs of ARA, Gibralter Straits and Malta which are served by multiple suppliers. For each stem, only the larger quantity fuel was analysed (often VLSFO or HSFO, unless a single LSMGO grade was procured) as supplier coverage in the dual fuel stems often depends on the main larger quantity grade.
Figure 1. shows the relationship between the supplier response rate (the share of suppliers quoting a price in the total number of suppliers) and the average premium or discount paid over the bunker benchmark price provided by ENGINE.
It is evident that, on average, stems with less than 20% of suppliers quoting were fixed at a slight premium to the benchmark, while stems with over 60% of suppliers quoting were fixed at significant discounts, hence having more suppliers’ quotes resulted in an average savings of up to $5/mt. And there are a number of ways to achieve such savings.
To visually represent this, all the stems have been mapped for supplier coverage and response rate with stems falling into three distinct categories (Figure 2.). Around 30% of stems fall into the first category, where both supplier coverage and response rates were low, including most of the stems with one supplier. Stems in this category were on average fixed with a $0.2/mt discount to the ENGINE benchmark price.
Intuitively, an over payment could be expected, however, the small discount was mostly due to a number of large quantity fixtures that usually attract good prices. The stems in the second category, which constitute around 15% of all stems, had good a supplier coverage but a low response rate.These are characterised by their smaller size, shorter lead time and a small discount to the benchmark of $0.3/mt. A lot of these fixtures were done for same day delivery. Lastly, in the third category are the stems with a good supplier coverage and response rate -these on average achieved a much larger discount of $3.4/mt to the benchmark and this is the category where more fixtures should be aiming to be.
Interestingly, we found a number of stems with the high supplier coverage and response rate yet with sizeable over-payments beyond the ENGINE benchmark pricing. The main reason for this was found to be the limitation imposed by some companies in the wake of the IMO2020 change on the acceptable levels of sulphur and viscosity when buying VLSFO. While in some instances such limitations helped to avoid buying fuel that was more likely to test off-spec or cause issues on board vessels, in others this meant that some suppliers offering lower prices were being disqualified on the basis of provisional certificates of quality which were not always representative of the delivered fuel quality. A similar trend was spotted among the minority of stems where a certain spec was requested, for example ISO8217:2017.
Overall, the data shows that increasing the lead time and stem quantity, avoiding out of hours and weekend enquiries, being flexible with the fuel specs where operationally possible and safe to do so, can help increase suppliers’ response and achieve a better price paid. Moving beyond the stem sample analysed, another typical reason for sub-optimal supplier coverage is that some companies only prefer to deal with a limited number of physical suppliers directly.
Traders can help increase supplier coverage
Direct business is often perceived as the only way to achieve low prices as it cuts the middleman from the equation. This does work well for large companies buying substantial volumes of bunkers globally who have the resources to negotiate prices, set up and maintain credit lines with the hundreds of suppliers globally. However, the reality is that a lot of medium and smaller companies may only be dealing with a handful of suppliers directly thus not covering the whole market. This significantly limits their bargaining power. A trader can not only cover the rest of the market but also act as insurance policy should the company’s own credit lines with suppliers become tight, particularly in the rising oil price environment.
Long gone the days when traders were matching sellers with buyers. In recent years, investment has been going into gathering data, setting up systems, news flow and analytics. While receiving quotes and sending back counteroffers to five suppliers may not sound too complex, a trader may have a system that allows to compare supplier quotations on the weighted by fuel grade average price while also considering suppliers’ historical claims, density short lifts, recent quality issues and fuel energy content. These days a trader can not only cover every supplier in the market but also warn about supply delays (as no one wants their $40,000/day earning bulk carrier to go off hire waiting for bunker supplies), worsening weather conditions, help prevent claims, bundle up several enquiries to achieve volume discounts and even help with bunker planning and suggest the most optimal port or combination of ports to bunker your vessel.
Source: Integr8 Fuels
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Sunday, 21 August 22
COAL-RICH POLAND FACES WINTER OF ENERGY DISCONTENT - DW
Poland uses 10 million tons of coal a year to heat households — a whopping 87% of all coal consumed in EU homes in 2019, according to the War ...
Saturday, 20 August 22
KOSPO TO IMPORT 240000 MT OF MIN 4400 KCAL/KG NCV STEAM COAL FOR OCTOBER;LOADING FROM RUSSIAN PORTS NOT ALLOWED
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 240,000 MT of min 4,400kcal/kg to max. 4,999 kcal/kg NC ...
Wednesday, 17 August 22
INDIAN COMPANIES SWAPPING DOLLAR FOR ASIAN CURRENCIES TO BUY RUSSIAN COAL - REUTERS
Indian companies are using Asian currencies more often to pay for Russian coal imports, according to customs documents and industry sources, avoidi ...
Wednesday, 17 August 22
LNG: MAJOR INVESTMENT AND EXPANSION PHASE, DOUBLING OF LIQUEFACTION CAPACITY BY 2028 PROJECTED - CLARKSONS
Clarksons Research have released the latest version of their long standing annual review, LNG Trade & Transport, on to Shipping Intelligence Ne ...
Wednesday, 17 August 22
UNAFFORDABLE LNG PRICES UNDERMINE RAPID DEMAND GROWTH FORECASTS IN KEY ASIAN MARKETS - IEEFA
Sustained high prices may accelerate downward pressures on Asian LNG demand, clouding long-term industry outlooks
The global liquefi ...
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- Energy Development Corp, Philippines
- Directorate Of Revenue Intelligence - India
- AsiaOL BioFuels Corp., Philippines
- Indian Oil Corporation Limited
- Interocean Group of Companies - India
- Energy Link Ltd, New Zealand
- Sarangani Energy Corporation, Philippines
- CNBM International Corporation - China
- Neyveli Lignite Corporation Ltd, - India
- ICICI Bank Limited - India
- European Bulk Services B.V. - Netherlands
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Orica Mining Services - Indonesia
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Maheswari Brothers Coal Limited - India
- Australian Commodity Traders Exchange
- Bharathi Cement Corporation - India
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Kohat Cement Company Ltd. - Pakistan
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Samtan Co., Ltd - South Korea
- PetroVietnam Power Coal Import and Supply Company
- Leighton Contractors Pty Ltd - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bangladesh Power Developement Board
- Singapore Mercantile Exchange
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Asmin Koalindo Tuhup - Indonesia
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Banpu Public Company Limited - Thailand
- Rashtriya Ispat Nigam Limited - India
- Indonesian Coal Mining Association
- Anglo American - United Kingdom
- Krishnapatnam Port Company Ltd. - India
- Price Waterhouse Coopers - Russia
- Savvy Resources Ltd - HongKong
- Sree Jayajothi Cements Limited - India
- Jaiprakash Power Ventures ltd
- Goldman Sachs - Singapore
- Wood Mackenzie - Singapore
- Global Green Power PLC Corporation, Philippines
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- Thiess Contractors Indonesia
- Simpson Spence & Young - Indonesia
- IEA Clean Coal Centre - UK
- The University of Queensland
- Economic Council, Georgia
- Wilmar Investment Holdings
- MS Steel International - UAE
- Petrochimia International Co. Ltd.- Taiwan
- Electricity Authority, New Zealand
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- PNOC Exploration Corporation - Philippines
- Semirara Mining Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Independent Power Producers Association of India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kumho Petrochemical, South Korea
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Sakthi Sugars Limited - India
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tata Chemicals Ltd - India
- Planning Commission, India
- IHS Mccloskey Coal Group - USA
- Bhoruka Overseas - Indonesia
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Bulk Trading Sa - Switzerland
- Offshore Bulk Terminal Pte Ltd, Singapore
- Billiton Holdings Pty Ltd - Australia
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Posco Energy - South Korea
- India Bulls Power Limited - India
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Sical Logistics Limited - India
- Ministry of Transport, Egypt
- San Jose City I Power Corp, Philippines
- Cigading International Bulk Terminal - Indonesia
- McConnell Dowell - Australia
- Chamber of Mines of South Africa
- Thai Mozambique Logistica
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Attock Cement Pakistan Limited
- Toyota Tsusho Corporation, Japan
- Riau Bara Harum - Indonesia
- Coastal Gujarat Power Limited - India
- SN Aboitiz Power Inc, Philippines
- Ambuja Cements Ltd - India
- Indogreen Group - Indonesia
- GVK Power & Infra Limited - India
- South Luzon Thermal Energy Corporation
- Intertek Mineral Services - Indonesia
- Lanco Infratech Ltd - India
- LBH Netherlands Bv - Netherlands
- Formosa Plastics Group - Taiwan
- Cement Manufacturers Association - India
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Trasteel International SA, Italy
- Metalloyd Limited - United Kingdom
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Sojitz Corporation - Japan
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Mercator Lines Limited - India
- Australian Coal Association
- International Coal Ventures Pvt Ltd - India
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Sindya Power Generating Company Private Ltd
- Jorong Barutama Greston.PT - Indonesia
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Mjunction Services Limited - India
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Karaikal Port Pvt Ltd - India
- Rio Tinto Coal - Australia
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- Marubeni Corporation - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Directorate General of MIneral and Coal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Kartika Selabumi Mining - Indonesia
- Grasim Industreis Ltd - India
- Ministry of Mines - Canada
- Eastern Energy - Thailand
- Bhushan Steel Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Tamil Nadu electricity Board
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Finance - Indonesia
- Aboitiz Power Corporation - Philippines
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Makarim & Taira - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Deloitte Consulting - India
- VISA Power Limited - India
- Renaissance Capital - South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Meenaskhi Energy Private Limited - India
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Salva Resources Pvt Ltd - India
- Xindia Steels Limited - India
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Parry Sugars Refinery, India
- Borneo Indobara - Indonesia
- Coal and Oil Company - UAE
- New Zealand Coal & Carbon
- Jindal Steel & Power Ltd - India
- White Energy Company Limited
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
- Dalmia Cement Bharat India
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