We welcome article submissions from experts in the areas of coal, mining,
shipping, etc.
To Submit your article please click here.
|
|
|
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
If you believe an article violates your rights or the rights of others, please contact us.
|
|
Tuesday, 26 July 22
CAP RUSSIA'S OIL PRICE NOW - PROJECT SYNDICATE
Though the price of oil has declined in recent weeks, it is still through the roof, filtering through to gasoline prices, and causing economic and ...
Tuesday, 26 July 22
WILL SOUTH AMERICA’S WINTER DEMAND DRAW LNG CARGOES AWAY FROM EUROPE? - ICIS
South America is now in the middle of its winter demand season. Last year the region increased its share of global LNG imports in winter, with Braz ...
Monday, 25 July 22
GLOBAL 2021 COAL-FIRED ELECTRICITY GENERATION SURGES TO RECORD HIGH - REUTERS
By contrast, mine output was still fractionally below the record set between 2012 and 2014 because older and less efficient coal generators have be ...
Saturday, 23 July 22
THE EU HAS BEEN REDUCING IMPORTS OF RUSSIAN REFINED OIL PRODUCTS SINCE MARCH - BANCHERO COSTA
The European Union could now ban the import and transit of fuel oil from Russia around six months ahead of the planned deadline, an EU official and ...
Saturday, 23 July 22
INDONESIA CONSIDERING SCRAPPING DOMESTIC SALES RULE FOR PALM OIL EXPORTS - REUTERS
Indonesia is considering removing a domestic sales requirement for palm oil exports because high inventories of the vegetable oil have been holding ...
|
|
|
Showing 276 to 280 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Coalindo Energy - Indonesia
- Mjunction Services Limited - India
- Romanian Commodities Exchange
- The University of Queensland
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Carbofer General Trading SA - India
- Chettinad Cement Corporation Ltd - India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Videocon Industries ltd - India
- Uttam Galva Steels Limited - India
- Toyota Tsusho Corporation, Japan
- Leighton Contractors Pty Ltd - Australia
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Madhucon Powers Ltd - India
- CIMB Investment Bank - Malaysia
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- Essar Steel Hazira Ltd - India
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Lanco Infratech Ltd - India
- Altura Mining Limited, Indonesia
- Deloitte Consulting - India
- The State Trading Corporation of India Ltd
- Manunggal Multi Energi - Indonesia
- PNOC Exploration Corporation - Philippines
- Trasteel International SA, Italy
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Gujarat Sidhee Cement - India
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Georgia Ports Authority, United States
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Maharashtra Electricity Regulatory Commission - India
- Ambuja Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Coastal Gujarat Power Limited - India
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- OPG Power Generation Pvt Ltd - India
- Orica Mining Services - Indonesia
- Indika Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- White Energy Company Limited
- Africa Commodities Group - South Africa
- Ind-Barath Power Infra Limited - India
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining and Power Corporation, Philippines
- Medco Energi Mining Internasional
- Central Java Power - Indonesia
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- Cement Manufacturers Association - India
- Intertek Mineral Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mintek Dendrill Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indogreen Group - Indonesia
- Bharathi Cement Corporation - India
- Kartika Selabumi Mining - Indonesia
- Minerals Council of Australia
- Marubeni Corporation - India
- India Bulls Power Limited - India
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Pendopo Energi Batubara - Indonesia
- Electricity Authority, New Zealand
- Kepco SPC Power Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Goldman Sachs - Singapore
- Sinarmas Energy and Mining - Indonesia
- Vizag Seaport Private Limited - India
- Therma Luzon, Inc, Philippines
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- Sojitz Corporation - Japan
- Heidelberg Cement - Germany
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Neyveli Lignite Corporation Ltd, - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Banpu Public Company Limited - Thailand
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Bukit Makmur.PT - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Global Business Power Corporation, Philippines
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- SMG Consultants - Indonesia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Indo Tambangraya Megah - Indonesia
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Mercuria Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Maheswari Brothers Coal Limited - India
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Salva Resources Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Ministry of Transport, Egypt
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Siam City Cement - Thailand
- Barasentosa Lestari - Indonesia
- SMC Global Power, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Larsen & Toubro Limited - India
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Tamil Nadu electricity Board
- Bayan Resources Tbk. - Indonesia
- PowerSource Philippines DevCo
- Grasim Industreis Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Parliament of New Zealand
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Planning Commission, India
- Riau Bara Harum - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Electricity Generating Authority of Thailand
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Posco Energy - South Korea
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- McConnell Dowell - Australia
- Australian Commodity Traders Exchange
- Sical Logistics Limited - India
- Eastern Energy - Thailand
- Chamber of Mines of South Africa
- Australian Coal Association
- PTC India Limited - India
- The Treasury - Australian Government
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Indonesian Coal Mining Association
- GAC Shipping (India) Pvt Ltd
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
- Ministry of Finance - Indonesia
- Semirara Mining Corp, Philippines
|
| |
| |
|
