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.
|
|
Monday, 04 July 22
INDONESIAN COAL PRICE REFERENCE SLIGHTLY DOWN IN JULY
COALspot.com: Indonesian Coal Price Reference for July delivery drops 1.52 per cent month on month.
The Indonesian Coal Price Refere ...
Sunday, 03 July 22
CHINESE VICE PREMIER STRESSES CLEAN, EFFICIENT USE OF COAL - XINHUA
Chinese Vice Premier Han Zheng has stressed efforts to promote the clean and efficient use of coal, and pursue green, low-carbon and high-quality d ...
Sunday, 03 July 22
SOVEREIGN SECTOR OUTLOOK REVISED TO NEUTRAL ON UKRAINE WAR IMPACT - FITCH RATINGS
The deterioration in global sovereign credit conditions this year relative to our expectations at end-2021 has caused Fitch Ratings to change its g ...
Saturday, 02 July 22
GLOBAL SEABORNE COAL EXPORTS IN 2021 INCREASED BY 4.4% Y-O-Y TO 1147 MLN TONNES - BANCHERO COSTA
In the full 12 months of 2021, global seaborne coal exports increased by +4.4% y-o-y to 1147 mln tonnes, from 1099 mln tonnes in 2020, according to ...
Friday, 01 July 22
INDIA'S TOP CEMENT MAKER PAYING FOR RUSSIAN COAL IN CHINESE YUAN - REUTERS
India’s biggest cement producer, UltraTech Cement ULTC.NS, is importing a cargo of Russian coal and paying using Chinese yuan, according to a ...
|
|
|
Showing 306 to 310 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Independent Power Producers Association of India
- Essar Steel Hazira Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Aboitiz Power Corporation - Philippines
- PowerSource Philippines DevCo
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Iligan Light & Power Inc, Philippines
- Bharathi Cement Corporation - India
- Interocean Group of Companies - India
- Central Java Power - Indonesia
- Binh Thuan Hamico - Vietnam
- Directorate Of Revenue Intelligence - India
- Maharashtra Electricity Regulatory Commission - India
- Grasim Industreis Ltd - India
- Chettinad Cement Corporation Ltd - India
- Global Business Power Corporation, Philippines
- Bhushan Steel Limited - India
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Price Waterhouse Coopers - Russia
- Samtan Co., Ltd - South Korea
- Bhoruka Overseas - Indonesia
- Aditya Birla Group - India
- Therma Luzon, Inc, Philippines
- GAC Shipping (India) Pvt Ltd
- Australian Coal Association
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Port Waratah Coal Services - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Agrawal Coal Company - India
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Neyveli Lignite Corporation Ltd, - India
- Pendopo Energi Batubara - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Planning Commission, India
- Global Coal Blending Company Limited - Australia
- Eastern Coal Council - USA
- Jorong Barutama Greston.PT - Indonesia
- Savvy Resources Ltd - HongKong
- Energy Development Corp, Philippines
- PTC India Limited - India
- Barasentosa Lestari - Indonesia
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- IEA Clean Coal Centre - UK
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Indian Energy Exchange, India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Merrill Lynch Commodities Europe
- ICICI Bank Limited - India
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Attock Cement Pakistan Limited
- Mjunction Services Limited - India
- Thai Mozambique Logistica
- Siam City Cement - Thailand
- Simpson Spence & Young - Indonesia
- TeaM Sual Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Standard Chartered Bank - UAE
- Metalloyd Limited - United Kingdom
- Parry Sugars Refinery, India
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Marubeni Corporation - India
- Cigading International Bulk Terminal - Indonesia
- Electricity Generating Authority of Thailand
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- Meralco Power Generation, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Power Finance Corporation Ltd., India
- Kohat Cement Company Ltd. - Pakistan
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Formosa Plastics Group - Taiwan
- Kaltim Prima Coal - Indonesia
- GMR Energy Limited - India
- Billiton Holdings Pty Ltd - Australia
- Sical Logistics Limited - India
- Edison Trading Spa - Italy
- Salva Resources Pvt Ltd - India
- Wilmar Investment Holdings
- Kobexindo Tractors - Indoneisa
- LBH Netherlands Bv - Netherlands
- Wood Mackenzie - Singapore
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Anglo American - United Kingdom
- Altura Mining Limited, Indonesia
- MS Steel International - UAE
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Bukit Makmur.PT - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Sarangani Energy Corporation, Philippines
- Mercator Lines Limited - India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- India Bulls Power Limited - India
- CNBM International Corporation - China
- Banpu Public Company Limited - Thailand
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Malabar Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- San Jose City I Power Corp, Philippines
- Karaikal Port Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- London Commodity Brokers - England
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Coalindo Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Authority, New Zealand
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- Central Electricity Authority - India
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- Rio Tinto Coal - Australia
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Maheswari Brothers Coal Limited - India
- Heidelberg Cement - Germany
- Siam City Cement PLC, Thailand
- Makarim & Taira - Indonesia
- Vizag Seaport Private Limited - India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Singapore Mercantile Exchange
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- Alfred C Toepfer International GmbH - Germany
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Indonesian Coal Mining Association
- Coal and Oil Company - UAE
- Bhatia International Limited - India
- AsiaOL BioFuels Corp., Philippines
- Deloitte Consulting - India
- Kalimantan Lumbung Energi - Indonesia
- Ambuja Cements Ltd - India
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Medco Energi Mining Internasional
- Romanian Commodities Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Straits Asia Resources Limited - Singapore
- Commonwealth Bank - Australia
- Videocon Industries ltd - India
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Indian Oil Corporation Limited
- Global Green Power PLC Corporation, Philippines
- Economic Council, Georgia
- IHS Mccloskey Coal Group - USA
- The State Trading Corporation of India Ltd
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Mercuria Energy - Indonesia
- Jindal Steel & Power Ltd - India
|
| |
| |
|
