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.
|
|
Thursday, 25 November 21
SE ASIA POWER DEMAND TO RISE AS STATE SUPPORT MITIGATES COVID-19 IMPACT - FITCH RATINGS
Electricity demand in south-east Asia is likely to increase in 2021, following slow growth or contraction in 2020, thanks to state support that has ...
Thursday, 25 November 21
FITCH RATINGS INCREASES MOST GLOBAL METALS AND MINING PRICE ASSUMPTIONS - FITCH RATINGS
Fitch Ratings has increased most metals and mining price assumptions, particularly those that benefit from increased longer-term demand due to glob ...
Thursday, 25 November 21
CHINA'S COAL PRICE DROPS IN MID-NOVEMBER AMID GOVERNMENT’S SWEEPING MEASURES - GLOBAL TIMES
China’s coal prices have dropped significantly in mid-November compared with the beginning of the month, with the price of coking coal and co ...
Wednesday, 24 November 21
MARKET INSIGHT - INTERMODAL
Inflation is the word that has dominated the meetings of foreign leaders and finance ministers in recent weeks, as rising energy costs, supply chai ...
Wednesday, 24 November 21
WHY THIS MINING ANALYST IS UPBEAT ON THE IRON ORE PRICE FORECAST - MOTLEY FOOL
In many ways, 2021 can be called the year of the iron ore price. Much of the talk of the ASX town this year has revolved around this key economic m ...
|
|
|
Showing 401 to 405 news of total 6871 |
|
 |
|
|
|
|
| |
|
 |
|
|
| |
|
- Timah Investasi Mineral - Indoneisa
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- Formosa Plastics Group - Taiwan
- Meenaskhi Energy Private Limited - India
- Orica Australia Pty. Ltd.
- ICICI Bank Limited - India
- Globalindo Alam Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- SMG Consultants - Indonesia
- Goldman Sachs - Singapore
- Indogreen Group - Indonesia
- Uttam Galva Steels Limited - India
- Thiess Contractors Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Medco Energi Mining Internasional
- Edison Trading Spa - Italy
- White Energy Company Limited
- AsiaOL BioFuels Corp., Philippines
- Directorate Of Revenue Intelligence - India
- Jindal Steel & Power Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhatia International Limited - India
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Independent Power Producers Association of India
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Alfred C Toepfer International GmbH - Germany
- Kapuas Tunggal Persada - Indonesia
- Mjunction Services Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Electricity Authority, New Zealand
- Samtan Co., Ltd - South Korea
- Siam City Cement - Thailand
- Petron Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Aboitiz Power Corporation - Philippines
- GMR Energy Limited - India
- Anglo American - United Kingdom
- Sical Logistics Limited - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- Mercuria Energy - Indonesia
- Xindia Steels Limited - India
- Trasteel International SA, Italy
- Therma Luzon, Inc, Philippines
- Vizag Seaport Private Limited - India
- Altura Mining Limited, Indonesia
- Larsen & Toubro Limited - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Carbofer General Trading SA - India
- Leighton Contractors Pty Ltd - Australia
- Global Business Power Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Central Java Power - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Rashtriya Ispat Nigam Limited - India
- Renaissance Capital - South Africa
- PowerSource Philippines DevCo
- Parry Sugars Refinery, India
- Krishnapatnam Port Company Ltd. - India
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Standard Chartered Bank - UAE
- Kepco SPC Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Bhushan Steel Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- Coal and Oil Company - UAE
- The Treasury - Australian Government
- Global Green Power PLC Corporation, Philippines
- Eastern Coal Council - USA
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Bharathi Cement Corporation - India
- India Bulls Power Limited - India
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Baramulti Group, Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- The State Trading Corporation of India Ltd
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- Latin American Coal - Colombia
- Merrill Lynch Commodities Europe
- Sree Jayajothi Cements Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Indian Oil Corporation Limited
- Parliament of New Zealand
- Madhucon Powers Ltd - India
- Economic Council, Georgia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Grasim Industreis Ltd - India
- Manunggal Multi Energi - Indonesia
- Dalmia Cement Bharat India
- Interocean Group of Companies - India
- Simpson Spence & Young - Indonesia
- San Jose City I Power Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Sarangani Energy Corporation, Philippines
- The University of Queensland
- Global Coal Blending Company Limited - Australia
- Salva Resources Pvt Ltd - India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Ind-Barath Power Infra Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Karaikal Port Pvt Ltd - India
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- Minerals Council of Australia
- Ambuja Cements Ltd - India
- London Commodity Brokers - England
- Ceylon Electricity Board - Sri Lanka
- SN Aboitiz Power Inc, Philippines
- Straits Asia Resources Limited - Singapore
- Georgia Ports Authority, United States
- Sakthi Sugars Limited - India
- Eastern Energy - Thailand
- Bank of Tokyo Mitsubishi UFJ Ltd
- McConnell Dowell - Australia
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Antam Resourcindo - Indonesia
- Sojitz Corporation - Japan
- CIMB Investment Bank - Malaysia
- OPG Power Generation Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Electricity Authority - India
- Star Paper Mills Limited - India
- Marubeni Corporation - India
- Ministry of Mines - Canada
- Chettinad Cement Corporation Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bulk Trading Sa - Switzerland
- European Bulk Services B.V. - Netherlands
- TeaM Sual Corporation - Philippines
- Wilmar Investment Holdings
- International Coal Ventures Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Africa Commodities Group - South Africa
- Rio Tinto Coal - Australia
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Ministry of Transport, Egypt
- Indonesian Coal Mining Association
- Heidelberg Cement - Germany
- Borneo Indobara - Indonesia
- Singapore Mercantile Exchange
- Asmin Koalindo Tuhup - Indonesia
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Chamber of Mines of South Africa
- Cement Manufacturers Association - India
- IHS Mccloskey Coal Group - USA
- PNOC Exploration Corporation - Philippines
- Indika Energy - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Semirara Mining and Power Corporation, Philippines
- Mercator Lines Limited - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- Semirara Mining Corp, Philippines
- GVK Power & Infra Limited - India
- SMC Global Power, Philippines
- Gujarat Sidhee Cement - India
- Ministry of Finance - Indonesia
- Kartika Selabumi Mining - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Price Waterhouse Coopers - Russia
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Planning Commission, India
- CNBM International Corporation - China
- PTC India Limited - India
- Energy Link Ltd, New Zealand
|
| |
| |
|
