• 2018 November 2 11:27

    MABUX: Bunker market is awaiting further clarity as Iran sanctions loom

    The Bunker Review is contributed by Marine Bunker Exchange

    World oil indexes have fallen roughly $10 per barrel in the past three weeks, awaiting more signs of a clear direction. The overall market sentiment is bearish. Global trade is also slowing down, with freight rates decreasing after an extensive period of growth. OPEC has started sending mixed signals, forecasting that the global oil market would shift to oversupply in Q4 2018 amid high stockpile rates.

    MABUX World Bunker Index (consists of a range of prices for 380 HSFO, 180 HSFO and MGO at the main world hubs), demonstrated slight irregular changes in the period of Oct.25 – Nov.01:
        
    380 HSFO - up from 469.79 to 472.57 USD/MT     (+2.78)
    180 HSFO - up from 517.21 to 518.71 USD/MT     (+1.50)
    MGO         - down from 722.86 to 719.79 USD/MT (-3.07)


    Cumulative oil production by Russia, the United States and Saudi Arabia reached 33 million barrels per day (bpd) for the first time in September. That's an increase of 10 million bpd since the start of the decade, meaning the three producers alone now meet a third of global crude demand.

    Meantime, OPEC and its Russia-led non-OPEC partners in the production cut deal may have to change course in the current relaxing of the cuts, due to increased inventories in recent weeks and uncertainties about the global economy. OPEC and allies agreed in June to relax compliance rates with the cuts to 100 percent from the previous over-compliance and achieved a combined compliance rate of 111 percent in September. The IEA in turn pressed the cartel to increase production.

    Russia has already reversed the entire 300,000 bpd cut and additionally boosted production last month: it reached 11.36 million bpd - a record high for the post-Soviet era. Although RF hit a post-Soviet record in its oil production last month, it doesn’t plan to raise output to 12 million bpd by the end of 2018, or in the near term, because this wouldn’t fit Moscow’s economic development plans. Currently, Russia is pumping 150,000 bpd above the October 2016 level, so in total, the country has increased production by 450,000 bpd since May.

    It is expected that China will lead global refinery capacity expansion and investments with 3.12 million bpd additional refining capacity and US$67.3 billion capital expenditure through 2022. Total refining capacity in the world is expected to grow by 15.1 percent between 2018 and 2022. Among individual countries, China is the leader, with ten new-build refineries expected to come on line by 2022, followed by Nigeria and Kuwait. The top ten also includes Iraq, Iran, Turkey, Brunei, Indonesia, the Philippines, and Saudi Arabia.

    Meantime, it was reported that China’s largest refiners, state-held Sinopec and China National Petroleum Corporation (CNPC), haven’t booked any crude oil cargoes from Iran for November due to fears they would be in breach of the U.S. sanctions on Iranian oil. The key concern is the uncertainty over whether Iran’s Chinese customers would obtain waivers from the sanctions. Iran, for its part, is keen to keep its single biggest oil customer when U.S. sanctions on Iranian oil exports kick in. Forecasts have assumed that China will keep buying Iranian oil and could be the only certain meaningful customer of Iran, because the other major buyer, India, is even more hard-pressed by the United States to wind down purchases from Tehran.

    The European Union (EU) in turn is working to set up a payment mechanism for trade with Iran, and that mechanism should be legally in place by November 4, when the U.S. sanctions on Iran return. Meantime, it is expected that the mechanism won’t be operational until early in 2019. Still, the biggest European companies are withdrawing from Iran due to the U.S. sanctions. The EU’s oil imports from Iran are also expected to cease as refiners are not eager to open them-selves up to risk. Iran’s crude oil and condensate exports fell to 1.9 million bpd in September.

    The United States has recently hinted that it was at least considering waivers, but U.S. Treasury Secretary Steven Mnuchin said that it would be more difficult for Iranian oil customers to get waivers from the sanctions than it was during the Obama administration, and the United States would issue waivers, if any, only to buyers that have significantly reduced Iranian purchases.

    China finds it hard to understand why the United States is not sending senior government officials to a major import expo in Shanghai next month. Set to run from Nov. 5 to Nov. 10, the China International Import Expo will bring together thousands of foreign and Chinese companies, aiming to boost imports, allay foreign concern about China's trade practices and show readiness to narrow trade gaps. The United States does not plan to send senior government officials to the fair, urging China to end what it called harmful and unfair trade practices.

    At the same time more than 70 percent of U.S. firms operating in southern China are considering delaying further investment there and moving some or all of their manufacturing to other countries as the trade war bites into profits. The trade war is shifting both supply chains and industrial clusters, mostly towards Southeast Asia. U.S. companies reported facing increased competition from rivals in Vietnam, Germany and Japan, while Chinese companies said they were facing growing competition from Vietnam, India, the United States and South Korea. The top concern of companies was the rising cost of goods sold, which resulted in reduced profits. Other concerns included difficulties managing procurement and reduced sales.

    Production in the U.S. is set to rise further. U.S. drillers added two oil rigs in the week to Oct. 26, bringing the total count to 875, the highest level since March 2015. More than half of all U.S. oil rigs are in the Permian basin in West Texas and eastern New Mexico, the country's biggest shale oil formation.

    The U.S. has been trying to delay the implementation of regulations on maritime fuels beyond the January 1, 2020 start date. However, the International Maritime Organization (IMO) dismissed the effort, and said that the regulations are set to go ahead as scheduled. Be-ginning in 2020, maritime ships will have use fuels with sulfur concentrations of just 0.5 per-cent, down from the current limit of 3.5 percent. Besides, the prohibition of the carriage of non-compliant fuel oil for combustion purposes or operation on board a ship (unless equipped with a scrubber) will enter into force on 1 March 2020.

    With Iran sanctions set to take effect in a few days, the market is awaiting further clarity. Saudi Arabia and Russia have vowed to cover any supply shortfall, but Iran’s oil exports likely won’t go to zero. We assume bunker prices may continue volatile irregular fluctuations in the beginning of next week with further possible transformation into more balancing phase.

     

     

     

     

     

     

     

    All prices stated in USD / Mton
    All time high Brent = $147.50 (July 11, 2008)
    All time high Light crude (WTI) = $147.27 (July 11, 2008)




2019 June 17

18:24 USCG saves six people, tows disabled vessel in Port Etches
17:59 Denis Krylov appointed General Director of Gazpromneft-Sakhalin
17:28 China and South Korea agree on ballast water exchange rules
17:04 Mermaid Maritime borrows a loan of USD 65 mln to extend the financing of two vessels
16:41 Neptune Lines welcomes Neptune Galene & Neptune Thalassa after scrubber installation
16:23 DG Termināls invests about 1 million euros during the year
16:17 Finnish ferry getting a diesel-electrical drivetrain system
16:04 MSC Katya R. sets record as largest container ship to boost Costa Rican export links to Europe
15:45 Singapore to host 18th Vessel Efficiency & Fuel Management Summit
15:26 Onezhsky Shipyard launches multifunctional buoy tender for Volga-Baltic Basin
15:04 Hunter Group sells one vessel
14:42 Gdansk, Poland to host 6th Operating Specialist Wind Vessels Summit
14:19 Seatrade Europe conference programme to include Marine Interiors specialist panel discussions
14:12 ClassNK releases amendments to class rules
13:55 Finland hosts an EU–China maritime meeting
13:31 AWT completed stage III of modernization and expansion of the Paskov Terminal
13:24 Average wholesale prices for М-100 HFO down to RUB 16,007 in RF spot market
13:10 The Irish Port of Cork and Port of Amsterdam to collaborate
12:48 Pella Shipyard launches tugboat of project 90600, Sadko, built for Sevmash-Shelf (video)
12:31 Port of Oakland exports up 8.4 percent in May 2019
12:01 North Carolina Ports adopts Vortex port equipment simulator
11:30 MEYER WERFT announces the keel laying for the new cruise ship IONA
11:15 Throughput of port Shanghai (China) in Jan-May’19 declined by 1.3% to 225.91 million tonnes
11:00 Panama Canal issues proposal to modify tolls structure
10:59 Bunker sales at the port of Singapore in Jan-May’2019 fell by 7.7% Y-o-Y to 19.79 million tonnes
10:37 Fincantieri's Muggiano shipyard launches PPA “Paolo Thaon di Revel”
10:21 CMA CGM announces FAK rates from Asia to the Mediterranean
10:01 Brent Crude futures price is up 0.26% to $62.17, Light Sweet Crude – up 0.19% to $52.87
09:38 Port of Singapore throughput in Jan-May’2019 was nearly flat YoY at 261.39 million tonnes
09:19 Diana Shipping commences self tender offer to purchase up to 2,000,000 shares
09:16 MABUX: Bunker market this morning, June 17
09:10 Baltic Dry Index is up to 1,085 points

2019 June 16

17:13 DC area agencies to conduct mass rescue exercise off National Harbor
16:05 Boskalis appointed as salvor for both damaged tankers in the Gulf of Oman
15:53 Fincantieri and Naval Group sign a joint venture agreement
13:47 Diana Shipping Inc. announces the sale of a Panamax dry bulk vessel, the MV Thetis
12:47 WSC unveils its hybrid patrol vessel at Seawork 2019
11:41 GasLog Partners LP announces new multi-year charter agreement with Gunvor

2019 June 15

15:44 Wight Shipyard rolls out its new windfarm support vessel concept at Seawork Int'l 2019
13:17 Malta Freeport hosts its first LNG-powered container ship
12:53 Petrobras closes the sale of TAG
11:41 USCG, local partners respond to sailing vessel aground off Magic Island
08:43 Vessel training simulation underway at Tema Port’s new Terminal 3

2019 June 14

18:05 Ole Martin Grimsrud appointed CFO of Aker Solutions
17:44 USCG Cordova FOL crew saves man stranded for three days on Montague Island
17:05 Knud E. Hansen wins two separate contracts for innovative large RoRo vessels
16:41 Hapag-Lloyd to increase rates from North East Asia to Australia
16:26 Murmansk Sea Fishing Port handled 90,300 tonnes of cargo in Jan-May’2019, down 38.7% Y-o-Y
16:05 CMA CGM announces GRR from Asia to South Africa
15:14 “K” Line receives recognition for vessel speed reduction programs in the West Coast of North America
15:00 UK maritime industry leaders debate decarbonization, digital technologies and the future of safety at the annual ABS UK National Committee meeting
14:00 China Railway Container Transport signs strategic cooperation agreement with SITC International Holdings
13:38 Container throughput of Vladivostok Sea Fishing Port in 5M’2019 up 39% YoY to 89,649 TEUs
13:09 Algoma increases its interest in in the CSL International Pool
12:41 Port of Klaipeda (Lithuania) handled 19.77 million tonnes of cargo in 5M’2019, up 8.5% Y-o-Y
12:09 Global Ship Lease announces new charter agreements
11:32 Bunker prices continue going down at the port of Saint-Petersburg, Russia (graph)
11:09 ECSA issues statement on suspected attack on two oil tankers in the Gulf of Oman
10:51 France signs up to fishing vessel training treaty
10:30 Zhatai Shipyard to let build up to 10 river ships and scrap at least two ships per year