DRY
Whoever wins election, Chile state copper giant may get boost
The world’s largest copper miner, Codelco, may see a boost in investment cash regardless of who wins next month’s presidential runoff in Chile, as both candidates have vowed to end the state-run firm’s funding of the military. Conservative front-runner Sebastian Pinera and his center-left rival Alejandro Guillier, set to face off in the Dec. 17 vote, have both pledged to overturn the dictatorship-era law that transfers to the military 10 percent of Codelco’s export sales, worth $866 million last year.
Bunge widens exec takeover payout scheme after Glencore approach
Grain merchant Bunge Ltd has sweetened compensation packages for top executives in the case of a takeover, according to the company’s regulatory filings, around six months after rebuffing an approach by commodity trading giant Glencore PLC. Bunge and its rivals have seen profits fall as several years of oversupply in global grains markets have cut the trading margins that merchants can make for buying and selling corn, soy and wheat. Bunge has said conditions in the sector could trigger consolidation. (Reuters)
Weekly US coal production again dips as demand remains light
Weekly US coal production totalled an estimated 14.9 million st in the week that ended November 18, up 0.9% from the prior week, but down 6.2% compared with the year-ago week, US Energy Information Administration data showed Wednesday.
Production has now lagged behind 2016 for eight of the last nine weeks, as weak demand, coupled with uncertainty regarding weather and natural gas prices, are encouraging utility buyers to limit deliveries.
Platts Analytics estimates utility coal stockpiles stood at 136.5 million st in the week that ended November 16, roughly 20% below year-ago levels.
For the most recently concluded week, coal production in Wyoming and Montana, which primarily consists of coal from the Powder River Basin, totalled an estimated 7 million st, up 0.4% compared with last week but down 7% from the year-ago week.
On an annualized basis, 2017’s coal production in Wyoming and Montana would total 356 million st, up 7.9% from last year.
In Central Appalachia, weekly coal production totalled an estimated 1.61 million st, up 1.3% from last week but down 0.3% from last year. Annualized 2017 production would total 88.6 million st, up 15.9% from last year.
In Northern Appalachia, weekly coal production totalled an estimated 2.07 million st, up 1.8% from last week, but down 3.5% from the year-ago week. Annualized production would total 110.4 million st, up 8.4% from last year.
In the Illinois Basin, weekly coal production totalled an estimated 1.9 million st, up 1.9% from last week but down 5.1% from last year. Annualized production would total 105.5 million st, up 7.2% from 2016.
Based on the most recent EIA estimates and first quarter revisions, US coal production in 2017 on an annualized basis would total 785.4 million st, up 7.9% from last year. (Platts)
BALTIC INDEX
Last Index Published Date: 23 NOVEMBER 2017
Baltic Exchange Dry Index 1445 +32
Baltic Exchange Capesize Index 3420 +122
Baltic Exchange Panamax Index 1284 +3
Baltic Exchange Supramax Index 899 +24
Baltic Exchange Handysize Index 622 -2
TIMECHARTER
‘Bulk Denmark’ 2010 181458 dwt dely Gijon 26/28 Nov trip via Nouadhibou redel Singapore-Japan min 70 days $34,700 daily – Cargill
‘Golden Zhejiang’ CCL relet 2010 175837 dwt dely Gijon 26/28 Nov transatlantic round redel Skaw-Cape Passero $26,750 daily – SwissMarine
‘Bottiglieri Flavio Borriello ‘ 2011 93222 dwt dely Cai Mep 26 Nov 2/3 laden legs redel Singapore-Japan $11,750 daily – Norden
‘Indus Prosperity’ 2011 92988 dwt dely Mundra prompt trip via Maputo redel China approx. $12,250 daily – Louis Dreyfus
‘Blumenau’ 2012 81652 dwt dely Dalian 23/25 Nov trip via East coast Australia redel India $8,900 daily – Louis Dreyfus
‘Pan Energen’ CJ relet 2012 81170 dwt geared dely EC South America 10/20 Dec trip Singapore-Japan $14,100 daily plus $400,000 bb – Norden
‘Aeolian Heritage’ Norden relet 2011 80650 dwt dely Mauban 25 Nov trip via Indonesia redel Malaysia $10,000 daily – World Wide Bulk
‘Hampton Bridge’ 2013 76847 dwt dely US Gulf 01/15 Dec trip Skaw-Gibraltar $13,300 daily plus $330,000 bb – Pola
‘Ocean Domina’ 2005 76255 dwt dely Port Kelang 26/29 Nov trip via Indonesia redel India $11,250 daily – Norvic
‘Ecomar G.O.’ 2008 75093 dwt dely Rizhao 27/28 Nov trip via NoPac with fertilizers redel Singapore-Japan approx. $9,000 daily – Ultrabulk
‘Efrossini’ 2012 75003 dwt dely Tianjin 23/27 Nov trip via East coast Australia redel India $10,800 daily – cnr
‘Summer Lady’ 1999 72083 dwt dely Xinsha 24/27 Nov trip via Indonesia redel India $8,400 daily – Libra
‘Feng Xiu Hai ‘ 2016 63408 dwt dely Bintulu, Malaysia 30 Nov trip via Indonesia redel China $11,500 daily – cnr
‘Sadlers Wells’ 2015 63153 dwt dely Iceland prompt trip via Murmansk redel east Mediterranean intention coal approx $14,000 daily – Clipper
‘Ocean Vendor’ 2012 56815 dwt dely Cebu prompt trip redel WC India $9,500 daily – cnr
PERIOD
‘Cotswold ‘ 2016 179611 dwt dely Qingdao in d/c 27/28 Nov 11/13 months trading redel worldwide $17,000 daily – Uniper
‘Proteas’ 2005 76454 dwt dely Karaikal 30 Nov/06 Dec 4/7 months redel wordwide $10,500 daily – cnr
COMMODITY NEWS
Oil prices eased, with U.S. crude dipping away from two-year highs reached the day before, but the shutdown of the Keystone pipeline and a drawdown in fuel inventories continued to bolster markets despite worries over rising output. Gold prices nudged lower, with investors taking profits after gains of nearly 1 percent in the previous session on weaker U.S. economic data and concerns among some Federal Reserve policymakers over lower inflation. Shanghai aluminium prices rose as much as 1 percent, on track to end a four-day losing run despite some lingering bearish sentiment. Chicago soybean futures approached a two-week high near $10 a bushel Wednesday on technical buying ahead of the U.S. Thanksgiving holiday, analysts said. The dollar touched a two-month low against the yen, having tumbled after the minutes of the Federal Reserve’s latest meeting showed some policymakers were concerned about persistently low inflation in a blow to rate hawks. (Reuters)
TANKERS
PDVSA in credit talks with Rosneft, Eni, Repsol, Statoil
Venezuela’s PDVSA is in talks with Russia’s Rosneft, Italy’s Eni, Spain’s Repsol and Norway’s Statoil to get credit for oil and gas projects, a company executive said on Wednesday, in a bid to reverse a slump in output to an almost 30-year low. Venezuela and state-run oil company Petróleos de Venezuela, S.A., or PDVSA, are seeking fresh funding as the country works to refinance $60 billion of debt in the face of U.S. sanctions against what the White House calls President Nicolas Maduro’s “dictatorship.” (Reuters)
OPEC ministers say oil market is finding balance
OPEC will need to extend supply cuts when it meets next week to end years of global oil oversupply, oil ministers from two OPEC members said on Wednesday, just over a week before the group meets to discuss supply policy. The Organization of the Petroleum Exporting Countries, non-member Russia and nine other producers agreed to curb oil output by about 1.8 million barrels per day until March 2018. They are expected to extend the deal at a Nov. 30 meeting in Vienna. (Reuters)
US oil firms Talos Energy and Stone Energy are close to merger
US oil companies Houston-based Talos Energy and Stone Energy of Lafayette, Louisiana, are moving toward a $2.5bn merger, according to Reuters.
Both firms have significant involvement in Gulf of Mexico projects. The valuation includes debt.
Talos specializes in exploration, development and production of oil and natural gas properties in the Gulf and on the US Gulf coast.
Stone Energy has projects in the Gulf but also has some onshore interests in the Appalachian Basin.
A statement from the companies said that under the deal Stone Energy shares will be exchanged for Talos shares one-for-one and Talos’ shareholders will be issued 34.2 million new shares so that they will have a 63% stake in the merged firm.
The new entity will be named Talos Energy. (Splash247)
Eastern Canadian producers to offer as many as 10 January crude cargoes
Producers operating off the coast of the eastern Canadian province of Newfoundland and Labrador will offer as many as 10 crude cargoes for January loading, a source with knowledge of the program said.
Five cargoes of Hibernia crude plus one potential direct-to-market cargo are scheduled to load in January, compared with seven in December, the source said. The Hibernia project is co-owned by ExxonMobil (33.125%), Chevron (26.875%), Suncor (20%), Canada Hibernia Holding (8.5%), Murphy Oil (6.5%) and Statoil (5%).
There will be two cargoes of Terra Nova available in January, compared with one in December, the source said. Suncor, the operator of Terra Nova, has a 37.675% stake. The other partners in the field are ExxonMobil (19%), Statoil (15%), Husky Energy (13%), Murphy Oil (10.475%), Mosbacher Operating (3.85%) and Chevron (1%).
There will be two cargoes of White Rose available in January, the same as in December, the source added. Husky operates the White Rose field with a 72.5% stake, while Suncor holds the remaining 27.5%. (Platts)
Freight costs suppress Thai appetite for Mediterranean crude
Crude oil trade flows from the Mediterranean to Southeast Asia could remain slow for the rest of the fourth quarter with Thai refiners maintaining their low sulphur crude procurement choices mainly within the regional markets, as the high cost of shipping oil from West to East hampers demand for European arbitrage deals.
Cash differentials for various crude grades in Malaysia and Oceania have been rallying over the past few trading cycles, but Thai end-users have had limited options when trying to seek cheaper sweet crude barrels outside the region as shipping rates for the Europe-Asia route remain unattractive.
“Nothing is cheap these days … but freight rates are crazy high, so [the Mediterranean-Asia] arbitrage is not [easy],” said a trading manager at state-owned Thai energy company PTT.
Fixtures for November-loading cargoes seen by S&P Global Platts showed that Vitol has fixed a Suezmax tanker, the Seaprince, for a Libya-Singapore voyage, loading November 5, at a lumpsum rate of $2.4 million.
ExxonMobil fixed the Kaveri Spirit for a Ceyhan-Singapore voyage with an option for Sriracha, loading November 17-19, at $2.35 million.
In comparison, fixtures for August-loading cargoes were seen at much lower rates: Unipec had previously fixed a Suezmax, Kriti Sfakia, for a Libya-Singapore voyage with options, loading August 27-28, at a lumpsum rate of $1.925 million. Meanwhile, the VLCC freight rate on the key Hound Point-Far East route has sustained at a nine-month high since the start of November — Platts last assessed this voyage at a lump sum rate of $5.4 million, or $20/mt.
Shipping sources said overall VLCC market sentiment was firm on seasonality, as the strong demand in Europe during winter typically boosts freight rates.
Socar’s shipping arm United Maritime Logistics had fixed the Agistri for a Ceyhan-Singapore voyage, loading August 17, at a lumpsum rate of $1.8 million.
Mediterranean grades including Azerbaijan’s Azeri Light and Algeria’s Saharan Blend have struggled to attract Thai buyers in recent months, with no crude carriers from Ceyhan and Arzew seen reaching the Southeast Asian consumer so far in the fourth quarter, according to Platts Analytics vessel tracking software cFlow.
In comparison, Thailand imported around 1.4 million barrels of crude from Algeria and Azerbaijan combined in Q3, 1.7 million barrels in Q2 and 2.5 million barrels in Q1, according to data released by the Thai customs department.
Thai refiners often turn to the spot Mediterranean market for cheaper alternatives when light sweet Malaysian and Australian crudes become expensive, but the recent uptick in Asian product margins could mean that the end-users should be able to endure the latest uptrend in regional crude premiums, traders said.
Among recent spot tender deals concluded, Thailand’s PTT was said to have purchased on behalf of the IRPC refinery in Rayong, a total of around 1.3 million barrels of Australian Cossack crude and Malaysian Kidurong crude for delivery over November 15-December 10.
Prior to that, trade sources said the company bought a combined 1.6 million barrels of US Eagle Ford crude, Brunei’s Champion crude, Malaysia’s Kidurong crude and Kimanis condensate for delivery over late October to early November.
Industry sources noted that it was rare to see the company filling more than two thirds of its monthly spot tender shopping basket with regional crude grades.
“Regional premiums are very high these days … it’s a niche market. But [product] margins have been good so that’s going to somewhat compensate [rising spot crude prices],” said a Singapore-based sweet crude trader.
Earlier this month, state-owned Petronas raised the November Malaysian Crude Oil official selling price differential by 55 cents/b from October to a premium of $4.50/b to Platts Dated Brent crude assessments — the highest differential since February 2016, when it was set at a premium of $4.60/b, Platts data showed.
Light sweet grades in Oceania have also rallied in recent months with Papua New Guinea’s Kutubu crude assessed at an average premium of $2.63/b to Platts Dated Brent in October — the highest since averaging $3.08/b in March 2016.
Australia’s Cossack crude was assessed at an average premium of $2.48/b to Dated Brent in October, also the highest level since March last year when the differential averaged $2.88/b.
Refining margins in Asia have also been tracking the regional crude premiums higher, with Singapore middle distillate product cracks touching multi-week highs recently.
The second-month jet fuel/kerosene crack against Dubai crude swap rose to $14.17/b last Friday — the highest since $14.34/b on October 2, Platts data showed.
The second-month gasoil crack against Dubai hit $14.33/b last Thursday — the highest since September 11, when it was assessed at $14.48/b, the data showed. (Platts)
SHIPPING
Diana Shipping Remains in Red
Although it remained in the red, Greece-based dry bulk owner Diana Shipping managed to cut its net loss in the third quarter of 2017 ended September 30.
The company’s net loss for the three months stood at USD 24.5 million, compared to a net loss of USD 78.3 million seen in the third quarter of 2016.
The result includes a USD 8.4 million impairment loss on the MV Melite which was sold for scrap in October 2017. The ship was disposed of after it grounded in July 2017.
Time charter revenues increased to USD 43.9 million in the third quarter, from USD 27.1 million reported in the same quarter of 2016.
Diana Shipping said that the increase in time charter revenues was due to increased average time charter rates achieved for the company’s vessels during the quarter and increased revenues resulting from the enlargement of the fleet.
For the nine months ended September 30, 2017, Diana Shipping’s net loss amounted to USD 74.8 million. This compares to a net loss of USD 141 million seen in the same period of 2016. (World Maritime News)
Petronas, Partners Pen Ship-to-Ship LNG Transfer Deal
Petronas LNG (PLL), a subsidiary of Petronas LNG Sdn. Bhd (PLSB), signed a two-year service agreement with Argo Engineering Sdn Bhd and Eastport Marine Sdn Bhd to provide liquefied natural gas (LNG) ship-to-ship transfer services in Labuan, Malaysia.
The ship-to-ship transfer is the transfer of LNG between two vessels positioned alongside each other.
“This ship-to-ship transfer service agreement is Petronas’ first collaboration in providing flexible delivery solutions that goes beyond the conventional selling and delivering of LNG,” PLL’s Chairman, Ahmad Adly Alias said.
“LNG ship-to-ship transfer services is an emerging trend to cater to the needs of small scale LNG requirements,” he added.
As disclosed, combining Argo and Eastport’s shipping expertise with Petronas’ LNG portfolio, the partnership will enable PLL to respond to new market requirements in the changing LNG industry landscape which includes LNG shipping solutions.
Argo has vast experience in LNG shipping operations supported by a network of technical personnel in the LNG shipping industry, while Eastport has expertise in handling bunkering and ship-to-ship operations, in addition to possessing the sole license to provide LNG bunkering and ship-to-ship services at Brunei Bay, Labuan.
Separately, PLL has signed a Memorandum of Agreement (MOA) with Bintulu Port Sdn Bhd (BPSB), a subsidiary of Bintulu Port Holdings Berhad (BPHB), for the provision of marine services to support PLL’s Gassing Up and Cooling Down (GUCD) services at the Bintulu Port for a period of three years.
The GUCD is a specialized service to bring the storage tanks on LNG carriers, after dry-docking, to natural environment and later cool it down to cryogenic temperature (minus 160 degrees Celsius) before loading its next cargo.
The services at the Bintulu Port will commence in 2018, making Bintulu as one of the few terminals in the world to offer this facility. The LNG for gassing up services will be supplied from the Petronas LNG Complex in Bintulu.
As explained by Adly, this is the first GUCD services in Malaysia at the Bintulu Port.
“This collaboration is expected to enhance Petronas’ portfolio of services in the integrated (LNG) value chain,” he added.
For the nine-month period ended 30 September 2017, Petronas Group recorded a 15 percent increase in revenue at RM 161.8 billion (USD 39.3 billion), mainly due to the impact of higher average realized prices and the impact of foreign exchange rate.
Cumulative profit after tax was RM 27.3 billion compared to RM 12.5 billion in the same period last year, primarily due to lower net impairment on assets and well costs. (World Maritime News)
Ship Finance International’s Profit Up in Q3
Bermuda-based shipowner Ship Finance International (SFI) ended the third quarter of this year with a net income of USD 29 million, up from a net income of USD 20 million posted a quarter earlier.
Total charter revenues remained flat during the three-month period ended September 30, 2017, and stood at USD 150 million.
Adjusted EBITDA for the quarter dropped to USD 115 million from USD 118 million seen in Q2 2017.
In August, SFI took delivery of two 114,000 dwt LR2 product tanker newbuildings. The ships commenced their seven-year time charters to Phillips 66 immediately upon delivery, with options for the charterer to extend the period up to 12 years.
During the quarter, the company strengthened balance sheet through early conversion of convertible notes. In October, USD 121 million principal amount was converted to equity and 9.4 million shares were issued. The remaining amount of USD 63 million is due in February 2018.
“The fleet renewal continues and we have strengthened our balance sheet through amendments to certain loan facilities, the issuance of new unsecured notes in the market and the early conversion of a large portion of our convertible notes,” Ole B. Hjertaker, CEO of Ship Finance Management AS, commented.
“These proactive measures significantly enhance our financial profile, allowing us to intensify our focus on growth,” Hjertaker concluded. (World Maritime News)