Changing tack

Trends to watch in 2021

How long will the 2020 bust and boom cycles extend into 2021 for the tanker and container freight markets? Yet bunker prices have shown some pandemic resilience, while Panama consolidates as a Latin American bunkering hub.

Join S&P Global Platts specialists on February 2, 2021 for our Latin America Shipping and Bunker Webinar to discuss pandemic and post-pandemic shifts in the 2020-2021 shipping markets. Get updates on current market dynamics, the latest industry pricing and news, and submit questions to our shipping and bunker teams as they cover the topics below:

Latin America Bunker Markets Resilience in a Tumultuous Year of Challenges

– Panama consolidates as a bunker hub in Latin America
– Brazil: A success story of export-oriented production
– Spreads between VLSFO, MGO and high-sulfur IFO 380 shrink

Pandemic Latin America Tanker Market Trends 2020-2021

– Evolution of counter-seasonal pandemic freight trends
– Post-pandemic tonnage supply and ton-mile demand
– Brazil: An emerging clean and dirty tanker market focus

Box Boom: Impacts from a Volatile Year in Container Freight

– Highlights from a record year in container rates and volumes
– Latin America in focus: Regional impacts from global trends
– Solving the dilemma of bunker charge opacity

REGISTER NOW

S&P Global Platts will begin publication of two new Aframax assessments in the Mediterranean and change the basket for the current cross-Mediterranean Aframax assessment in the West of Suez dirty tanker markets from Feb. 1, 2021.

Crude oil trading patterns in the Mediterranean basin have continued to evolve, with certain routes pricing at premiums or discounts to the current cross-Mediterranean assessment on Aframaxes.

Platts has observed an increasing number of fixtures for the following routes:

80,000 mt Sidi Kerir to Mediterranean

80,000 mt Libya to Mediterranean

Platts will publish daily spot and monthly average assessments for these two routes in order to better capture the growing diversity and to better reflect the spot freight markets in the Mediterranean basin.

The 80,000 mt Sidi Kerir to Mediterranean assessment will be based on the following freight basket:

Sidi Kerir to Cartagena; Sidi Kerir to Trieste; Sidi Kerir to Livorno

The 80,000 mt Libya to Mediterranean assessment proposed freight basket has changed following market feedback and alteration in exports’ share from the different ports.

The new basket will be based on the following routes:

Es Sider to Trieste; Bouri to Fos; Zuetina to Sarroch

Platts will also change the basket of the current 80,000 mt Aframax cross-Mediterranean assessment, from the current basket:

Sidi Kerir to Lavera; La Skhirra to Augusta; Ceyhan to Trieste

The new freight basket for the cross-Mediterranean 80,000 mt assessment will be:

Ceyhan to Trieste; Ceyhan to Augusta; Ceyhan to Huelva

The name will also be amended to Ceyhan-Mediterranean from Mediterranean-Mediterranean.

Platts is also amending the name of the demurrage assessment for the Med-Med run basis 80,000 mt (AMEDB00) to Ceyhan-Med, and amending this to reflect the Ceyhan-to-Mediterranean basket.

Please send all comments or questions to shipping and pricegroup. For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available to the public upon request.

London — The first export cargo of Nigeria’s newest crude grade Anyala is on its way to Northwest Europe, trading and shipping sources said on Jan. 18.

The Aframax Minerva Clara loaded a 700,000 barrel stem of Anyala crude from the Abigail-Joseph floating production, storage and offloading vessel on Jan. 10, and the tanker is on its way to the Fos-sur-Mer terminal, located at France’s Mediterranean port of Marseille, according to data intelligence firm Kpler.

Sources said trading house Vitol had chartered this tanker, as it has a stake in indigenous producer FIRST E&P, which is the operator of the Anyala West oil fields, located in the shallow waters of the Niger Delta.

A representative at Vitol wasn’t immediately available for comment on the matter.

One market source said the cargo is likely to travel from Fos-sur-Mer to the Cressier refinery in Switzerland through the SPSE pipeline.

The 68,000 b/d Cressier is operated by Varo Energy.

Varo Energy is a joint venture between Vitol, private equity fund the Carlyle Group, and private investment fund Reggeborgh.

Medium sweet

Sources said that a second cargo will load in March, with some Asian refiners already showing buying interest.

Anyala has been labeled a medium sweet crude grade, similar in quality to Nigeria’s flagship crude Bonny Light, sources added.

When refined, Anyala will produce a high yield of middle distillates, making it attractive to both simple and complex refineries.

The new crude is from Nigeria’s shallow-water Anyala West oil fields in the Niger Delta, which struck first oil in November,

The fields in blocks OMLs 83 & 85 are expected to reach 60,000 b/d when fully developed, according to FIRST E&P.

Anyala is the country’s newest oil development since the start-up of the giant Egina field in late-2018.

Seven development wells have been planned in Phase 1 in the Anyala West field (OML 83), which will be developed along with the nearby Madu field in (OML 85). The project is estimated to contain 300 million barrels of crude oil recoverable reserves.

The final investment decision on the project was made in July 2018, while first oil was initially expected in 2019.

OMLs 83 & 85 are located in the shallow waters offshore Bayelsa State in southern Nigeria.

Nigerian oil output has fallen sharply in the past six months as it has come under pressure to adhere to its OPEC+ cut obligations. Some of the country’s key grades like Qua Iboe, Forcados and Brass River have also recently faced outages.

Nigeria’s crude and condensate production slumped to around 1.66 million b/d in 2020 from 2.04 million b/d in 2019, according to S&P Global Platts estimates. This was its lowest annual output figure since 2016, when militancy in the Niger Delta pushed output to as low as 1.60 million b/d.

Singapore — The Asian low sulfur fuel oil market is seeing heightened activity in January due to a double whammy of demand from the regional utility market and from sellers looking to re-stock after running down inventories in December in the lead-up to year end.

A surge in demand for low sulfur material from the utilities sector to meet peak winter season heating demand, especially from North Asian markets that have traditionally relied instead on cleaner burning fuels like LNG, has prompted LSFO suppliers to sit up and plan balances in January in a way they did not have to for most of last year when availability was ample.

“Last year we never worried about oil for the next month, but now we have to plan,” a Singapore-based LSFO trader at a western company said.

A resurgence in demand for LSFO as a burning fuel has also come at a time when both buyers and sellers are in the midst of looking to pile on product after de-stocking for the financial year end in December.

Current steady demand from the end-user low sulfur marine fuels market, especially from buyers that have inked contracts for January supply, if not so much from the spot market, has also bolstered market sentiment.

INCREMENTAL DEMAND

Further to North Asian markets like Japan and South Korea stepping up imports of low sulfur fuel oil to meet incremental domestic utility demand amid a cold snap, demand for high sulfur fuel oil as a burning fuel has remained firm from the Middle East and South Asia.

In Japan, some domestic refiners have been unable to increase fuel oil output at short notice to meet a surge in utility demand, S&P Global Platts reported Jan. 15 quoting Japanese refinery sources.

Chugoku Electric has resorted to importing fuel oil in addition to its domestic procurement, Platts reported, quoting a company official.

At least three South Korean utility companies have also been in the spot market to procure a cargo each of LSFO for delivery over January and February, traders said.

Taiwan’s CPC Corporation has maintained its purchase of at least 1 LSFO cargo per month to meet domestic utility demand, market sources said.

In the Middle East, Kuwait Petroleum Corp. has bought three 80,000 mt HSFO cargoes for January to meet utility demand, while its Mina Abdullah refinery, which normally supplies product to meet domestic demand, undergoes upgrade works.

Kuwait is likely to continue importing HSFO over February to meet its local power generation demand amid domestic refinery upgrades, Platts reported Jan. 7, quoting a company source.

Utility demand for fuel oil from other regional buyers like Sri Lanka and Bangladesh also remained steady, traders said.

“Clearly, there is more [fuel oil] going to meet utility demand, but there is also demand for bunkering…[South] Korea, China, Hong Kong, for example,” another Singapore-based fuel oil trader at a western company said.

OPTIMISTIC OUTLOOK

Given the current demand-supply balances, market sentiment was generally optimistic.

A western arbitrage fuel oil volume of just over 2 million mt is expected to arrive in Singapore for January, down 500,000-600,000 mt from December, market sources said.

Incremental demand, both from the regional utility sector and the end-user marine fuels market, will likely hasten a drawdown in stocks in landed tanks and on floaters off Singapore, traders said.

Singapore’s commercial onshore residue stocks edged down 0.94% week on week to 22.304 million barrels, or 3.52 million mt, in the week to Jan. 13 amid a doubling of fuel oil exports, latest available data from Enterprise Singapore showed.

Reflecting the bullish sentiment, the benchmark Singapore marine fuel 0.5%S cargo market’s premium to the Mean of Platts Singapore marine fuel 0.5%S assessment hit a near 11-month high of $3.58/mt Jan. 15. The premium was last higher on Feb. 26 last year at $4.92/mt, Platts data showed.

Also underpinning the bullish sentiment was a strengthening of the market structure at the front of the Singapore marine fuel 0.5%S swaps curve, which touched a 49-week high of $3/mt Jan. 11 before ending the trading week at $2.80/mt on Jan. 15, Platts data showed.

“The market is more bullish. This year is different because we are working with lower inventory. This year we need bigger arbitrage [volumes],” the first fuel oil trader said.

S&P Global Platts will begin publishing six new daily container bunker charge assessments, complementing existing container assessments, on Feb. 1, 2020.

The bunker charge assessments will reflect the bunker costs for transporting a 40-foot container on the above routes and will be expressed in $/FEU.

The assessments will be calculated using $/mt bunker prices in representative ports, published by Platts.

VLSFO PBC27 and PBC28 – Tokyo, South Korea, Shanghai, Zhoushan, Singapore.

VLSFO PBC29 and PBC30 — South Korea, Shanghai, Zhoushan, Hong Kong, Los Angeles, El Callo, Valparaiso.

VLSFO PBC31 and PBC32 — South Korea, Shanghai, Zhoushan, Hong Kong, Singapore, Santos, Montevideo, Buenos Aires.

The bunker charge round voyage weighting allocation, vessel speed and consumption used in the bunker charge calculations are arrived at through market survey and reflect market practice.

All assessments will reflect the use of 0.5% marine fuel and will include a sea margin of 5%.

The voyage durations are arrived at through market survey and the vessel will proceed on a round-voyage basis to ports in geographical rotation within the below ranges.

PBC27 and PBC28 — North Asia – Australasia range

PBC29 and PBC30 — North Asia – West Coast South America range

PBC31 and PBC32 — North Asia – East Coast South America range

The above variables used in calculating bunker charge assessments will be regularly updated to reflect market practice and new regulations.

Prices will be published in Platts Dry Freight Wire, Platts Global Alert service and on the Platts Platform on fixed page PGA 3950, and in the Platts pricing database.

Please send any comments or questions to shipping@spglobal.com, containers@spglobal.com, and pricegroup@spglobal.com.

For written comments, please provide a clear indication if comments are not intended for publication by Platts for public viewing.

Platts will consider all comments received and will make comments not marked as confidential available upon request.