Newcastle coal exports down

In Freight News 14/03/2016

Newcastle coal exports are down 9 per cent in 2016 year on year, according to the Hunter Valley Coal Chain Co-ordinator.

Coal throughput at for Port Waratah Coal Services has reached 86 per cent of the year to date outbound target rate at an average of 104.5 million tonnes per annum at the end of February.

The inbound throughput rate for Port of Newcastle of 148.9 million tonnes per annum represented 82 per cent of the year to date target. Real figures to the end of February came in at 24.4 million tonnes hauled to port, compared to 26.7 million tonnes in the same period 2015.

At present 12 vessels are in queue, with an average vessel turnaround of 4.2 days, while port stocks sit at 1.133 million tonnes.

Early in January heavy rains caused flooding in the Hunter Valley between Maitland and Newcastle bringing rail haulage to a halt, and forced Port Waratah Coal Services to stop all rail and ship loading operations for two days.

Source: Australian Mining

Cheniere Preparing To Load Second LNG cargo from Sabine Pass: Sources

In Freight News 14/03/2016

The Cheniere-operated Sabine Pass LNG terminal in Louisiana is preparing to load its second cargo, market sources said.

The facility is understood to be taking more feed gas than in the previous week, indicating that the facility has restarted liquefaction.

“[Gas flows to the plant] were almost zero for a few days and have increased substantially in the last three days,” one source said.

Another source said deliveries had ramped up to 200,000 MMBtu/d.

The Cheniere-controlled 162,000 cm m Clean Ocean is in a holding pattern off the Louisiana coast, according to cFlow, Platts trade-flow software. The vessel started moving toward the coast March 10 after lingering in the Gulf of Mexico since the start of the month.

Loading is expected to commence this weekend, according to one of the earlier market sources, with a source close to the issue confirming that loading will take place within the next week.

Cheniere loaded the first cargo from Sabine Pass between February 21-25. The cargo is on board the 160,000 cu m Asia Vision and headed toward Brazil’s Guanabara Bay LNG terminal.

The cargo was sold to Brazil’s Petrobras and was heard to have been sold for a delivered price similar to the equivalent NBP forward contract, market sources said.

After the loading of the first cargo, the facility was taken offline so that checks could be carried out. This is understood to have lasted about two weeks, and “went smoothly,” according to a source close to the matter.

Cheniere is expected to export eight to 10 cargoes over March and April, most of which have been committed to buyers, according to market sources. After the commissioning of the first train is complete, most of its offtake volumes are expected to go to BG, which has a long-term contract for volumes on a FOB basis.

Cheniere did not respond to a request for comment.

Source: Platts

U.S. Rejects Multibillion-Dollar Jordan Cove Gas Export Plan

In Freight News 14/03/2016

U.S. regulators rejected Veresen Inc.’s multibillion-dollar proposal to build a terminal in Oregon that would export as many as two tankers of natural gas a week. They also denied its plan to a build a pipeline with Williams Partners LP to supply gas to the terminal.

Williams and Veresen failed to demonstrate that the pipeline’s benefits would outweigh the “adverse effects on landowners,” the Federal Energy Regulatory Commission said Friday in an order denying authorization. And without a pipeline supplying gas, the Jordan Cove export terminal “can provide no benefit to the public to counterbalance” the impacts associated with its construction, the agency said.

The rejection throws into question the future of a project that has waited almost three years for regulatory approval. A worldwide glut of liquefied natural gas is meanwhile emerging, threatening the economics of such export terminals in the U.S. As much as half of the nation’s LNG export capacity is at risk of being shut between 2017 and 2020, according to the research and consulting group Wood Mackenzie Ltd.

“Jordan Cove was one of the few projects off the West Coast we would have expected to move forward,” Het Shah, an analyst at Bloomberg New Energy Finance in New York, said by e-mail late Friday. The terminal would have “brought much-needed relief” to gas markets in Western Canada and the Rockies by creating another outlet for the region’s production, he said.

‘Extremely Surprised’

Calgary-based Veresen said in a statement that it was “extremely surprised and disappointed” by the decision and plans to request a rehearing on it. “We will continue to advance negotiations with customers to address this concern,” Don Althoff, the company’s chief executive officer, said.

Williams, based in Oklahoma City, didn’t immediately respond to requests for comment.

While Veresen has estimated in previous presentations that the Jordan Cove terminal would cost $5.3 billion, a report issued by the federal energy commission’s staff last year estimated construction would total about $3 billion.

Shale Boom

Jordan Cove isn’t the first terminal to have been rejected by the federal energy commission, but it may be the first export project to be denied since the U.S. shale boom touched off a flurry of applications to send natural gas abroad. The commission had approved at least seven export plans as of Jan. 6 and was weighing applications for nine more, including Jordan Cove, reports on its website show.

Veresen had proposed to build four “trains,” or LNG production plants, at Jordan Cove that would have been capable of making 6.8 million metric tons of LNG a year. The 232-mile (373-kilometer), $1.74 billion Pacific Connector gas pipeline proposed to supply the plant would have been owned by Veresen and Williams Partners.

Regulatory SetbacksThe project has been mired in regulatory setbacks since it was first proposed, from delays over a state water permit to the extension of its public commenting period.

“The more adverse impact a project would have on a particular interest, the greater the showing of need and public benefits required to balance the adverse impact,” the federal energy commission said in its order on Friday.

The companies showed “little or no evidence of the need” for the Pacific Connector pipeline considering they hadn’t conducted an open season for capacity on the system and didn’t have contracts for it, the agency said in the order.For their part, Veresen and Williams said they were confident they’d find customers and that they were in negotiations with prospective clients.

Source: Bloomberg

Cyprus President expresses determination to protect and further develop shipping sector

In International Shipping News 14/03/2016

Cyprus President Nicos Anastasiades has expressed his government`s determination to protect and further develop the island`s shipping sector.

He was addressing an event in the coastal city of Limassol to mark the 25th anniversary of a Russian shipping company.

Addressing the company he expressed appreciation “for the trust you place on Cyprus to establish and operate your business and your contribution towards the development of the Cyprus shipping industry.”

“Over the past decades Cyprus has built up an exceptional maritime infrastructure and high level of expertise,” he pointed out, recalling that “the Cypriot maritime registry is today one of the largest in the EU and the 10th largest worldwide.”

Furthermore, he noted, “our country is considered to be one of the largest third party ship-management centres globally”, adding that “this is largely due to the contribution of companies like Unicom.”

President Anastasiades continued to say that despite the international adverse economic conditions and the financial difficulties that our country faces in the last years, the Cyprus shipping sector managed to maintain its competitiveness and perspectives as a result of combined efforts from the public and private sectors.”

Shipping, he added, “has in fact evolved in the recent years as one of the leading sectors of our economy and has proven to be an invaluable asset in our journey to recovery.”

At the same time he assured that the government “acknowledges now, more than ever, the important role that the shipping sector plays in the Cyprus economy.”

We are well aware of the fact that the shipping sector operates in a continuously evolving and highly competitive global environment, he said.

That is why, he stressed, “we are determined to introduce the necessary mechanisms to protect and further develop the shipping sector, to further improve the overall shipping infrastructure in Cyprus and our services in the shipping industry.”

Addressing the event, in Russian through an interpreter, Deputy Minister of Transport of the Russian Federation Viktor Olersky said the presence of both Cyprus President and Transport Minister Marios Demetriades at the event shows how much attention the government of Cyprus gives to the development of the shipping sector of this country.

“We believe that our relations with Cyprus, especially in the shipping industry sector can develop even more and can be deeper,” he said.

Referring to the a meeting he had with Demetriades he said he had expressed the view that Russian presence in Cyprus and our cooperation can be more practical and that it should “develop more into ship-management and ship-ownership.”

I believe the government of Cyprus will provide more assistance to the Russian companies that would like to have deeper roots in this wonderful land, he concluded.

Source: Famagusta Gazette

India: Shipping vessel sharing pacts get exemption from CCI purview

In International Shipping News 14/03/2016

In a significant move, the government has decided to exempt vessel sharing agreements from the ambit of Competition Commission for another year.

The Corporate Affairs Ministry has decided to give exemption for such pacts, which are common in the shipping industry, after concluding that they are unlikely to adversely impact competition.

To ensure that the agreements do not result in unfair business practices, the Shipping Ministry would monitor them.

Vessel Sharing Agreement (VSA) allows entities to share space in each other’s vessels. The earlier exemption given for one year expired recently.

In a notification, the Ministry said that in public interest it was exempting “vessels sharing agreements of liner shipping industry from the provisions of section 3 of the said (Competition) Act, for a period of one year”.

Section 3 pertains to anti-competitive agreements.

It would be applicable for carriers of all nationalities operating ships of any nationality from any Indian port. The exemption would be in place till March 1, 2017.

However, such agreements should not entail “concerted practices involving fixing of prices, limitation of capacity or sales and the allocation of markets or customers”.

Competition Commission of India (CCI) comes under the administrative control of the Corporate Affairs Ministry.

During the exemption period, the Director General of Shipping would monitor the agreements.

“Persons responsible for operations of such ships in India shall file copies of existing VSAs or VSAs to be entered into with applicability during the said period along with other relevant documents,” with the Director General, as per the notification dated March 2.

These documents have to be submitted within 30 days of the notification or ten days from signing of such agreements, whichever is later.

With the exemption, shipping industry entities would not have to seek approval from the Competition Commission for VSAs.

Source: Business Standard

How Do Your Quarters Look, Shipping Investors?

In International Shipping News 14/03/2016

Conditions in many sectors of the shipping market are extremely challenging today, but some asset market watchers might look at that as fertile ground for new opportunity. However, different parts of the market cycle pose different questions for shipping’s asset players. What does the historical data tell us about investor behaviour across the cycle in the key shipping sectors?

Where In The Cycle?

The graph illustrates the share of reported secondhand sale and purchase (S&P) activity since 1997 at different ‘price point quartiles’, across the three main sectors and also for total sales activity (see graph explanation for more detail). According to asset investment theory, one might not expect the pattern across the quartiles to be even. At the top end of the price cycle there are limited numbers of ‘optimistic’ buyers willing to make a deal with many keen to sell at rewarding levels, and at the bottom end there are fewer sellers ready to dispose of assets at challenged prices. But how does the pattern look across the shipping sectors?

Life At The Top

Tanker sales reveal a focus at the upper end with a 30% share in the top quartile, and 50% in the middle two quartiles. Less than 20% of sales fell in the bottom quartile. In the bulkcarrier S&P market, transactions have historically been even more concentrated in the upper two quartiles, which accounted for almost 60% of sales in 1997-2014, boosted by record sales numbers in 2007 to many ‘exuberant’ buyers when prices and markets were near to the peak. However, with asset values falling further in 2015, and the market remaining liquid in recent times, in part due to increased pressure from traditional shipping banks, the share of bulker sales in the bottom quartile has risen to 20%, more than in the tanker sector.

Boxships At The Bottom

In the containership sector, the pattern has been more differentiated. Sales in 1997-2014 were much more heavily weighted towards the bottom quartile, with over 30% of transactions occurring there. Often outside of the more traditional ownership structures, it appears that many investors have felt pressure to exit their positions in the prolonged doldrums since the financial crisis. The record number of sales in 2015, at a low point in the price cycle, amplified the trend; by March 2016, 34% of boxship sales since 1997 had taken place in the bottom quartile.

An Optimistic Bunch?

Overall, across all reported vessel sales, only 51% of transactions took place in the mid-quartiles, and almost 30% at the top end compared to 20% at the bottom. What does this mean? Does it make shipping investors an optimistic bunch?

Well, given some of the market ‘spikey-ness’ the top quartile here probably factors in some less than top quartile levels in terms of absolute price range, so that may not be fully true. But still, containership sector aside, it leaves analysts of today’s markets with something to chew over. Even at the darkest of times for some of the sectors, analysis of historical asset play activity could potentially provide some reassuring evidence of more ‘optimistic’ behaviour in the past.

Source: Clarksons

Tanker market could find additional support in the future from India’s growth

In Hellenic Shipping News 14/03/2016

India is bound to make a splash in the shipping freight markets in the coming years, both in the dry bulk, but also in the tanker market segments. In its latest weekly report, Poten & Partners examined this exact development, highlighting in the tanker market, where LR1 and LR2s product tankers could take a hit, while other tanker segments benefit.

Poten noted that “in the most recent Medium-Term Oil Market Report, the IEA describes the Indian demand outlook as “particularly favorable”, with 1.1 million barrels per day (mb/d) of demand forecast to be added to 2021, an average annual increase of 4.2%. This is even one of the more conservative forecasts. According to other analysts, India’s development has characteristics that are similar to those of China 10-15 years ago. As a reminder, China’s oil demand experienced a compound annual growth rate of 7.75% between 2000 and 2005. If India were to start growing at those rates, this would provide a significant boost to both oil and shipping markets.

According to Poten’s report, “India has a lot of potential. Its population reached 1.29 billion in 2015 and is expected to grow by 1.2% (or 20 million people) in 2016. Based on its current growth trajectory, it is expected that India’s working age population (Aged 15-19) will surpass China by 2025 and continue to climb until 2045. China’s rapid economic growth has been built on infrastructure, investment and manufacturing, areas in which India has barely scratched the surface”, said the analyst. What’s interesting though is that the Modi-run government has already moved forward with a series of initiatives and reforms, aimed at modernizing the country and bringing it on par with other growing economies. From the results so far, the task in hand has proven to be more than the government bargained for, but nonetheless progress is already obvious in a number of areas, albeit not at the rate which was hoped for at the beginning. Still, India’s economic growth has accelerated, which in turn has led to an increase of India’s demand for oil products by 9% during 2015, which equates to a rise of 318,000 b/d, with gasoline being the most sought after with an annual rise of 16%.

In fact, as Poten noted, “demand growth could have been even higher if not for an increase in excise duty on gasoline and diesel that was instituted in the second half of 2014. Initial data for 2016 seems to indicate a continuation of India’s growth momentum. Barclay’s Research expects that India will see strong gasoline demand growth in 2016, driven by continued growth in passenger vehicle sales, expanding road networks and rising income levels. Since India has limited oil reserves (domestic oil production is less than 900,000 b/d), the country is a significant – and growing – importer of crude oil. For 2016, Indian oil demand is forecast to grow by 300,000 b/d, while an additional 80,000 b/d will be added to the Strategic Petroleum Reserves. With domestic production reducing by 40,000 b/d, this will raise overall crude oil imports to above 4 mb/d. India is now the world’s third largest importer of crude oil after the United States and China”, said Poten.

In terms of ton-mile demand, it’s worth keeping in mind that India traditionally imported the majority of its crude oil from short-haul sources in the Middle East. However, recently it has began to change course, looking to diversify its sources of supply. For instance, tanker owners are very happy that India has increased its imports from countries in West Africa, Venezuela in Latin America, while also, small volumes from Mexico have all contributed to an increased ton-mile demand for crude tankers. Meanwhile, as recent developments have shown, post-nuclear sanctions in Iran will see India increasing crude imports from Iran, however, it’s still unknown which supplier will lose market share as a result.

It’s worth noting at this point, that “India has built up a modern refining industry with world class facilities that are exporting petroleum products all over the world. In recent years, however, growing local demand as well as the liberalization and deregulation of the domestic market has made it more attractive to sell products in India. In 2015, refined product exports from India fell by 6.7% (110,000 b/d). In the coming years, Indian refined product exports are expected to fall further, as the market becomes increasingly competitive with more volumes from the Middle East and China. This could reduce demand for LR1 and LR2 product tankers”, Poten concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide