August 07th 2023
Off-shore oil prospecting
National Holidays: Monday August 21st, 2023
Grains and Markets:
China is reported to have purchased various Panamaxes of soyabeans, including one from Argentina on May 2024 dates.
Malaysia is in the market for Supra/Panamax of maize on October dates.
Off-shore oil prospecting:
Permits for offshore exploration (immediate) have been issued by the Government.
Permitted commencement date starts December 15th, 2023 in the area known as CAN-100. The drill ship “Valaris DS-17” has been chartered as well as (at least) one anchor handling tug for assistance.
It is not yet reported which Argentine port will be used as a base for operations.
Odin Tank Storage Market Report – July / August, 2023:
Please find hereunder a Report prepared by our friends Odin which we trust you will find of interest.
In various previous editions, we have already highlighted the uncertainty caused by changes within the regulatory landscape and the effect of policymakers on businesses and investments. The latest withdrawal of the permit for the construction of a new ethane cracker in the Port of Antwerp serves as an illustrative example of the adverse effects of uncertainty in our industry. According to the court ruling, the Belgian government, in granting the permit, has not sufficiently considered the question of why the additional nitrogen deposition from the cracker would not be harmful to nature in the surrounding Brabantse Wal. This situation appears to be the new normal, and it is something all liquid bulk operators and adjacent stakeholders have to take into consideration. However, it once again emphasizes why it is essential for policymakers and industry stakeholders to work collaboratively to create a stable regulatory environment, fostering growth and sustainability in the liquid bulk sector.
Regarding the Ukraine peace talks, Saudi Arabia is hosting them in the first week of August. Russia has declined to attend, but both Washington and Europe are hopeful that the talks could lead to international backing for peace terms favoring Ukraine. As of the time of writing, the United States, several European countries, and Brazil have been invited to participate in the talks. Moscow has advised keeping an eye on this meeting, but it has also stated that a peace settlement in its current stance will be impossible.
Oil – Petroleum
OPEC leader, Saudi Arabia, announced a unilateral cut in oil production of 1 million barrels per day in June. Currently, the market doesn’t seem overly worried. At the time of writing, the West Texas Intermediate (WTI) crude oil is trading at USD 80.77 per barrel, while Brent crude is priced at USD 84.95 per barrel. Prices have increased by approximately 12% since last month, but they continue to fluctuate around the price level set since December 2022.
One of Europe’s main markets for gasoline has shrunk. After the blending mandates entered into force, Dutch exports to West Africa were already affected, but as of the end of July, Nigeria removed fuel subsidies and consequently destroyed much of the country’s domestic demand. North America and West Africa (WAF), with Nigeria at the helm, historically have been the top two destinations for petrol exports from Europe, which produces more gasoline than it uses, meaning its refiners rely on exports to support profit margins.
The imposition of sanctions on Russian oil by Western countries in response to the Russian-Ukrainian War resulted in a shift in parties handling Russian products. Prior to the war, a handful of large trading houses, such as Shell, BP, Vitol, Trafigura, and Glencore, handled most of Russia’s crude and oil exports for decades. However, due to the conflict, these large trading houses have opted out of the trade, leading to many little-known trading firms stepping in. It is common for cargo to change hands before the vessel even reaches its destination, sometimes multiple times. There is no suggestion that these trades violate sanctions, but they make it difficult for sanctions enforcement agencies in Europe and the United States to track Russian oil transactions and prices. The rapidly changing trading network complicates the identification of those involved in moving the oil, particularly when prices exceed the imposed gap.
The second-quarter results of leading chemical companies indicate a continued decline in demand for chemicals across all regions. Several major players in the chemical industry, listed below, reported a significant slowdown in activity, and there are few signs in favor of an upturn in the chemical markets. These global companies are already forecasting adjusted FY reports and mention that they do not expect to meet their initial targets. This could potentially serve as an indicator of an impending general recession. At the very least, the next five months are expected to be bumpy for this sector.
We have received inquiries from players seeking tanks for specialty chemicals in the United States, as well as inquiries for commodity chemicals in ARA and the Mediterranean. Unfortunately, while availability is gradually improving, it remains limited, and prices are still quite high, making it difficult to find suitable homes for these products.
Biofuels have experienced a surge in market traction in recent months, following a disappointing performance in the first half of the year. The expectation is that the biofuels market will continue to grow, as underscored by a recent report from the International Energy Agency (IEA), which emphasized the need for global sustainable fuel production to triple by 2030 to achieve net-zero emissions by 2050. The past increases in biofuel demand were largely driven by new regulatory programs and tax incentives, and we anticipate that similar incentives will be introduced in the future.
Interestingly, despite significant untapped potential in many regions worldwide, over 80% of biofuel production is concentrated in just a few countries. This indicates a substantial opportunity for growth in other parts of the world. In the past few months, there has been a resurgence of interest and activity in biofuel storage across various locations. This presents potential opportunities that may align with your requirements.
Please let us know your specific needs, and we will be delighted to explore potential matches that suit your preferences.
There is a healthy demand for vegetable oil, and as a result, we have once again worked on various inquiries in ARA, Mediterranean, and South America. The products in demand were mainly soybean oil, palm oil, and molasses.
The storage demand for soybean oil comes on the back of record highs in Brazil’s soybean crushing activities in July 2023, reaching 53.5 million mt, surpassing the estimates by 0.3 million mt. The latest estimates for Brazil’s soybean oil sales stood at 2.4 million mt, up 0.1 million mt compared to June’s forecast.
In July 2022, a deal was struck between Russia and Ukraine, brokered by Turkey and the UN, allowing cargo ships to sail along a corridor in the Black Sea to export mainly grain from Ukraine. This agreement also made it easier to export vegetable oils from the Black Sea. However, the deal has expired, and Russia refuses to renew it because the UN had promised to help increase exports of grain and fertilizers in return. Although Western countries have not imposed sanctions on Russian agricultural products, Russia claims that the restrictions have deterred shipping firms, international banks, and insurers from dealing with its producers.
The share of Electric Vehicles (EVs) in China, the world’s largest car market, surged to 28% from January to May, a significant increase from the 9% recorded in the same period in 2021. Meanwhile, the share of petrol cars decreased to 72%, down from 91%. This remarkable shift in the automotive market is expected to lead to a peak in China’s demand for petrol as early as next year, as electric vehicle sales continue to soar. This milestone marks a crucial step in the energy transition for the world’s largest polluter. Interestingly, despite the growing adoption of EVs, the demand for base oil in the Asia-Pacific region continues to rise, and this trend is projected to continue until 2030. The increase in demand can be mainly attributed to lubricants used for marine and other heavy applications, while the demand for base oil for automotive use is declining. However, even with the increasing share of electric vehicles, there is still a substantial demand for conventional fuels and lubricants from petroleum cars in Asia.
In the Port of Rotterdam, the total volume of bunker sales fell by 10% in the second quarter of 2023. Sales of Very Low Sulfur Fuel Oil (VLSFO), Marine Gas Oil (MGO), Marine Diesel Oil (MDO), and bio-blended bunkers declined between 8% and 15%. This decline is not surprising, given that overall port activity, as measured by total cargo throughput, also dropped during the same period. In contrast, High Sulfur Fuel Oil (HSFO) sales increased by 5% in the same quarter, leading to a rise in the fuel grade’s market share from 30% to 35%. The increased demand for HSFO can be attributed to the investments in mass-scrubber technology made in 2021. Following the Russia-Ukraine War, there has been a surge in middle distillate prices and desulfurization costs, which have put pressure on VLSFO premiums. This situation prompted shipowners to install mandatory exhaust cleaning systems, or ‘scrubbers,’ which allow them to burn the cheaper high-sulfur fuel grade. Consequently, there has been a notable increase in enquiries for fuel oil storage, with a particularly strong interest in a combination of fuel oil/bio storage with blending capabilities. Various parties have shown interest in such setups, but as of now, there are no terminals, at least in the ARA region, that are willing and/or able to accommodate these requests.
STS Bunker at zona comun for next days:
As always, the STS operation is up to the discretion of the Master’s of the vessels involved.
Will keep you posted.
Antares Servicios Maritimos S.A.
For more information