January 22th 2024
ODIN | Tank Storage Market Report:
National Holiday: Monday and Tuesday February 12th and 13th, 2024 (Carnival)
Grains and Markets:
South Korea has purchased 120,000 tons of soya bean meal on July dates, sourcing of the meal is unreported for the moment.
Algeria’s ONAB are in the market for 160,000 tons of maize and 30,000 tons of barley. Dates unreported.
Vietnam are in the market for two Supramaxes of maize, one during April ands another for May.
Bahia Blanca – Puerto Rosales SBM out of service:
The two SBMs located at Puerto Rosales, off-shore Bahia Blanca are out of service for the moment.
Both installations have suffered leakages of crude oil within a short period of time and until repairs are completed, they will not be in service.
Punta Cigueña and Punta Ancla produced leakages into the Bahia Blanca estuary within a few days of each other during the middle of last week.
Oiltanking SA, who the operators decided to shut down operations until they are both safely serviceable. Further updates are due early during the coming week.
The SBM are principally used to feed the Oiltanking storage facility on shore and the crude oil discharged is sent by an oil pipeline to refineries in the Buenos Aires area for cracking and distillation.
They are also applied to crude oil export from Vaca Muerta oil field to a lesser extent.
ODIN – Tank Storage Market Report:
Our friends at Odin have issued the January Tank Storage Market Report which please find hereunder.
As the echoes of New Year festivities fade away, we extend our warmest wishes for a prosperous 2024. With the dawn of the new year, our focus shifts back to the storage market and the new challenges and opportunities this year will bring.
Once again, global supply chains face threats as a ripple effect from the ongoing conflicts in the Middle East, with drone and missile strikes originating from Yemen targeting tankers and cargo ships. Throughout December, Houthi militants intensified attacks on commercial vessels in the Bab-el-Mandeb strait as they enter the Red Sea en route to the Suez Canal. This prompted major shipping companies to reroute their vessels, causing a surge in insurance costs for Red Sea crossings. Initially claiming to target Israeli flagged vessels and/or vessels bound for Israel, the threat has expanded as vessels without any Israeli connection have also come under attack. The attacks target a crucial shipping route for East-West trade and compelled large shipping companies such as Euronav, BP, CMA CGM, Maersk, and OOCL, among others, to opt out of Suez Canal transits. This increases their voyages by up to 14 days, consequently increasing shipping costs and causing delays in supply. For vessels still transiting the War-Risk zone, the risk premium increased from 0.02% to 0.5% in a matter of days. To put his into perspective, for a 17yrs old, 30,000 DWT tanker, an additional war risk premium (AWRP) of USD 65,000 was reported. Additionally, the Joint War Committee (JWC) announced an expansion of the high-risk zone from 15 degrees North to 18 degrees North. On December 19th, the US Defense Secretary announced the formation of an international task force to patrol the Red Sea under the name Operation Prosperity Guardian, intended to safeguard vessels transiting the Bab el-Mandab Strait. On December 28th, a US Naval destroyer shot down a drone and a missile in the Southern Red Sea, marking the 22nd attack targeting international shipping in the last two months. No ships were damaged, and no crew were injured in the attacks, as the US-led naval operation seeks to build confidence among commercial operators to return to the Suez Canal route despite ongoing attacks.
With the Panama Canal still struggling with drought, both major continental shipping passages, are suffering from obstructions to trade. Bringing with them logistical challenges and congestions at terminals in various regions.
Oil – Petroleum
At the time of writing, West Teas Intermediate (WTI) crude oil is trading at USD 71.57 per barrel, while Brent crude is priced at USD 77.05 per barrel. The prolonged transit times have led to a minor drop in inventory levels in Europe, and if Suez Canal avoidance persists, it may result in congestion at European terminals and additional logistical challenges.
If European demand for Diesel recovers later in 2024, diesel margins may prove sensitive. The marginal supply will need to be imported as Europe’s refineries have already been maximizing output in response to (historically speaking) higher margins. As a result, European refiners have little spare capacity to increase diesel output, and more frequent unplanned outages raise the threat of sudden supply dips. Reported overheating among Mediterranean refineries during this summer, as well as protracted outages at German refineries and the announced closure of Petroineos’ 150,000 b/d Grangemouth refinery in 2025, again shone a light on the fragility of the refining economic model in Europe and underscored the continent’s growing dependence on diesel and gasoil imports. Europe can take some comfort from the introduction of new large refinery projects, which will probably ease diesel supply concerns by building on the continent’s list of alternative suppliers to Russia. The 650,000 b/d Dangote refinery is due to come online in Nigeria next year, joining Oman’s 230,000 b/d Duqm, Bahrain’s 130,000 b/d Sitra, Mexico’s 340,000 b/d Dos Bocas and China’s 400,000 b/d Yulong refineries.
There remains a healthy demand for the storage of conventional fuels, with fuel oil maintaining the highest level of interest. Unfortunately, the overall suitable capacity for conventional fuel storage in the hubs is diminishing and currently, there is no availability for these types of cargo.
Chemicals
The European chemical industry is currently facing one of its most profound crises as it enters 2024, characterized by persistently weak fundamentals. Throughout 2023, the industry grappled with subdued demand, leading to a decline in chemical prices amid historically high costs, particularly for energy and feedstocks. This challenging scenario was further exacerbated by substantial labor and regulatory expenses. The adverse effects of these conditions have taken a toll on European-based businesses, with most companies cautioning against expecting any significant improvement until at least mid-2024. This grim outlook is reflected in the availability of tankage, where opportunities for sublease are gradually emerging within the ARA region. Although existing tenants still choose to retain the tanks on their balance sheets for 2024, it provided options for short-term requirements worth exploring.
Biofuels
The European Union has initiated an anti-dumping investigation into the imports of Chinese biodiesel and renewable diesel. This investigation will encompass the timeframe from October 1st, 2022, to September 30th, 2023, given the unprecedented surge in imports from China during this period. EU producers attribute these imports to the mounting pressure on EU renewable fuel prices, leading to plant slowdowns and closures. The proceedings are anticipated to extend until February 2025, with provisional anti-dumping measures potentially being implemented as early as June. According to EU customs data, there were 640k mt imports from China of methyl ester biodiesel, classified under the HS code 382600. However, the new investigation also encompasses customs codes for various feedstocks.
The demand for biofuel storage remained low during the last months of the previous year, with minimal requirements for HVO and small quantities of FAME in different regions.
Vegoil
Latin American soybean crushing volumes are likely to increase consistently in 2024 due to a recovery in Argentina’s crop output and a higher biodiesel mandate set for Brazil. Brazil is set to raise the country’s mandatory biodiesel blending mandate to 14% in March 2024, advancing previously established blending targets. Additionally, Brazil has suspended biofuel imports until further notice. These measures enhance the prospects of the Brazilian oilseed crushing industry, which has struggled with idle capacity averaging 50% in recent years, as approximately 70% of the country’s biodiesel is produced from processed soybeans.
Furthermore, Palm Oil prices are anticipated to be higher globally in 2024. This is attributed to stagnant production in main producers Indonesia and Malaysia, coupled with growing demand for its use in biodiesel production, which will likely tighten supplies in the coming year.
Amidst a landscape predominantly filled with negative news and pessimistic forecasts, this positive development is a welcome change.
Renewable energy
The 28th United Nations Climate Change Conference (COP 28) took place in Dubai from November 20th, 2023 to December 13th, 2023. The meeting concluded with countries agreeing on the necessity to “transition away from fossil fuels in energy systems”. Additionally, a new agreement was reached to fund assistance for nations impacted most by climate change through the Loss and Damage fund. Moreover, the Global Stocktake, a crucial component of the Paris Agreement used to monitor and evaluate collective progress towards agreed-upon goals, called upon participating parties to take action in reducing emissions and mitigating the impacts of climate change. Actions mentioned included tripling of renewable energy capacity, doubling the average annual rate of energy efficiency improvements by 2030, and accelerating efforts towards the phase-down of unabated coal power and the phasing out inefficient fuel subsidies.
The largest regional regulation on greenhouse gas emissions entered into force on January 1st, 2024, as shipping is now included in the European Union’s emissions trading system (EU ETS). The EU ETS is a market-based measure that sets a cap on allowed emissions. This means that, as of January 1st, vessels visiting EU ports are required to offset their applicable CO2 voyage emissions through the purchase of an equivalent number of EU Allowances (EUAs). The additional voyage costs vary per voyage but are estimated at approximately 2% of the current freight for an MR tanker sailing between UK and the US East Coast. As a result of this new regulation, carbon emissions will now incur direct additional cost for shipping.
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Bunker deliveries at Zona Comun:
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.
Best regards,
Antares Servicios Maritimos S.A.
For more information