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What technology area do you expect to be a game-changer?

Gepubliceerd Jacob on 13 december 2018 10:08:35

 

PJK International is an independent market research powerhouse that counts on a methodology that balances a data driven and quantitative approach with the assessment of an extensive network within the industry.

 

With “GRIPPING THOUGHTS” PJK International aims to share ideas and insights from its network – partners, clients and friends – to help shedding light on the challenges that the industry faces, in the near and long future.

 

So join us and get inspired by IVAR BERNTZ, Research Analyst in the Cross-Industry and Advanced Manufacturing Group at GARTNER :

 

Gartner recently released the results of the 2019 CIO Survey: Oil and Gas Industry insights based on 84 responses out of the 3,102 overall respondents from 89 countries. Let us discuss the most cited answers to two of the questions posed, namely: 1) What is your organization’s top priority for 2018/2019? and 2) What technology area do you expect to be a game-changer for your organization?

 

As market recovery has continued through 2018 and firms have made significant progress improving efficiency, cautious optimism has spread across the industry. With better market conditions, improving balance sheets and leaner operations, it is unsurprising that oil and gas executives are strongly focused on revenue and business growth as their top priority, as stated by 28% of the respondents. Caution, however, is still in evidence since the recovery is recent and still fragile. Operational excellence (No. 2) provides a relatively low-risk route to growth and profitability (included in No. 4, business or financial goals), and is the priority for 26% of respondents. Cost optimization remains a priority for a small, but significant, minority (9%).

 

Oil and gas company executives, senior leaders and functional managers are embracing digital. This year 22% of respondents rate it as top priority, compared with only 8% last year. Recognition of the capacity of digital innovation to both optimize and transform business models has crossed a tipping point in the industry, significantly elevating digital as a priority. Nevertheless, companies within most other industries are more likely to prioritize digital, a sign that traditional oil and gas industry inertia has not disappeared. Progress, while rapid by oil and gas standards, is only just keeping pace with trends outside the industry.

 

The oil and gas industry’s striking enthusiasm for analytics that was noted last year, continues unabated, with 44% of oil and gas CIOs expecting data analytics to be the top game-changing technology set for the industry this year — double the percentage across all industries. Despite occasional mixed results and scepticism of vendor promises, analytics has gained widespread acceptance based on multiplying use cases and demonstrated value. As digital ambitions intensify, analytics is consistently prioritized by oil and gas leadership seeking proven ways to derive business value from digital technologies.

 

The greatly elevated priority of the IoT is new, with 24% of respondents now identifying it as a game-changing technology compared to 8% last year. As companies deal with existing inefficiencies, continued pursuit of operational excellence demands new strategies to improve asset performance, driving greater use of analytics for simulation and prediction of future behaviour. Analytics’ focus also shifts from reactive modelling offline to nearer real time. IoT offers advantages in data collection and system responsiveness over legacy systems to support this. However, cost-benefit considerations have so far acted as a brake on adoption, especially on mature assets. With improving market conditions driving business growth, the comparative advantages (and increasing cost-effectiveness) of IoT promise performance differentiation that will accelerate take-up.

 

A stark difference between oil and gas and all industries is apparent in artificial intelligence/machine learning. Across all industries, artificial intelligence/machine learning is ranked as the No. 1 game-changing technology across all three categories of performers, with 40% of top performers placing it at the top. While it is the third-most-cited, game-changing technology in oil and gas, only 21% of industry CIOs rate it as the top technology.

 

Some care is needed to interpret this result. In part, it reflects the natural mistrust of the industry to hyped technology. Many oil and gas operators are still exploring ML and AI use cases and have yet to operationalize it. They do not necessarily recognize AI and ML as extensions of analytics techniques generally. Understanding is more concrete for other technologies today, which — given the asset-centric nature of the business — are also expected to deliver significant value leading to a more even spread of expectation. Nevertheless, the growth of AI and ML, along with the elevation of IoT, indicates a shift in focus in the industry toward greater real-time connectivity and prediction for asset optimization.

 

Given this background, what do you believe will be your organization’s top priority for 2019 and what technology will be a game changer to accomplish it?

 

PS: if you want to contribute to “Gripping Thoughts” and share your vision regarding the Oil & Gas industry challenges as well as inspire your peers with fresh ideas, please send an email to aldo.cavalcanti@pjk-international.com

 

Find here other “Gripping Thoughts” articles:
  •  Read now: interview with Bertrand Chupin, VP of the Loading Systems business unit of TechnipFMC, a global leader in subsea, onshore/offshore and surface projects, with about 37,000 employees.

 

 

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ARA independent product stocks rise on fuel oil build

Gepubliceerd Jacob on 7 december 2018 15:11:24

London, (Argus) — Oil products held in independent storage tanks in the Amsterdam-Rotterdam-Antwerp (ARA) trading hub increased by 1.7pc on the week today to 4.9mn t. A sharp rise in fuel oil stocks outweighed declines in every other product.

Fuel oil inventories increased by 18.5pc on the week hitting a three week high. Cargoes arrived from France, Poland, Russia and the UK. A Suezmax and Aframax departed for Singapore. Stocks increased ahead of the loading of a very large crude carrier (VLCC) — the Neptun — due to arrive next week.

Gasoil stocks declined by 1.4pc to a six month low. A rise in Rhine water levels allowed exports from ARA to reach the German inland market, which weighed on stock levels. Cargoes also left for the US and west Africa. Tankers from the Baltic and Russia.

Gasoline stocks fell by 1.3pc to a three week low, as cargoes departed for west Africa and product loadings along the Rhine increased. Products arrived from France, Germany, Sweden and the UK.

Naphtha inventories declined by 7pc. Cargoes arrived from Algeria, France, Spain and the UK. As with gasoil and gasoline, naphtha demand from inland Europe is likely to have increased as a result of higher Rhine water levels.

Jet fuel stocks fell by 3.7pc, also a three week low. Exports to the UK outweighed imports from the Mideast Gulf, which totalled just one cargo.

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Tank Terminal Market Model – Part 1

Gepubliceerd Jacob on 3 december 2018 15:03:16

INTRODUCTION

 

Last week was a short review of the profit drivers for physical traders, where we explained in short how traders make profit. There are a lot of different factors influencing the tank storage sector. Mostly the imbalances in the sector create opportunities for financial players. The market appears to be complex and demonstrating a lack of transparency. PJK International has developed a Tank Terminals Commercial Performance Model to quickly gain insight and a higher proficiency of the tank storage market. This is the first part related to the Tank Terminal Market Model, next week we will publish the second part for you to be able to connect the dots.

 

MARKET FUNDAMENTALS

 

First we describe the market fundamentals as shown in the image below. Relevant market fundamentals for the oil storage business are the shape of the forward curve, the competitive market structure and the logistical factors supply, demand, imbalances and trade flows. The shape of the forward curve is determined on oil futures markets. The oil price forward curve can be upward sloping (contango) or downward sloping (backwardation). In a backwardated market is less demand for tank storage than in case of a contango. Inventory levels are also lower in a backwardation compared to a contango. Both demand and tank availability are therefore affected and this influences the commercial setting.
 

 

Furthermore the competitive market structure consists of a supply-side and demand-side market structure. Tank capacity and market shares of various terminal operators are key factors that determine the supply-side competition. The number of players, their size and diversity are key factors on the demand-side of the market. Both demand- and supply-side competition influence commercial performance of the terminals. And also Tank terminals are part of the oil products supply chain and therefore logistical factors such as local product demand, regional refinery output, imbalances and trade flows are very relevant. Developments in these factors influence the demand and requirements for tank terminal capacity.
MARKET DYNAMICS

 

Besides the market fundamentals we have to take into consideration the market dynamics. Relevant market dynamics are inventory levels, arbitrage and trade flows, changes in product specifications and variation in vessel sizes. These market dynamics have a direct influence on operations and on terminal requirements. A terminal that can accommodate and can adapt better and faster to these dynamics compared to competitors will likely show superior commercial performance. From the previous section you could already see that market dynamics are linked to market fundamentals.

 

CONCLUSION

 

The market fundamentals and the market dynamics are important building blocks for PJK’s commercial performance model. Next week we will go more into detail regarding this model. If you have any questions regarding the above mentioned subject please do not hesitate to contact me.

 

Thank you very much for your attention.

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Profit drivers for physical traders

Gepubliceerd Jacob on 23 november 2018 15:53:29

 

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INTRODUCTION

This is the second blog article of our series of 5 blog articles made for you to be able to better understand the drivers and the complexity of the tank storage industry. In the first article we took a closer look at the functions of a tank terminal. Click here to be able to read the first blog article.

HOW DO TRADERS MAKE MONEY?

Traders can take a physical (&paper) position and ‘buy low / sell high’ to be able to make profit. There are several strategies to profit from trading physical commodities. We can distinguish three main strategies:

1. Arbitrage
2. Speculation
3. Optionality

 

ARBITRAGE

Arbitrage is a very simple idea, it is really taking advantage in the difference of price on essentially the same product, to make profit. For example if you would have the price of gasoline in two different geographical markets. These different markets can be the Netherlands (A) and the US (B). If in market A the price would 1 dollar and in market B the price would be 2 dollars, then you can profit from the difference in price. The three main types of arbitrage are:

 

1. Geographical arbitrage
2. Time arbitrage
3. Technical arbitrage (blending)

 

SPECULATION

The U.S. Commodities Future Trading Commission defines a speculator as a trader who does not hedge, but who trades with the objective of achieving profits through the successful anticipation of price movements. Traders take a position in anticipation of moves in prices/spreads. For example with the gasoil price as is shown in the chart below:

 

 

OPTIONALITY

As for speculation, also for optionality volatility is key. Profit can come from market opportunities, where traders can limit losses if market turns against position. Three examples are:

 

1. Optionality during geographic arbitrage trade
– For example divert ship if there is a better deal and reduce costs
2. Optionality during contango storage
– Contango means that the spot price of oil is lower than future contract for oil
3. Optionality in transport mode
– Can be applied when transport costs are market driven and volatile

 

CONCLUSION

More familiarity within this complex market can provide you with quick insights derived from the financial markets. By watching and following oil prices spreads and market volatility can provide you with a better picture of the market. Other trends like backwardation and contango are also important to understand and analyse, to be able to make intelligent decisions. More to come in the next blog article next week, meanwhile feel free to download last week’s tank terminal report. And try to test your comprehension of the subjects discussed.

For more information or any questions please do not hesitate to contact us.

 

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ARA Independent Product Stocks Rise on the Week

Gepubliceerd Jacob on 23 november 2018 9:38:17

London, (Argus) — Oil product stocks held in independent storage within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose by 1.4pc from a week earlier to 4.95mn t, after reaching an 11-month low a week earlier.

Gasoil stocks fell by 5.1pc to 2.1mn t, the lowest level recorded since June. Supply remained tight in Europe, prompted by disruption to German refining activity caused by low Rhine water levels. Gasoil premiums to North Sea Dated crude consequently averaged more than $23/bl for the second consecutive week, for the first time since November 2012. High Rhine barge freights continued to motivate market participants to transport gasoil volumes by tanker into northern German ports. Tankers carrying gasoil arrived in the ARA area from Latvia, Russia and the US, and departed for France, Germany, the UK and west Africa.

Gasoline stocks rose by 7.9pc to 970,000t. The US Atlantic and Gulf coasts remained amply supplied, limiting interest in European gasoline from across the Atlantic. West Africa was the primary source of demand, with tankers leaving the ARA for that region and for the Mideast Gulf. Tankers arrived from Finland, France and the UK. Disruption to Rhine traffic limited gasoline flows beyond Duisburg, where volumes are being loaded onto trucks for transport into the hinterland.

Fuel oil stocks rose by 13.6pc to 1.04mn t, with strong demand from east of Suez drawing cargoes into the ARA area for onward transport to Singapore. At least one tanker left the area for west Africa, and vessels arrived from Canada, Poland, Russia, the UK and the US. The Solomon Seais due to depart Rotterdam for Singapore on 23 November carrying a 100,000t cargo.

Naphtha stocks fell by 10.6pc to 202,000t, the lowest total since November 2017. Tankers left the ARA area for Asia-Pacific and the Mediterranean, and arrived from Italy, Russia, the UK and the US. Naphtha flows into Germany remained under downward pressure from low water levels, but naphtha demand from gasoline producers in the ARA area was supported by blending for export to west Africa.

Jet fuel stocks rose by 1.4pc to 645,000t. Inland demand continued to be met largely by pipeline flows with high Rhine barge freight rates impacting the use of barges. Recent tightness in northwest European supply drew in at least one partial cargo from the Mideast Gulf, while a single tanker departed for the UK.

Reporter: Thomas Warner

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functions of tank terminals

Gepubliceerd Jacob on 19 november 2018 10:27:50

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Introduction

During the coming weeks we will provide you with relevant information regarding the tank storage market and its influences and opportunities. This week we will focus on the different functions a tank terminal. It is the first of 5 blog articles for you to be able to better understand the drivers of this sector and help you with your commercial decisions.

 

Functions of a terminal

Tank terminals can have various functions, although commercial clients’ operational requirements tend to focus on the logistics/hub and trading platform functions. These three main functions are:

  • Logistics/hub – function
  • Trading platform
  • Strategic storage

Logistics/hub function

The logistics/hub function is firstly related to the make/break and bulk of the product(s). In addition we can observe an integrated approach between transport modalities such as sea, rail, road and pipeline. Also the correct integration with an industrial complex and buffer stock(s) are considered to be part of the logistical chain of a tank terminal.

 

Trading platform & Strategic storage

The tank storage activities can also be influenced by the financial markets, as investors, traders and other financial intermediates are active on various trading platforms. How do traders make money and why are they interested in the tank storage industry? Mainly by taking a physical (&paper) position(s), traders take advantage of a price differences between two or more instruments. They will make profit if there is a combination of matching deals that capitalize upon the imbalance. As a trading platform four important factors can be described:

 

  1. Physical arbitrage
  2. Blending
  3. Contango storage
  4. Optionality

 

How does physical arbitrage work? During arbitrage the global commodity traders seek to identify and respond to supply and demand differentials between linked markets. Trading firms are essentially in the business of transforming commodities in space (logistics), in time (storage) and in form (processing). Traders with access to physical oil and storage can profit in a contango market, as the futures price of a commodity is above the expected spot price, and people are willing to pay more for a commodity at some point in the future than the actual expected price of the commodity. Besides this also optionality is very important as it builds in flexibility to profit from market opportunities and limits losses if the market turns against positions.

 

Conclusion

By focussing on the things that matter we can understand better how our clients are making money. As a result it can help shape your business, to have a better insight and to be able to make better operational and commercial decisions. By watching market indicators like the oil price level, market volatility and the forward curves it will provide a better picture of the market. This directly provides in-depth insights into the tank storage market developments. Our weekly report is specifically designed to clarify the mentioned above, and to provide a weekly market snapshot. If you would like more information please do not hesitate to contact me.

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GREATER SINGAPORE TANK STORAGE MARKET OUTLOOK 2018 – PART 2

Gepubliceerd Jacob on 17 oktober 2018 11:23:53

Click here if you missed Part 1 of the article “Greater Singapore Tank Storage Market Outlook 2018”.

Singapore naturally has a vast deficit of fuel oil as local production is only modest while demand is of unparalleled size. Large imports of fuel oil allow Singapore to fulfill its hub function.

THE IMPACT OF IMO 2020 – A GAME CHANGER

Fuel oil demand primarily comes from marine bunker activity and is therefore submissive to a large change following the IMO 2020 regulations, which require lower sulphur contents to be used in marine fuel.

Fuel oil generally is high on sulphur and will thus see a sharp decline in demand from 2020 onwards when high-sulphur fuel oil is replaced by, among other alternatives, diesel oil. After 2020 demand will gradually pick up as a result of growing economies and populations, but its share in marine bunkering will remain low.

The immediate switch from fuel oil to alternatives will provoke a surplus of the product for most countries in the region, while Singapore will continue to have a deficit, be it smaller than before. The region in whole will have a surplus in the short run, lowering fuel oil trade flows from other continents to Asia.

TRADE IMBALANCES WILL CONTINUE INTENSIFYING TANK STORAGE USAGE

Diesel is Far East and the ISC’s largest refinery output category and together account for roughly 50% of the total. The main drivers for diesel demand are passenger cars with diesel engines, marine bunkers, building heating and industry. Passenger car fleet developments are of great importance to the demand for diesel. Since diesel does not propel the majority of cars in Far East and the ISC, the impact of car emissions regulations on diesel demand is limited. With growing populations and developing economies, the number of diesel-powered passenger cars is set to further increase in the future, despite more efficient engines, the increasing share of electric vehicles in the passenger car fleet and other environmental initiatives. IMO 2020 regulations, will increase the demand for diesel in the maritime sector. As of 2017 most of the region’s major producers and consumers of diesel have surplusses with the largest ones in China, India and South Korea. Australia, on the other hand, has quite a substantial deficit, meeting most of its diesel demand with imports.

China is the region’s largest producer of gasoline, followed by India and Japan. India and China have seen tremendous growth in their gasoline productions, both having doubled their output since 2009. The primary demand driver for gasoline is passenger cars, accounting for virtually the entire gasoline consumption. Passenger car fleet developments are therefore of even greater importance to gasoline than for diesel. Chinese demand for gasoline has more than doubled over the last decade despite strict emissions regulations but hasn’t outgrown production yet. Demand for gasoline is very sensitive to changes in car fuel usage, but the growing Chinese economy offsets the strict fuel policies of the country. India’s demand is still relatively low but growing rapidly, while Japanese demand naturally seems to be in decline. As for diesel, most of the major producers/consumers of gasoline had surplusses of the product in 2017.

Fuel oil has historically been Far East and the ISC’s third largest oil product in terms of demand. Simultaneously it’s Singapore’s largest product in terms of demand and trade volumes, since the country acts as the region’s largest marine bunker fuel hub. Local production is negligible, however, and Singapore fulfils demand through imports. The region has a deficit of the product despite increasing local production. Most fuel oil is produced by China and Japan, with China increasing its production while Japanese production is in decline. South Korean and Indian production is likewise in decline. Due to its hub function Singapore has the largest demand for fuel oil in the region, as a variety of ships from many different countries come to Singapore in search for the right propellant. China comes second in terms of demand, while Japanese fuel oil demand is only a third of what is was half a decade ago.

CONCLUSION

Relevant market fundamentals for the oil storage business are the shape of the forward curve, the competitive market structure and the logistical factors supply, demand, imbalances and trade flows. Tank terminals are part of the oil products supply chain and therefore logistical factors such as local product demand, regional refinery output, imbalances and trade flows are very relevant. Developments in these factors, as well as new regulations influence the demand and requirements for tank terminal capacity.

 

SINGAPORE TANK TERMINAL MARKET STUDY 2018

Based on extensive market research, PJK International – in partnership with Ener8 Limited – has produced a +75 pages report providing insights into the Tank Terminal Market in both Singapore and the greater Singapore area.

 

Click here to download the table of contents.

 

For more information on how to purchase this report please contact aldo.cavalcanti@pjk-international.com

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The impact of ARA barge transport on the feedstock within the petrochemical sector.

Gepubliceerd Jacob on 15 oktober 2018 14:35:30

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Naphtha is an intermediate hydrocarbon liquid stream derived from the refining of crude oil. It is in the ARA region mostly used as a gasoline blending component as feedstock within the petrochemical sector. Other important feedstocks for the petrochemical sector include ethane, propane and methane. The petrochemical sector is responsible for producing various materials such as plastic, paints, solvents, fibres and raw materials for pharmaceutical and cosmetics sectors.
The ARA-region, or Amsterdam – Rotterdam – Antwerp region is an area in The Netherlands and Belgium where various coastal and inland ports are interconnected and act as a global hub. Apart from the large ports Amsterdam, Rotterdam and Antwerp it includes Flushing, Ghent, Terneuzen and Moerdijk as other relevant ports. All these ports lie in the delta of various rivers, like the Rhine, Meuse and Scheldt, which flow into the North Sea and could be seen as gateway of the European continent. Hinterland markets are connected to global markets via these seaports, in particular the vast hinterland of German industrial centres and population. The river Rhine, Scheldt and Meuse enable barge transport to and from these ports to inland markets, which give the market its unique attractiveness and improves the position of the hub in the worldwide trade flows.

When we take a closer look at the feedstock prices we can observe that naphtha is the most expensive feedstock. In the image below you can see the historical monthly petrochemical feedstock prices from 2013 till 2018.

Although naphtha is the most expensive feedstock, it is the most used feedstock in the ARA region of all the substitutes mentioned above. There are various factors influencing this, but in this article we focus solely on the barge transport. As we have established earlier the Rhine has a unique position as being an important route for the transport of liquid bulk across different Western European countries. It is one of the world’s most frequented inland waterways. In Europe, there are more than 13.500 vessels offering inland freight transport services (dry cargo, tanker cargo and push & tug vessels) with a total loading capacity of 17 Mio tonnes. About 76% of the European fleet comes from Rhine countries. Source : Inland Navigation Europe. Tankers account for +- 15% of the total inland fleet.

 

Of the liquid bulk market, according to PJK’s interntional numbers you can see in the image below a comparison of the number of inland tankers showing that the clean (including chemical) tankers are far more dominant compared to gas tankers. While there are currently more gas tankers under construction, the same accounts for clean tankers. Clean tankers under construction are also bigger in terms of DWT, up to 10,000 DWT.

 

 

 

As mentioned before, naphtha is a liquid hydrocarbon mixture, which means it should be transported in double hull tanker, mainly to prevent cargo from leaking due to its hazardous nature. With regard to ethane and propane it is different as these are gases, and therefore have to be transported in special gas tankers, which are often fabricated with triple hulls and equipped with circular tanks. At the moment there are far more double hull tankers available in the market compared to the gas tankers, increasing supply of transport possibilities. Therefor the transport of naphtha is economically more feasible and accessible, despite the higher product costs.  Another reason for the high usage of naphtha in the region is the excess components received after cracking naphtha. These residues are used in the gasoline blending market, which holds a key position in the ARA and provide more usages of the excess valuable components like for example isomerate, raffinate, toluene and xylene.

As you can see a lot of factors influence the petrochemical market. Are you struggling to connect the dots of the petrochemical side of the cluster? We can then provide you with our ARA Petrochemical Tank Storage report, where we aim to shed some light on complex subjects by unravelling trends and themes that underlie current markets relevant for the ARA cluster and by giving an outlook for future states of these petrochemical markets.

 

Contact us at our headquarters in the Netherlands at +31 (0) 850 66 25 22

The contents of this article from PJK International has been written with the greatest possible care. However, PJK International cannot guarantee the accuracy or completeness of the information. The content of PJK International blog publications therefore are not legally binding. PJK International accepts no liability which might arise from the content of its blog.

 

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GREATER SINGAPORE TANK STORAGE MARKET OUTLOOK 2018 – PART 1

Gepubliceerd Jacob on 11 oktober 2018 16:00:23

As one of the most crucial tank storage hubs in the world, Singapore and nowadays the greater Singapore region play a fundamental role in global trade.

Far East and the ISC countries have experienced tremendous economic growth over the past decades, and this upward trend even has had an impulse after the global financial crisis in 2008.  Going forward, trade imbalances, regulations and newly build capacity will continue to influence opportunities in the tank terminal industry in the greater Singapore region.

REGIONAL DEMAND FOR OIL PRODUCTS REMAINS STRONG

The continuously growing economies have driven supply and demand for oil products in Asia, with the Indian and especially Chinese economy increasing their production substantially. China, India, Japan and South Korea are the region’s largest suppliers of oil products, with China more than doubling any other country’s output in 2017.

Far East and the ISC refinery output primarily consists of diesel and gasoline, accounting for 44% and 26% of the region’s total output in 2017 respectively. The productions of both products grew rapid over the past decade, more than any other main refinery output, while demand for both products in the region has increased gradually over the last decade.

Far East and the ISC has surplussus of diesel, gasoline and jet-kerosene, meaning it produces more than it consumes of these products. A higher surpluss generally leads to higher exports of a product, implying an increased demand for temporary tank storage capacity. Deficits exist for fuel oil, naphtha and LPG, meaning Far East and the ISC has to import these products from outside of the region.  Singapore’s tank terminal industry has been benefiting from this situation for a long time.

SINGAPORE ON ALERT AS NEIGHBORS’ TANK STORAGE MARKET SHARE INCREASES

Malaysia and Indonesia aim at increasing their market share both approaching Singapore’ total tank storage capacity, while Singapore stays on alert with only minor expansions.

Singapore has been the largest provider of tank capacity in the Greater Singapore area and has roughly tripled its capacity since 2005, especially during the prolonged period of contango between 2005 and 2011, which supported demand for tank capacity. Market circumstances were less favorable after 2011, but the construction of new capacity had already begun adding new storage tanks after this date.

Malaysia is expected to almost double its capacity in 2018 with 4,900,000m3, while in Singapore a total of 370,000 m3 or a mere 2% of its total capacity is being constructed as of 2018. Indonesia has no capacity that is noteworthy under construction but has plans to add more than 7 million m3 in the future. This expansion would more than double the country’s total capacity, but whether these plans will be executed is uncertain.

Singapore will therefore primarily see increased competition from Malaysian tank storage operators.

PREPARING FOR A NEW SET OF CHALLENGES

The Tank Terminal industry in the Greater Singapore area is facing some new challenges, such as new restrictions on emissions, IMO 2020’s new bunker fuel specifications and logistical developments in Asia.

Environmental regulations will  have a downforce to gasoline and diesel demand in the region, changing national imbalances and thus trade flows.  A sharp decline in fuel oil demand as of 2020 on the other hand, will increase marine gasoil demand, which will result in less temporary storage of fuel oil in Singapore and increase the demand for temporary storage of marine gasoil.

There may also be pressure on demand for marine bunkering and temporary oil products storage in Singapore when alternative cargo routes replace the Strait of Malacca. These could include new One Belt One Road trade routes and China’s two Ocean’s strategy via pipelines through Myanmar.

 

Click here to read Part 2 of the article “Greater Singapore Tank Storage Market Outlook 2018”.

 

SINGAPORE TANK TERMINAL MARKET STUDY 2018

Based on extensive market research, PJK International – in partnership with Ener8 Limited – has produced a +75 pages report providing insights into the Tank Terminal Market in both Singapore and the greater Singapore area.

 

Click here to download the table of contents

 

For more information on how to purchase this report please contact aldo.cavalcanti@pjk-international.com

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Insights from Lars – comparing ARA and Rhine freight rates over the summer.

Gepubliceerd Jacob on 1 oktober 2018 15:04:03

 

 

 

Freight rates in both the ARA region as well as on the Rhine remained strong, supported by increasing demand and the ongoing low water levels, which are hampering intakes. Freight rates for Rhine based destinations have not only risen for Middle and Upper Rhine destinations, where loaded volumes are contracted by low water levels up pegel Kaub, but also destinations in the German Ruhr area are highely affected. The difference between ARA-routes like Cross Harbor transports, Antwerp – Amsterdam and Rhine based tranports to Duisburg or Cologne are shown below.

In common situations, freight rates per mton are increasing in line with the voyage durations. The strong demand, and therefore increasing rates, to German markets are seen in the two graphs. Besides the absolute freight rates, a graph is made for indexed freight rates. The base rates of 1st of May 2018 are used for this calculation. After a slow late-spring, with low freight rates per ton, rates started to increase from July on. This has been accelerated by decreasing water levels and increasing demand for automotive fuels in hinterland markets. Rates to the Ruhr area, which are longer voyages compared to ARA-transports and are therefore priced at higher levels, saw a steady increase during the summer season. In August, a distinction is seen between demand in ARA, which was fading, and up the Rhine, which was supported by diesel transports.

 

 

Last month, rates up the Rhine increased further. Water levels continued to stay low and the market regained support from outages at various refineries in Germany. The maintenance season is causing less local supply and an unplanned outage at the Vohburg refinery in Bavaria is limiting product supply even further. Importers are looking at alternative outlets and more product needs to be imported to handle domestic demand. This is partly done over the Rhine, where barges are still coping with loading restrictions. Imports by barge have however increased by over 60% during September compared to the summer months, as was seen in PJK’s Rhine barge flow reports. By comparison, rates to Lower Rhine destinations have more than quadrupled in the last months. The revenue per barge is somewhat lower due to less loaded volumes, but are still elevated. This is also seen in the ARA, where supply of barges is lacking due to the higher demand in Germany.

 

The demand for importing product in the coming weeks could remain high since end consumers still need to stock up heating oils for the winter. This has been postponed last spring due to the backwardated market structure, so stock levels in hinterland are relatively low. With inadequate local production, low availability of barges and high freight rates, keeping track of the markets is vital in order to stay up to date.

 

 

If you would like more information about our products like the Rhine flow service, barge freight rates and daily report contact our sales department in the Netherlands at 00 31 850 66 25 00.

 

 

 

 

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