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What drives demand for tank storage?

Gepubliceerd Jacob on 31 mei 2018 9:04:01

PJK’s tank terminal commercial performance model

In this article we would like to explain PJK’s tank terminal commercial performance model and why this model offers essential insights into tank storage demand drivers.

Eager to know on a structural base what moves tank storage demand? Click here for a FREE trial of PJK’s Tank Terminal Week Report.

Intro PJK’s conceptual model

PJK’s tank terminal commercial performance model (see figure: 1) shows the relation between a terminal’s market environment and its commercial performance. The environment is divided into market fundamentals (which have a slow rate of change) and market dynamics (which have a fast rate of change). In our model the fundamentals drive dynamics. A terminal that has a good fit with market dynamics will find storage rates are being better supported. Besides market dynamics also market fundamentals influence storage rates.

Market fundamentals (see figure 2) are:
• The shape of the forward curve,
• The competitive structure and
• Logistical factors such as supply, demand, imbalances and trade flows.

 

Market dynamics (see figure 3) are:
• Inventory levels;
• Arbitrage and trade flows,
• Changes in product spec, and
• Variation in vessel sizes.

These variables have a direct impact on a terminal’s operations and on a terminal’s requirements. When a terminal is able to react faster to these dynamics in relation to its competition, it is more likely that it can create superior commercial performance.

PJK’s Tank Terminal Week Report has been based on these essential parametrics that drive tank storage demand. This report will improve your understanding of the world of oil trading and as a result offers you the chance to make intelligent decisions. Contact PJK International for more information. Or register on our website for the weekly newsletter.

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Looking through the oil barrel

Gepubliceerd Jacob on 28 mei 2018 12:35:20

The increasing of information stream due to digitalization and accessibility to information sources, has led to numerous debates in the oil markets. Refiners, traders, brokers, end-consumers and all other stakeholders within the industry need to cope with decision making on various levels and are therefore relying on certain proved sources in an industry which is full of closed doors and limited availability of information. Transparency in this market is therefore crucial to search and select the appropriate partners within the market and to make smarter business decisions.

Market transparency can be found in all different subjects within the oil and gas industry. Price setting agencies, transport and tank storage rates overviews and other statistical insights contribute to a level playing field, which can help the customer make the best decision possible. By obtaining instantly accurate information, one can reduce mainly costs, time and effort. Objective players in the oil and gas environment, help balance the markets by supplying vast amounts of data and information to all participants. Traders interpret the macro-economic data of NGOs, governmental institutions and central banks to weight their decisions and therefore depend on reliable information. Falsified or incorrect information can give individuals an edge and increases the costs involved for the other businesses.

Moreover, these objective market participants withhold fraudulent companies or individuals from entering and disbalancing the market. Associations such as, FERM Rotterdam (ferm-rotterdam.nl) provide insights over the fake suppliers of tank storage capacity, in order to limit the risks involved for other market participants. Individuals without proper knowledge of the markets, can easily become targets of these scams. Who is able to spot the differences when certain, legitimately looking, websites come across?

Websites about the same terminal in the Port of Rotterdam: which one is legitimate?

Version 1

Version 2

For businesses entering the market, these organizations are key to a fruitful collaboration between suppliers and clients. In addition, these organizations show which websites, companies or individuals to bypass. Companies and terminals in the TankTerminals.com database are investigated by various database administrators before being added in the vast database of terminal details, characteristics, contacts and other relevant information. Data supplied by the terminals and the managers of the terminals is thoroughly checked before it is approved. The data is regularly updated and if possible expanded with more data to give a transparent overview on the tank terminals. This way, potential suppliers, customers and others interested have a quick go-to list which reduces the efforts of going through all kind of information. The completer the information in the terminal factsheets, the higher the reliability, legitimacy and opportunities to connect with the relevant contacts.

Market transparency is imperative in getting quickly the right information and with as little errors as possible. The oil and gas industry and its environment has been closed and constrained. However, it is rapidly changing in the digital age with the help of different organizations. The information, statistics and other relevant news can be supplied to the interested individuals and companies in order to get more insights, to make quicker and smarter decisions.

Lars van Wageningen

Operations Manager PJK International & TankTerminals.com

Register for our weekly newsletter.

If you have any questions please do not hesitate to contact Lars at lars.van.wageningen@pjk-international.com

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ARA Tank Terminal Market Review

Gepubliceerd Jacob on 4 mei 2018 13:45:19

The ARA (Amsterdam – Rotterdam – Antwerp) region is one of the main global commodity trading hubs. Its central location within Northwest Europe and its excellent connectivity to local and global markets have attributed to this position. When we zoom into liquid bulk markets the above statements certainly apply: ARA plays a central part in global petroleum, chemicals and vegetable oil markets. There are very few international commodity traders that do not have a presence in ARA.

In order to support liquid bulk traders a massive amount of tank storage capacity is located in ARA. A lot of that capacity is managed by independent terminal operators. These terminal operators rent out tank capacity to third parties, The majority of this capacity is rented out to traders and the biggest market segment is the petroleum products tank storage market. In this article we will examine recent developments and outlook for the ARA tank terminals market for storing oil products.

When analyzing tank terminal markets one needs to keep in mind that this business is tied closely to the trading business. Traders need tank terminals to facilitate their physical operations. So in order to gauge the tank terminal market one can best look at trader’s business model and trader’s behavior. The central question here is: what circumstances make having access terminal capacity a profitable position?

If you are interested in the answer of this question, please drop me a mail and get the complete article.

Jacob van den Berge
Marketing & Sales Manager

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Planned investments, where are pockets of growth?

Gepubliceerd Jacob on 18 april 2018 15:22:36

Introduction

All over the world, there are independent tank storage companies that support market players in storing their oil products. They help oil companies that have downstream obligations with storing products or support trading companies seizing (arbitrage) opportunities or governments and oil companies with building their strategic reserves. Tank terminals have an important if not a primary function in the oil and gas value chain.

Terminals per region

At the moment, the TankTerminals.com database consists of 4.700 tank terminals per geographical region. This number is not evenly spread over these regions. The applicable regions are Africa, Asia, Europe, Middle East, Oceania, North America, Central America and South America.

Planned expansions

In figure 1 can be seen that most of the expansions are planned in the Middle East with 45% of the planned expansion allocated in this region. This region is followed by Asia with more than 25% of the planned expansions and Europe with more than 10% of the planned expansions. North America, Central America and Africa are other regions that have some expansions planned.

In terms of capacity we are talking about almost 40.000kcbm in the Middle East. Asia follows with more than 20.000kcbm and Europe with around 12.000kcbm. The other regions have all less than 6.500kcbm expansions planned.

When we sum all capacity projects that are under construction, under expansion or planned, the main growth area is the Middle East that will practically double in capacity. Other relatively fast growing tank storage areas are Africa and Oceania. In absolute terms, capacity growth in these regions is small.

Curious to learn more about the global tank storage industry and what the value is from these statistics for your business, contact us.

Jacob van den Berge, Market & Sales Manager TankTerminals.com & PJK International

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In which region is the most tank storage capacity under construction?

Gepubliceerd Jacob on 12 april 2018 19:39:18

Introduction

All over the world, there are independent tank storage companies that support market players in storing their oil products. They help oil companies that have downstream obligations with storing products or support trading companies seizing (arbitrage) opportunities or governments and oil companies with building their strategic reserves. Tank terminals have an important if not a primary function in the oil and gas value chain.

Terminals per region

At the moment, the TankTerminals.com database consists of more than 4.700 tank terminals per geographical region. This number is not evenly spread over these regions. The applicable regions are Africa, Asia, Europe, Middle East, Oceania, North America, Central America and South America.

Under construction

In figure 1 can be seen that in total there is 37.529kcbm under construction. The most tank storage capacity is in Asia. This is around 20.829kcbm or 56% of the total capacity. The Asian region is followed by South America (5.491kcbm or 15%) and Africa (4.027kcbm or 11%). Other more mature regions with respect to tank storage assets (Europe and North America) have only little capacity under construction. This ranges between 2% and 7%.

Some examples of major projects in Asia are from Brightoil in China. According to the latest news, in Dalian the capacity that is under construction is 4.800kcbm and Zhoushan is 1.200kcbm. Another major project is the joint venture between Petronas and Vopak of 2.100kcbm which will be commissioned in 1Q19.

Under expansion

Figure 2 shows that in total there is 20.461kcbm under expansion. Also in this case, Asia is the region where the most tank storage capacity is under expansion. Around 9.427kcbm or 46% of capacity is under expansion. Asia is followed by Europe (4.250kcbm or 21%) and North America (3.720kcbm or 18%). Other regions have little capacity under expansion which ranges between 1% and 7%.

Curious to learn more about the global tank storage industry and what the value is from these statistics for your business, contact us.

Jacob van den Berge, Market & Sales Manager TankTerminals.com & PJK International

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In what region is tank capacity the highest?

Gepubliceerd Jacob on 5 april 2018 11:08:25

Introduction

All over the world, there are independent tank storage companies that support market players in storing their oil products. They help oil companies that have downstream obligations with storing products or support trading companies seizing (arbitrage) opportunities or governments and oil companies with building their strategic reserves. Tank terminals have an important of not a primary function in the oil and gas value chain.

Terminals per region

At time of writing, the TankTerminals.com database consist of 4.628 tank terminals per geographical region. This number is not evenly spread over these regions. The applicable regions are Africa, Asia, Europe, Middle East, Oceania, North America, Central America and South America. In table 1, you can see the number of terminals per region.

Table 1: terminals per region (approximate figures)

Region # terminals # tanks Market share
Africa >150 >2.500 4%
Asia >850 >22.000 19%
Europa >1100 >28.000 24%
Middle East >125 >2.500 3%
Oceania >60 >1.250 2%
North America >1500 >25.000 35%
Central America >175 >3.500 4%
South America >400 >7.000 10%

From this table can be derived that most terminals are located in the US followed by Europe and Asia. Smaller regions with respect to terminals are Middle East, Africa and Oceania.
When analyzing tank storage capacity per region and per terminal, some clear distinctions can be found as can be seen from table 2.

Table 2: capacity per region (approximate figures)

Region Capacity (cbm) Market share Av. Cap. (cbm)
Africa >30.000 3% >150
Asia >320.000 34% >350
Europa >250. 27% >225
Middle East >45.000 5% >370
Oceania >4.000 0.4% >60
North America >20.000 23% >125
Central America >38.000 4% >180
South America >30.000 3% >70

Tanks per terminal and average capacity

In table 2 can be seen that most storage capacity is currently in Asia, followed by Europe and North America. Because of this perspective the top 3 has reshuffled and makes Asia, the region with most tank storage capacity.

When combining table 1 and table 2 the following charts can be derived: chart 1 tanks per terminal per region and chart 2 Average capacity per region.

Chart 1 shows that Asia and Europe have the most tanks per terminal. Both regions have more than 25 tanks per terminal. Middle East and Oceania follow by more than 20 tanks per terminal.

Chart 1 Tanks per Terminal

Chart 2 Average capacity per region

In chart 2 can be seen that the Middle East holds the most capacity per terminal. In the case of this region the average capacity per terminal is 370cbm. A good second place has been taken in by Asia with 350cbm. The third place is for Europe. The average capacity per terminal globally is 200cbm. This leaves Central America, Africa, North America, South America and Oceania.

The reason behind this ordering, although not part of this analysis, is that tank terminals in the Middle Eastern Asian region are new compared to more matured tank terminal regions such as Europe. Furthermore, especially in the case of the Middle East national governments have a stake in these assets. Both variables have led to the build of assets with a larger average capacity.

Curious to learn more about the global tank storage industry and what the value is from these statistics for your business, contact us.

Jacob van den Berge, Market & Sales Manager TankTerminals.com & PJK International

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What Drives Tank Storage Demand? Market Structure

Gepubliceerd Jacob on 9 oktober 2017 14:30:02

The market structure stimulates traders to buy now and sell late. In this article we would like to highlight the themes contango and backwardation and what market structure means for tank storage operators.

Introduction contango and backwardation
An oil price for immediate delivery is called spot price or cash price while an oil price for delivery at a specified date in the future is called a forward price. When we plot these various prices and order them from short to long term delivery, a forward curve is created.

When a futures price (second month) is below a futures spot price (first or front month), the market structure is in backwardation. In this case, the forward curve is downward sloping. When the futures spot price is below the futures price, the market structure is known as contango. In this case, the forward curve is upward sloping.

Learn what drives tank storage demand. Join the FREE Webinar: PJK Tank Terminal Commercial Performance Model upcoming October 30th 2017.

A contango usually occurs when supply is higher relative to demand (supply glut) while in a backwardation demand is higher relative to supply (shortage). As time evolves, an oil forward curve can switch from backwardation into contango as in the case of the NYMEX RBOB futures forward curve (see: figure 2). When a cyclical pattern is visible, this is called seasonality. With respect to NYMEX RBOB futures, US gasoline prices tend to rise towards summer driving season during the period June and September. In the period before peak demand, oil traders tend to buy and store products to have product available in times of high consumption.

Learn what drives tank storage demand. Join the FREE Webinar: PJK Tank Terminal Commercial Performance Model upcoming October 30th 2017.

Importance of market structure to tank storage companies
In a period of contango, oil traders are encouraged to buy oil products today and sell in the future when the spread between two months covers storage, shipping and finance costs. When this opportunity presents itself, product is being sold, shipped and stored, resulting in more business for tank storage companies. This play is known as a ‘contango storage play’ but is limited by the maximum tank storage capacity available.

In some rare occasions, when the time spread is large enough even tanker vessels are chartered by trading companies to store oil products. This is known as floating storage. In this rare environment demand for tank storage is high and pushes storage rates for spot availability. Backwardation discourages storing oil products as a trader can sell oil today at a better price than in the future.

Is market structure the only business opportunity indicator for tank storage companies?
There are other indicators that should be taken into account such as price volatility, arbitrage and more. These topics and PJK’s market model will be covered in upcoming weeks.

Learn what drives tank storage demand. Join the FREE Webinar: PJK Tank Terminal Commercial Performance Model upcoming October 30th 2017.

Source: Morgan, D., Oil 101, 2009

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ARA oil stocks fell to 2017 low

Gepubliceerd Jacob on 8 juni 2017 17:01:25

London, 8 June (Argus) — Oil products stored independently in the Amsterdam-Rotterdam-Antwerp (ARA) region fell to their lowest level of the year on the back of a 27pc drop in fuel oil inventories.

Fuel oil stock levels fell by 210,000 in the week to 8 June on the back of surging exports volumes. Two very large crude carriers (VLCCs) — Socar’s Sophia and Koch’s MT Artois — left the ARA region this week, heading to Singapore. Products also flowed to Malta and west Africa with the departure of one Suezmax and several MR-sized tankers to these destinations. Healthy import volumes from Italy, Lithuania, Norway and Russia alleviated the impact of higher outflows, but only to a limited extent.

Gasoline inventories experienced the second biggest weekly drop, falling by 8pc on the week. A combination of lower import volumes — which came from France, Norway, Spain, the UK, Germany and Sweden — and higher outflows to Asia-Pacific pushed the stocks lower. But exports volumes to west Africa and the US — Europe’s traditional two main foreign gasoline outlets — slowed down this week. Spot tanker bookings with west Africa discharge options loading 2-8 June fell to 150,000t, down from a revised 230,000t a week earlier. Similarly, US-bound tankers amounted to 37,000t this week, compared with around 150,000t loading between 26 May and 1 June. Gasoline cargoes were also exported to Canada.

Gasoil stocks edged lower on the week, down to 2.697mn t, a fresh low for 2017. The drop in inventory levels coincides with weak contango on Ice gasoil futures that is stifling storage demand in the ARA region. The stock draw is partly attributable to increased activity in the prompt heating oil barge markets, but this has been partially offset by reduced volumes in the diesel barge market. Product came from the Baltic and the UK and was shipped to France, Nigeria, Togo and the UK.

Naphtha inventories remained broadly unchanged on the week despite the arrival of large volumes from Algeria, Denmark and Portugal. Barge demand from customers along the Rhine was said to be lacklustre for the second week in a row despite low freight rates and favourable loading conditions.

Jet fuel stocks held independently in the ARA region fell to eight-week lows of 702,000t despite the arrival of a 90,000t long-range vessel arriving into Rotterdam from South Korea on 3 June, chartered by Vitol. The decline was not reflective of supply in northwest Europe as a whole, which remains ample. At least 310,000t of product arrived into regional ports last week, with at least 170,000t of jet fuel scheduled to arrive into UK, Danish and Icelandic ports this week.

Argus editor: Benoît Petre

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Fuel oil outflows pushed ARA stocks down

Gepubliceerd Jacob on 1 juni 2017 16:57:34

London, 1 June (Argus) — Oil products stored independently in the Amsterdam-Rotterdam-Antwerp (ARA) region (ARA) fell for the fourth consecutive week to 5.57mn t on 1 June, reflecting a sharp drop in fuel oil inventories.

Fuel oil stocks fell by almost 22pc on the week to 1 June as higher exports volumes outweigh inflows from Italy, Poland and the UK. The Sophia — a very large crude carrier (VLCC) chartered by Socar — is currently loading at the Europoort terminal in Rotterdam. Meanwhile, two Suezmaxes with Togo discharge options —the Almi Odyssey and the Max Jacob — have also sailed on 25-29 May. The absence of supply from Russia, a key provider of fuel oil to the ARA region, also contributed to this week stock draw.

Gasoil inventories dropped this week despite products coming from Finland, Latvia and Saudi Arabia. Cargoes were exported to Germany, Sweden, Togo and the UK. Barge demand was described as average despite favourable loading conditions on the Rhine river.

Gasoline recorded the biggest inventories rise of the week, up by 65,000t from a week earlier. Preliminary vessel tracking showed mixed results in terms of imports flows. Spot tanker bookings with transatlantic discharge options loading from 26 April to 1 June were flat on the week at 75,000t, but the tally for west Africa-bound cargoes rose to around 270,000t, up by 195,000t from a week earlier. Gasoline was also exported to Canada, Latin America, China and other countries in the Far East. On the supply-side, products came from France, Sweden and the UK.

Naphtha stocks level rose by almost 12pc on the week, reflecting large imports volumes from Germany, Italy, Portugal, Russia, Spain and the UK. The rise in inventories was particularly acute at petrochemicals terminals, but diverted cargoes which were initially destined to the blending pool could have driven the stock build. Deliveries of naphtha barges along the Rhine were particularly weak this week, pushing naphtha stocks in the ARA region higher.

Jet inventories hit a 7-week low despite steady imports volumes. Foreign supply of jet amounted to a single long-range vessel from South Korea in the week to 1 June, a level similar to the one recorded on 19-25 April.

Argus editor: Benoît Petre

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ARA stocks fall led by gasoline

Gepubliceerd Jacob on 28 april 2017 10:25:30

London, 28 April (Argus) — Oil products stored independently in the Amsterdam-Rotterdam-Antwerp (ARA) region (ARA) region edged 0.2pc down in the week to 27 April, as lower gasoline and naphtha levels offset higher fuel oil and jet inventories.

Gasoline stocks fell to a four-week low on lower import volumes and higher outflows to the US and west Africa. Cargoes from Norway, Sweden and the UK were unloaded at ARA terminals this week, but none came from Russia — the region’s traditional biggest foreign supplier of gasoline. Spot tanker bookings with transatlantic options were 810,000t in the week, up by almost 40pc from a week earlier. Gasoline was exported to Latin America, Mexico, Togo and Senegal.

Naphtha inventories dropped reflecting strong barge demand. In northwest Europe, LPG has overtaken naphtha as the most competitive feedstock for steam crackers over the past few weeks. But petrochemicals units in the hinterland tend to be less flexible in terms of feedstock, supporting naphtha intake. Lower import volumes played a role in the naphtha stock draw, with no cargoes coming from north Africa or southern Europe this week.

Fuel oil stocks reached a four-week high despite high exports volume to Singapore. One very large crude carrier (VLCC) — the Yuan Hua Hu — sailed on 22 April and two more — the MT Maran Triton and the New Energy — are loading. Inflows came from Estonia, France and Russia.

Gasoil stocks moved lower as demand in northwest Europe held firm while opportunities for exporting cargoes from the US Gulf coast and the Mideast Gulf remained limited. The drop in inventories is being supported by a weak contango on Ice gasoil futures, which is limiting gains available from holding product in storage. Lower Rhine river water levels are hindering flows to the hinterland. Gasoil cargoes were imported from France and the US and shipped to France, the UK and Gibraltar for orders.

Jet stocks rose to the highest level since late December 2015. Increased local production rather than higher imports volumes — which came from South Korea this week — drove the stock build.

Argus editor: Benoît Petre

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