London, 18 October (Argus) — Oil product stocks held in independent
storage within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by
4.1pc on the week today, as a result of a significant drop in gasoil
volumes.
Stocks of gasoil rose fell by 5.3pc to their lowest in four weeks
(see table). Cargoes arrived from Russia and departed for France, the UK
and the Mediterranean. Demand from along the Rhine remained muted,
particularly in the upper Rhine area.
Gasoline stocks fell by 7.1pc. Ample supply weighed blending margins,
boosting outflows. Tankers left for Australia, Latin America,
Singapore, the US and west Africa.
Fuel oil stocks rose slighlty. Tankers left the ARA area for Singapore and west Africa, and the Chios was
still in ARA partially loaded today. Tankers arrived in the area from
France, the Mediterranean, Latvia, Poland, Russia and Spain.
Naphtha stocks edged up, with demand from within Europe subdued amid
narrow gasoline blending margins and transport issues on European
waterways.
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, Insights Global – 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.
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 Insights Global has been written with the greatest possible care. However, Insights Global cannot guarantee the accuracy or completeness of the information. The content of Insights Global blog publications therefore are not legally binding. Insights Global accepts no liability which might arise from the content of its blog.
London, 11 October (Argus) — Oil product stocks held in independent
storage within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub fell by
2.4pc from a week earlier, largely as a result of a significant drop in
fuel oil volumes. Stock levels of other products were broadly stable.
Fuel oil stocks fell by 17.3pc to 1.03mn t, prompted by the loading
and departure of several cargoes during the week to today. The Max Jacob, booked by Litasco to ship 130,000t of HSFO to Singapore loaded on 4 October and headed eastbound. The South Sea,
booked by P66 to ship 130,000t of cracked fuel oil from Rotterdam to
Singapore, likely started loading on 11 October. Tankers also left the
ARA area for west Africa and the Mideast Gulf. Arbitrage economics to
take high-sulphur material from northwest Europe to Asia Pacific
strengthened in the past week. The Singapore second-month 380cst swap
premium to HSFO cargo prices in northwest Europe averaged $33/t on 4-10
October, compared with an average spread of $29.70/t during the prior
five trading days. A total of 430,000t of fuel oil was booked to
Singapore this week.
Gasoline stocks fell by 25,000t to 1.06mn t, with outflows being
supported by efforts to sell off stored summer-grade volumes. Cargoes
arrived in the ARA area from Finland, Spain and the UK. Tankers left the
area for the Mideast Gulf, Brazil, Latin America and the Mediterranean.
Naphtha stocks fell by 11,000t to 341,000t, prompted by steady demand
from inland petrochemical end-users and low volumes arriving in the
area. Tankers arrived from Algeria, France and Portugal, and none were
seen departing.
Stocks of gasoil rose by 102,000t to 3.04mn t, the highest level
since mid-February 2018. Tankers arrived in the ARA area from Russia and
Saudi Arabia, and departed for France, the Mediterranean and the UK.
Low water levels on the river Rhine continued to impact barge traffic
into Germany and France, bolstering interest in other forms of product
transport. Cargo freight rates from the ARA continued to rise as a
result, with some operators preferring to move material inland via other
coastal outlets.
A single jet kerosene cargo arrived in the ARA area during the week
to 11 October and a single tanker left for the UK. Inventories were
effectively unchanged on the week at 674,000t. The Raysut partially
offloaded in Rotterdam following a partial deposit into Fawley. The
vessel had been sitting in the English Channel since 18 June, as the
buyer was exercising some of its contract options by waiting to offload.
Northwest European jet fuel demand has fallen since last week. Imports
from east of Suez have been thin, with most arrivals entering UK and
French ports.
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, Insights Global – 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.
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 reports, contact our sales department in the Netherlands at +31 850 66 25 00 or at info@insights-global.com.
Tank terminals play a vital role in daily oil trading by enabling break and making bulk operations and balancing short term variations in supply and demand. Oil trading companies have an interest in renting tank storage capacity as the oil derivatives market is related to physical oil markets. For ARA oil products ICE gasoil futures are one of the most important trading tools to manage risk. In the image below you can see the ICE LS Go Futures graph.
The backwardation at the beginning of the gasoil curve decreased to to +$0.00 despite far higher spot prices, while the contango in the middle decreased substantially. Trading opportunities have therefore become harder to find.
As gasoil inventories in the region are higher pressure is put on
local gasoil prices, while higher crude prices make refinery input more
expensive. As a result, Brent crude crack spreads are weak and this
could lead to lower output of local refiners. Currently the tank storage
market is in backwardation, traders have no incentive to store gasoil
and will minimize inventory levels. That is why the demand for storage
capacity will decrease when the market is in backwardation.
Would you like to have a weekly update about the tank storage market ? Or get a better insight about the ARA region ? Contact us for more information and become familiar with our diverse services.
Access more than 4,900 independent tank terminals on our newly released platform. See for yourself by registering for our free trial.
London, 27 September (Argus) — Oil product stocks held in independent
storage within the Amsterdam-Rotterdam-Antwerp (ARA) trading hub rose
by 6.3pc from a week earlier because of large gains in fuel oil and
gasoline inventories.
Fuel oil stocks rose by a fifth from a week earlier as product was
put into storage to be loaded on two Singapore-bound VLCCs. One of these
tankers — the Ridgebury Artois — has likely started loading
fuel oil and could shortly leave for Singapore. No VLCCs left during the
past week, while the Suezmax Sabine departed for Asia-Pacific
with 130,000t of fuel oil. Bookings on the route to Singapore have
picked up pace this week as export economics improved following a
decline in Singapore’s inventories to multi-week lows. The ARA region
imported fuel oil from the Black Sea, the Baltic Sea and Spain.
Gasoline stocks also rose, climbing by 10pc amid limited export
options. US demand for gasoline has been weak since the conclusion of
the summer driving season. This was reflected in last week’s increase in
stocks, which came despite lower domestic production. During the week
to 21 September, implied demand dropped to a 17 week low, and was also
down year on year, according to EIA data. Exports to the Middle East are
also likely to slow in the coming week as regional refineries come back
from unplanned shutdowns. The ARA region exported gasoline to the
Mideast Gulf and west Africa during the past week.
Lack of export options and comparatively low demand also led to an
increase in naphtha stocks, which climbed 6pc from a week earlier. The
European naphtha market is well-supplied, while demand from gasoline
blenders is low. And arbitrage economics to Asia-Pacific are unworkable,
largely because of ethylene cracker maintenance in that region. No
naphtha was exported from the ARA region this week, while product
arrived from Algeria, France, Spain and the UK.
And diesel inventories rose by less than 1pc this week. US diesel
production also has fallen, which is likely to lead to a decline in
exports to Europe in the coming weeks. In Europe, water levels on the
Rhine remain low, keeping barge rates high and limiting inland
shipments. The economics for importing diesel into Europe remain weak.
But this could change if Rhine river water levels rise, allowing German
demand to access ARA gasoil stocks, reducing supplies and pushing prices
higher.
Jet fuel stocks bucked the trend, dropping by 14,000t, or 2pc because
of comparatively high export volumes. The ARA region shipped the
product to Denmark and the UK, while importing some jet fuel from the
Mediterranean.
The ARA region is an important trading hub in Northwest Europe due to its infrastructure and fundamentals to serve the physical market for liquid trade. Location is key and ARA’s location is exceptional due to the Rhine river that connects with the Benelux countries, Switzerland, France and Germany. Also the ARA region provides refining facilities, tank storage and is seen as oil pricing center.
In the first image you can view the evolution of the tank terminal
capacity in the greater ARA region. Important capacity additions in the
past two years were done by Botlek Tank Terminals, Koole Tank Storage
Minerals and NoordNatie Antwerp. At the same time we can observe various
expansion activities in the ARA region, which will increase the current
tank storage capacity further.
Secondly in the image below you can see the capacity under construction. Various players will also be adding capacity to their current storage capacity. The total amount of storage capacity under construction will be about 2.3% of current installed capacity and will be accessible in the coming years. Besides expansions , new terminals are expected to be built as well in various ports, focusing on liquid bulk like mineral oil products & petrochemicals.
We do expect some changes that might alter the ARA fuel oil market and petrochemical market and may therefor influence the tank storage market in those segments. Are you interested to get more information contact us at the headquarters in the Netherlands at +31 (0) 850 66 25 22.
London, 20 September (Argus) — Oil products stored independently
within the Amsterdam-Rotterdam-Antwerp (ARA) hub declined by nearly 2pc
over the past week because of a large drop in fuel oil inventories.
Fuel oil stocks shed 143,000t — or 11.2pc — during the past week as
imports of Russian fuel oil from the Baltic Sea continued to fall. The
decline came despite challenging arbitrage economics to Singapore. No
vessels bound for Asia-Pacific have loaded fuel oil from Rotterdam
during the past week. The VLCC Ridgebury Artois, booked to ship
270,000t of fuel oil to Singapore earlier this month, has arrived in
Rotterdam. Some fuel oil was exported to the Mediterranean to supply the
local bunkering market and to the Middle East during the past week.
Jet fuel stocks also declined, but were down just 1pc week on week.
The European market is generally well supplied, while demand has
weakened following the conclusion of the peak summer flying season. But
most of the product imported from east of Suez this week was discharged
into ports in the UK. One vessel, the Polar Bright, chartered
by BP, arrived into Rotterdam on 16 September with 90,000t of jet fuel
from Ruwais, but has yet to offload this material.
Gasoil stocks rose by around 1pc during the past week. Inland
shipments to the German market, which is affected by supply shortages,
remained depressed because of low water levels on the Rhine.
Transatlantic shipments of diesel have not fallen as much as expected by
market participants in September from the prior month because of high
US production and stocks. The Asian diesel market is tight, which is
likely to draw diesel from the Mideast Gulf, reducing the amount of
material available to be exported to Europe from that region.
Gasoline inventories also rose by around 1pc week on week. US demand
for European gasoline has dropped following the conclusion of the summer
driving season, but buying interest in west Africa and the Middle East
remains firm, largely offsetting the impact of lower transatlantic
shipments. The ARA region imported gasoline from Denmark, France, the
Mediterranean and the UK in the past week.
Likewise, naphtha stocks rose marginally during the period, adding
just 2,000t. Demand from gasoline blenders and the petrochemicals sector
has softened during the past two weeks, keeping more product in
storage. Some naphtha was shipped to Denmark, likely to use as a
feedstock to produce gasoline.
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