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April 23, 2020 – The total volume of oil products held independently in storage in the Amsterdam-Rotterdam-Antwerp (ARA) refining and trading hub fell during the past week, largely as a result of higher fuel oil flows to Singapore, according to consultancy Insights Global.

Overall stocks reached seven-month highs a week earlier, and inventories of gasoil and gasoline continued to increase during the week to yesterday amid low demand and steep contango in the forward curve for both products. The overall fall was mainly the result of the VLCC Bunga Kasturi Lima departing for Singapore carrying fuel oil across two separate bookings. Demand for bunker fuels from within the ARA area remained low, supporting the viability of the arbitrage route.

Stocks of naphtha and jet fuel also fell. Naphtha inventories fell on the week on lower imports. Tankers did arrive from France, Norway, Poland and Spain but carrying relatively small cargoes. The volume of naphtha heading up the Rhine into Germany on barges fell, and demand from gasoline blenders was very low. Naphtha is more economical as a blending component when it trades at a heavy discount to gasoline. But northwest European naphtha was assessed above the benchmark Eurobob oxy gasoline quote yesterday, making it uneconomical. Demand in northwest Europe came predominantly from the petrochemical sector, where high prices of rival feedstocks are probably supporting interest in naphtha.

Jet fuel stocks fell, pushed down by the departure of a tanker for the UK and at least one for use as floating storage in the North Sea. Part cargoes arrived from the Mideast Gulf and Asia-Pacific. Local demand was low, which freed up several barges in the ARA area that have typically been used to carry jet fuel to Amsterdam’s Schiphol airport. Some market participants have sought to take advantage of excess barge capacity in the region to use the vessels as floating storage, particularly in the gasoil market.

Gasoil inventories, including those of heating oil and diesel, rose. The Ice gasoil forward curve is in steep contango and consumer demand for heating or road fuels was broadly stable at a low level. Demand comes predominantly from market participants seeking to store cargoes. Ice May gasoil traded weaker than the month-ahead Ice June gasoil contract at lunchtime today, creating a clear incentive and encouraging the rare use of barges as floating storage.

Gasoline inventories also rose on low demand and steep contango in the forward curve. Demand in Europe has dropped by more than half in some major European markets since travel restrictions were imposed. A single tanker departed for key export market the US, but outflows to China rose as refinery run cuts east of Suez and the easing of lockdown measures supported gasoline demand. Tankers also left the ARA for use as floating storage off Amsterdam, as well as leaving for the Mediterranean and Singapore. Tankers arrived from France, Russia, Spain, Sweden, the UK and an LR tanker arrived from Finland.

Reporter: Thomas Warner

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

Introducing Insights Global’s Conceptual Model

Insights Global’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.

Learn what drives tank storage demand. Join the FREE Webinar: Insights Global Tank Terminal Commercial Performance Model upcoming March 18th 2020.

Market fundamentals are:

• The shape of the forward curve;
• The competitive structure; and 
• Logistical factors such as supply, demand, imbalances and trade flows.

Market dynamics 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.

Do you want to understand the essential insights into tank storage demand drivers?

In order to explain the essentials of the model we would like to invite you to join our webinar, presided by Insights Global’s Managing Director Patrick Kulsen.

Key highlights of webinar are:

• Impact of the forward curve on a terminal’s commercial performance
• Impact of S&D and imbalances on a terminal’s commercial performance
• Impact of arbitrage and trade flows on a terminal’s commercial performance
• Explanation of how trading companies make money

Learn what drives tank storage demand. Join the FREE Webinar: Insights Global Tank Terminal Commercial Performance Model upcoming March 18th 2020.

Insights Global’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.

30 January, 2020 (Argus) — The total volume of oil products held independently in storage in the Amsterdam-Rotterdam-Antwerp (ARA) area rose on the week, steadying after a sharp drop from week highs in the previous week, according to the latest data from consultancy Insights Global.

Overall ARA stocks reached a bit higher than in the week to 29 January. The small rise was driven by a raise gain in gasoil inventories, which offset reductions in gasoline and fuel oil inventories.

Gasoil stocks rose in the week to 29 January, with cargoes arriving from India, Algeria, and Russia. Russian gasoil exports are likely to rise in January after the export schedule at the port of Primorsk was set at a multi-year high, up sharply in December. Gasoil cargoes departed ARA for west Africa and the UK. Lower prices in Europe have seen buying interest from west Africa pick up, which has prompted gasoil to depart Europe for west Africa in January, the highest since August. Demand in northwest Europe remains weak for gasoil, which could also explain the stockbuild.

Gasoline stocks dipped lower on the week, as exports rose. Cargoes departed ARA for Nigeria, the UAE, Puerto Rico, Libya and the UK. Exports from ARA to Puerto Rico have risen sharply this month, according to data from oil analytics firm Vortexa, with flows for January. The stockdraw could also have been driven by lower flows of gasoline along the Rhine into ARA, amid low water levels along the river. Gasoline arrived in ARA from Sweden, France and the UK over the monitoring period.

Fuel oil inventories in ARA dropped in the week to 29 January. Inflows into ARA came from Norway, the UK, and Germany, while no cargoes were spotted delivering fuel oil from Russia — the world’s principal fuel oil exporter — into ARA. Russia typically exports high-sulphur fuel oil, demand for which has been curbed by the IMO 2020 global marine fuel sulphur cap. Russian fuel oil has instead found firm demand in the US, where it is being purchased for coking units. Fuel oil tankers departed ARA for Malta this week, which could result in onward shipments east of Suez.

Naphtha stocks in the ARA gained, according to Insights Global. No naphtha cargoes departed the trading hub, while cargoes entered from Spain, France, Russia and the UK. Naphtha demand has weakened from the petrochemical sector amid falling prices of rival feedstock propane, while buying interest from gasoline blenders is also weak as a result of a closed arbitrage to the US Atlantic coast.

Jet kerosine inventories dropped on the week. Jet was delivered from the UAE, while no vessels were spotted taking jet out of the trading hub, implying the stock draw may have been linked to higher overland shipments. But jet fuel stocks in ARA could soon grow as a result of the coronavirus outbreak in China, which has resulted in the cancellation of thousands of flights globally, and severely hampered jet fuel demand in Asia-Pacific. That could result in more supplies heading into Europe from east of Suez.

Reporter: Robert Harvey

Insights Global, owner of TankTerminals.com will join NISTM’s 12th Annual Aboveground Storage Tank Conference and Trade Show. This event will be held in The Woodlands (Texas, USA) on December 11 and 12.

Our colleague, Jacob van den Berge, active as IG’s Marketing and Sales Manager and oil market analyst will be representing our company in the States, birthground of the modern oil industry.

Especially for the NISTM visitors, Jacob will give a presentation about the US tank storage market focussing on storage players and market outlook. Every day of the conference at 11AM at his stand #814. After each presentation, participants are able to access the slides.

Learn something new by joining!

Register below:

IG’s conceptual model shows relations between market circumstances and a terminal’s commercial performance. In this model market fundamentals drive market dynamics. A terminal that has a good fit to these market dynamics will find that their storage rates are supported.

Apart from this direct relation between tank terminal characteristics, market dynamics and storage rates, there is also a relation between market fundamentals and storage rates.

The distinction between market fundamentals and market dynamics lies mostly in the difference in rate of change. Market fundamentals tend to be more stable compared to market dynamics.

Market dynamics have a direct relation to operational activities at tank terminals. Main focus points are related to market fundamentals: logistics, forward curve outlook and competitive structure. Furthermore, expected impact on market dynamics and corresponding tank terminal operations will also be taken into consideration.

Request Our Research Methodology

Since the beginning of 2000, Insights Global has been involved in numerous consultancy assignments.

These ranged from market studies of specific sectors such as the chemical, wholesale and retail, tank storage, trading and shipping, and oil industry.

Also, different regions have been covered such as Northwest Europe, Mediterranean, ARA, Singapore, and the US.

Since 2014, Insights Global has been heavily involved in due diligence projects of storage assets, specifically commercial DD. Some of these were part of the winning bid.

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The oil and gas storage market is approximately 1.30 billion cubic meters in size and it is estimated to grow as more than 70 new projects and expansions are set to be completed till 2022¹. There are approximately 5000 tank terminals worldwide that offer their storage space for third party leases. These terminals are located all over the world and in some regions, they form clusters with large storage capacities. The four major storage hubs are located in Antwerp-Rotterdam-Amsterdam, Singapore, Fujairah and Houston.

The oil trading business is extremely competitive and trading companies are focusing on providing high level services. Major trading companies are investing in logistics and infrastructure in order to satisfy their customers and have advantage over their competitors.

What are the most essential factors that traders are looking for when assessing a storage opportunity?

1. Location and function

For trading companies it is important to have an overview on the location of terminals across the world and the operators of these terminals. Traders should be able to break down the terminal storage market according to the location and function. Tank terminals have different classes depending on their purpose. There are strategic, logistical, import/export terminals and trading hub terminals. Traders are interested in terminals that offer them the possibility of using their assets for trading activities. F.e. the blending services provided in Amsterdam offer gasoline traders the possiblity to blend the product to a country’s spec and move it to WAF or US.

2. Reliability

It is becoming very common that there are a lot of fake companies that claim to be real tank farms and are usually claiming to be located in major trading hubs. It can be difficult to distinguish real tank terminals from the fake ones, as some scammers are building websites almost identical to those of real terminal operators. Trading companies should be able to have access to trustworthy data that informs them about real tank farms in order to prevent scams.

See here a lits of websites that are claming to be real tank farms in Rotterdam.

3. Contacts

Key contacts are very important for any company in order to build a strong network and to drive business success. However, due to many privacy laws it is increasingly become very difficult to find key contacts, especially in the tank storage industry.

After trading companies have done their research and defined a strategic focus on certain terminals, they need to find contact details of those terminals. With these contacts, mainly the commercial manager of the operator, conditions of a tank storage agreement can be negotiated.

4. Flexibility

Multimodal terminals can optimize and facilitate the transportation or products, but it can also minimize costs for trading companies. Terminals have sea, barge, rail and pipeline access that move products into different parts of the world. More access modes offer trading companies more flexibility. For example, if barge freight rates go up due to low Rhine water levels, trading companies can switch to rail delivery.

• Truck: Delivering products with a truck offers the possibility to reach complex terrains.

• Rail: Rail access can be low cost and offers fast delivery.

• Pipeline: Fixed pipelines might be costly to build but for a long term these offers continuous supply.  

• Barge: Using barge transportation on certain rivers can be low cost and offer connection to local markets.

• Sea: Sea access offers connection to international markets and different ships in size and purpose can be used.

5. Tank and cargo types

When analyzing suitable terminals trading companies can also analyze the tank types that a terminal holds. As oil products require different storage needs, tanks can vary in their design, shape, material and equipment. Different tanks can suggest the products that certain terminal stores thus indicating if the terminal is suitable for a trader’s needs. Moreover, it is important to have information on the cargo types that a terminal can store. Even though tank types can give a good indication on the products that the terminal can hold, it is not always accurate, as some tanks can hold more than one product type.

• 

Conclusion

For trading companies to successfully lock in profits of an oil trading deal, some supply chain analysis is required. A trader seeks full flexibility and optionality to cash in opportunities. Finding a fitting storage is therefore of upmost importance. The factors that play a curcial role in this storage assesment are: location, reliability, contacts, flexibility and tank & cargo types.

¹ TankTerminals.com

The data for this article was gathered with the support of TankTerminals.com database platform. With only a few clicks and couple of seconds the information of the biggest market players in the various regions was obtained.

By Greta Talmaci

If you have any questions, please email me at:
gtalmaci@insights-global.com.

Read here about “The hottest terminal locations of 2020”

For several years, Insights Global has published market outlook reports on oil products for the ARA region. This report has been revised on a year-on-year basis.

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