Clean Petroleum Products; Seaborne Trade 2014
Descrição do Produto
Clean Petroleum Products; Seaborne Trade Anastasia G. Traikapi
Alba Business Graduate School
MSc in Shipping Management]
“Clean Petroleum Products; Seaborne Trade”
1
Contents ABSTRACT ................................................................................................................................... 5 1.
2.
Crude Oil ............................................................................................................................ 6 1.1.
General Information ..................................................................................................... 6
1.2.
Main Clean Products and their use. .............................................................................. 8
WORLD ECONOMIC GROWTH....................................................................................... 9 2.1.
“Real GDP growth rates 2008-2013”............................................................................ 9
2.2.
“Development in International Trade by groups and region”. ..................................... 10
2.3. “Merchandise Trade Matrix of Petroleum, Petroleum products and related Materials. IMPORTS – EXPORTS 2008-2013”. .................................................................................... 11 2.4. 3.
Merchandise Trade Specialization Index 2008-2012................................................... 13
SUPPLY and DEMAND. .................................................................................................. 15 3.1.
Reasons which affect Crude oil and Clean products.................................................... 15
Oil Supply Growth ............................................................................................................. 15 Limitations in Global Oil Refining Capacity ......................................................................... 17 Political instability ............................................................................................................. 17 Contingencies/ Extreme weather phenomena ................................................................... 17 Seasonable effects............................................................................................................. 17 Market Fluctuations .......................................................................................................... 17 Currency Fluctuations ........................................................................................................ 17 4.
Maritime Transportation .................................................................................................... 18 4.1.
Seaborne Trade .......................................................................................................... 18
4.2.
ORDER BOOK 2011-2014 ........................................................................................ 19
4.3.
Demolition in Product Tankers 2008-2014* ............................................................... 19
4.4.
Earnings per day under Time charter .......................................................................... 20
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Conclusions .............................................................................................................................. 22
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GLOSSARY OPEC: Oil Petroleum Export Counties. Members: Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, United Arab. Emirates, Venezuela. Non OPEC members: Russia, United States, China, Mexico, Canada, Norway, Brazil, Kazakhstan, United Kingdom, Azerbaijan, Indonesia, Oman, India, Colombia, Argentina, Egypt, Malaysia, Denmark, Syria, Australia, Yemen, Sudan, Vietnam, Tunisia, Brunel, Gabon, Congo Brazzaville, Trinidad & Tobago. National Petroleum Association scale: Optical density color measurement for petroleum oils. Economy Categories: Developed Economies: America: Bermuda, Canada, Greenland, Saint Pierre and Miquelon, United States. Asia: Israel, Japan. Europe: Andorra,
Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech Republic, Czechoslovakia, Denmark, Estonia, Faeroe Islands, Finland, Germany, Gibraltar, Greece, Holy See, Hungary, Iceland, Ireland, Italy, Latvia, Lithuania, Luxembourg, Poland, Portugal, Romania, San Marino, Slovakia, Slovenia, Spain, Sweden, Switzerland, United Kingdom. Oceania: Australia, New Zealand. Developing Economies: Africa: Eastern Africa, Middle Africa, Northern Africa, Southern Africa. America: Caribbean, Central America, South America. Asia: Eastern Asia: China, Hong Kong SAR, Macao SAR, Taiwan Province of Korea, Republic of Mongolia. Southern Asia: Afghanistan, Bangladesh, Bhutan, India, Iran (Islamic Republic), Maldives, Nepal, Pakistan, Sri Lanka. South- Eastern Asia: Brunei Darussalam, Cambodia, Indonesia, Lao People’s Dem. Rep. Malaysia, Myanmar, Philippines, Singapore, Thailand, Timor-Leste, Vietnam, Western Asia: Bahrain, Iraq, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, State of Palestine, Syrian Arab. Rep. Turkey, United Arab. Emirates, Yemen, Yemen Arab. Rep. Yemen Democratic. Transition Economies: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Georgia, Kazakhstan, Kyrgyzstan, Montenegro, Republic of Moldova, Russian Federation, Servia, Servia and Montenegro, Socialist Federative Republic of Yugoslavia, Tajikistan, TFYR of Macedonia, Turkmenistan, Ukraine, Union of Soviet Socialist Republics, Uzbekistan LDCs: Least Developed Countries: Africa and Haiti: Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Dem. Rep. of the ALBA Business Graduate School MSc in Shipping Management
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Congo, Djibouti, Equatorial Guinea, Eritrea, Ethiopia, Guinea – Bissau, Haiti, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Mozambique, Mauritania, Rwanda, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Togo, Uganda, United Republic of Tanzania, Zambia. Asia: Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People’s Dem. Rep. Myanmar, Nepal, Yemen. Islands: Comoros, Kiribati, Sao Tome and Principe, Solomon Islands, Timor- Leste, Tuvalu, Vanuatu UNCTADSTAT: United Nations Conference of Trade and Development Statistic Database
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ABSTRACT Crude oil is a major market consisted from many products. The aim of this essay is to present global picture of the past six years on Clean Petroleum Products. In order for the analysis to be more specific countries are divided in three economic categories as presented in United Nations Conference on Trade and Development Statistic Database. Economic groups and countries which are included in each one can be found in the Glossary of this essay. In chapter 1 is presented general information regarding crude oil giving a clear picture of how clean petroleum products occurred. Via this chapter it will be easy to understand why those products are affected from the various changes of crude oil. In chapter 2 is presented the global economic view in respect of economic growth per country and region, the development in the International Trade of Petroleum products, Imports and Exports per economic group and the Specialization Index in order for the main producers of Petroleum Products to be separated. After analyzing global’s economy in petroleum products , in chapter 3 are presented Supply and Demand by presenting Oil Supply and Oil Supply Growth and reasons which effect those products. At the end of this essay is presented the Seaborne Trade of Petroleum products, earnings for two different product vessels, the order book from 2011 until September 2014, demolition and how all those affect supply and demand.
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1. Crude Oil 1.1.
General Information
Petroleum is classified as a fossil fuel which was formed after the death of animals and sea plants which remained buried for several thousands of years under feet of slit, sand or mud. It is considered to be a non-renewable energy source because of the millions of years that it takes in order to be formed in crude oil. Petroleum can be found at a depth ranging from a few hundred meters to 2-3 kilometers and is pumping through drilling on land and sea. This mining process is very expensive and sometimes environmentally damaging. The oil that occurs via this method is known as crude oil. Crude oil is formed by hydrocarbons with the addition of certain other substances, primarily sulphur and is mixed with sea water and silt. Its natural form when is collected can be green or black and may be either thin like gasoline or thick like tar. It has a characteristic odor, is insoluble in water and has 0.8g/ml – 0.95g/ml density. Its boiling point range is from – 160 ° C to 400° C. As it can be understood under those circumstances crude oil cannot be used as such and for that reason is separated into several useful products by fractional distillation(separation), conversion (cracking and rearranging molecules) and treatment. In the first step (fractional distillation) where the crude oil is piping through hot furnaces the resulting liquids and vapours are passed into distillation towers. The diagram presents a stylized version of the distillation process; by this process crude oil is separated into broad categories. First is heated and then put into a distillation column where different products boil of and are recovered at different temperatures. FRACTION
B Number of Pt oC carbons
»Refinery gas
Uses
1-4
Bottled gas, fuels
40
~8
Fuel for cars
110
~10
Raw material for chemicals and plastics.
180
~15
Fuel for Aeroplanes
250
~20
Fuel for cars and lorries
340
~35
Fuel for Power Stations, Lubricants and grease
400+
40+
Road surfacing.
»Petrol »Naptha »Kerosine »Diesel »Oils Hot crude »Bitumen
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At the bottom of the column is hot and at the top cool. The crude oil separates into fractions according to weight and boiling point. The lightest fractions including petrol and liquid petroleum gas (LPF), vaporise and rise to the top of the tower. Kerosize and Diesel oil stay in the middle of the tower and heavier liquids separate lower down. The heaviest fractions with the highest boiling points settle in the bottom. The next step is conversion (cracking and rearranging molecules). In this stage some fractions are transformed into new components. The majority of the crude oil fractional distillation is used as a source of energy (electricity, heating, vehicles transportation etc.) The fractions are now ready for piping to the next areas within the refinery. Some fractions require very little additional processing. However, most molecules require much more processing to become high-value products. This is where a refinery makes money, because the low-value fractions that aren't in great demand can be converted to petrol and other useful chemicals.
The most widely used conversion method is called cracking because it uses heat and pressure to "crack" heavy hydrocarbon molecules into lighter ones. Catalytic cracking, or "cat cracking," is the basic petrol-making process. Using intense heat (about 600°C), low pressure and a powdered catalyst (a substance that speeds up a chemical reaction), the cat cracker can convert most of the heavy fractions into smaller more useful molecules. Cracking and coking are not the only forms of conversion. Other refinery processes, instead of splitting molecules, rearrange them to add value. Alkylation makes petrol components by combining some of the gaseous byproducts of cracking. The process, which essentially is cracking in reverse, takes place in a series of large, horizontal vessels. In order to be reformed is used heat which is moderate pressure and catalyst to turn naphtha into high octane petrol. The final step is treatment. In this stage in order to make petrol, refinery workers carefully blend together a variety of hydrocarbons. Technicians also add performance
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additives and dyes that distinguish the various grades of fuel. By the time the petrol is pumped into a car it contains more than 200 hydrocarbons and additives.
Until recently in Greece existed two refinery companies one with distillation (Pertola) and one with cracking process (Motoroil), Recently Petrola merged with ELPE and today Elpe has developed both crude oil conversion and separation units. (Source: http://www.helpe.gr/)
1.2.
Main Clean Products and their use.
Clean products are those products whose color is less than or equal to 2.5 on the National Petroleum Association scale and includes naphtha, jet fuel, gasoline and diesel/gas oil. Their transportation is made via dedicated product carriers which tend to be smaller than crude tankers. Each clean product has different use. For instance kerosene is used mostly for heating and stoves, Gasoline which have the more commercial use as gas for engines, diesel fuel as heating oil or marine diesel and jet fuel in power generation.
In more details: Naphtha: It is used primarily as feed-stocks for producing a high octane gasoline component via the catalytic reforming process. Naphtha is also used in the petrochemical industry for producing olefins in steam crackers and in the chemical industry for solvent (cleaning) applications. Jet Fuel: Is a type of aviation fuel designed for use in aircraft powered by gasturbine engines. The most commonly fuels for commercial aviation are Jet A and Jet A-1. Gasoline: It is used as a fuel in internal combustion engines and is measured by its octane rating. Some gasolines contain ethanol as an alternative fuel. The main concern with gasoline is the potential effect on the climate. Diesel/Gas Oil: Is a specific fractional distillate of fuel oil (mostly petroleum) that is used as fuel in a diesel engine such as power generations, vehicles etc.
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2. WORLD ECONOMIC GROWTH 2.1.
“Real GDP growth rates 2008-2013”
According to table 1 it can be observed that the world’s growth rate from 2008 till 2013 has been increased by 0.76 %. Compared with the highest peak which is noted in 2010 reaching 4.07% there is a large decline of 1.85% indicating the retarding trend of the global economy. The economy growth in developed countries after the big fall in 2009, reaching -3.69% influenced by the economic crisis show a rise that reaches in 2013 1.13%. The United States of America GDP picked up speed in 2012 growing at a rate nearly double (2.76%) from the developed economies GDP average (3.19%). In European Union after the lowest growing rate in 2009 (-4.54%) starts to stabilized reaching in 2013 0.10%. In Japan the growth rate in 2013 is 1.79% reduced by 0.16% compared to 2012 rates. The same movement prevails for transition economies which in 2009 show a reduction touching the -6.55% obviously influenced by Europe’s bad economic situation. However during the years of 2010-2013 begins to increased reaching in 2013 2.13%. The interest is presented in developing countries which show in 2013 a growth of 4.57%. The 2013 GDP rate however fell by 3.19 units from 2010. China and India in the past 6 years presented a huge growth which start to reduce from 2008 year by year reaching 7.6% and 5.2% respectively. According to UNCTADSTAT report 2013 “the deceleration is indicative of China’s efforts to slow down the ace of its economic growth, mainly to reduce inflationary pressures”. India’s growth almost cut by more than half in 2012 compared to 2008 (6.20% to 3.80% respectively). It can also be observed that developing economies are functioned inversely to transition and developed economies meaning that in points when the transition and developed economies are show an increase the developing economies start to show a reduction.
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2.2.
10
“Development in International Trade by groups and region”.
The below chart represents the total seaborne trade of petroleum products and gas, including LPG, LNG, naphtha, gasoline, jet fuel, kerosene, light oil, heavy fuel oil and others. Petroleum products show an upward trend from the begging of 2008 with a slight decrease in 2009 probably due to the world economic crises and the high freight of crude oil. However after the slight decrease of 2009 and compared to 2008 values the trade is increasing by 8.51%. It has to be noted that the transition economies have a very low traffic crossing of petroleum products. Moreover, developing countries note higher ALBA Business Graduate School MSc in Shipping Management
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metri c tones in millions
loaded tones of petroleum products and gas in comparison to the developed countries which on the other hand have the highest amount in unloaded petroleum products meaning that the first economic category has a higher need with less productivity of such products and developed economies higher productivity which hypothetical are able to cover a small amount of their own needs. World Seaborne Trade growth of petroleum products and gas 20082011
1.200,00 1.000,00 800,00 600,00
2008
400,00
2009
200,00
2010
0,00 Petroleum Petroleum Petroleum Petroleum Petroleum Petroleum Petroleum Petroleum products products products products products products products products and gas and gas and gas and gas and gas and gas and gas and gas loaded unloaded loaded unloaded loaded unloaded loaded unloaded World
Developing economies
Transition economies
2011
Developed economies
Chart 1.“World Seaborne Trade growth of petroleum products and gas 2008-2011” UNCTADSTAT. Press: http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx
2.3.
“Merchandise Trade Matrix of Petroleum, Petroleum products and related Materials. IMPORTS – EXPORTS 2008-2013”.
World imports in 2013 are notice the highest amounts reaching $2,754,857,646. From 2008 where the second high amount is noted until the end of 2010 starts to decreased reaching 50%, influenced by the crisis of 2008-2009. In general all three economic categories show a decrease of imports in 2009 but after this year they show an upward trend. In more details developing economies have the highest amount in imports in 2013 reaching $1,888,048,140 a small increased compared to 2012 total imports. Developed economies note in 2013 a small increase by $28,670,843 compared to 2012 amount. On the contrary economies in transition note a slight decrease by $1,152,794 in comparison to 2012 annual amount. Both, developing and developed economies in 2013 note the highest amount of imports from 2008 till 2013.
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Merchandise trade matrix of Petroleum, petroleum products and related materials Imports 2.754.857.645
3.000.000.000,00
2.611.885.350
Thousands of Dollars
2.500.000.000,00
2.359.322.788 1.910.307.499,95
2.000.000.000,00
World Developing economies
1.500.000.000,00
Transition economies 1.000.000.000,00
Developed economies
500.000.000,00 0,00 2008
2009
2010
2012
2013
Chart 2. “Merchandise trade matrix of Petroleum, petroleum products and related materials Imports 2008-2013” UNCTADSTAT. Press: http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=24740
The world view in exports present a totally different image showing that the leaders on petroleum and petroleum products exportation are countries which belong in the developing economic group. Although global exports in total presented a huge decrease in 2009, from 2010 until the end of 2013 are presented an increase which reach at $2,822,618,454. Developing economies are presented to have almost the 50% of the total exports reaching in 2013 $1,697,114,598. Developed Economies after 2009 where they note almost a 20% decrease in exports of Petroleum products, start to note an upward trend reaching in 2013 their highest amount in exports of $695,231,738. Economies in transition might be the group with the less exports on petroleum products but in 2011, their exports are almost 100% higher (in respect to 2009 amounts). In the next sub-chapter, it will be easier to understand which countries are main producers of petroleum and petroleum products and which countries are importing petroleum products more than they export. ALBA Business Graduate School MSc in Shipping Management
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World; 2008; 2.354.525.903
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World; 2011;World; 2012; World; 2013; 2.667.142.262 2.810.184.900 2.822.618.436
Thousands of Dollars
World; 2010; 1.919.500.332 World; 2009; 1.450.615.097 World Developing economies Transition economies Developed economies
World
2008 2009 2010 2011 2012 2013 2.354.525.90 1.450.615.09 1.919.500.33 2.667.142.26 2.810.184.90 2.822.618.43
Developing economies1.463.432.62 900.060.705 1.179.334.16 1.638.145.29 1.726.046.15 1.697.114.59 Transition economies 322.840.565 199.627.799 273.988.951 376.508.167 396.268.517 430.272.106 Developed economies568.252.715 350.926.593 466.177.221 652.488.802 687.870.231 695.231.738 Chart 3. “Merchandise trade matrix of Petroleum, petroleum products and related materials Exports 2008-2013” UNCTADSTAT. Press:http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=24738
2.4.
Merchandise Trade Specialization Index 2008-2012
Via the specialization index or normalized trade balance is easy to identify real producers than traders of petroleum products. Values that are positive indicate that the economy has not exports meaning that it specializes in the production of the specific product and values that are negative indicate that an economy imports more than it exports. According to Chart 4 it can be noted that all developed economies have negative net exports meaning that the import more petroleum products that they export. Countries such as Japan which belong in developed economic group or Australia and United States of America seem that their needs on petroleum products are more. In addition members of developing economies of Africa and Asia and America seem that they are specialized in the production of Petroleum and Petroleum products.
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Chart 4.“Specialization Index 2008-2013” UNCTADSTAT. Press: http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=30953
In more details the below chart represents developing economies which show according to the precious chart (chart 4) that are the main producers on Petroleum and petroleum products. As it can be observed countries from Middle Africa are the main producers and after that counties of Western Asia and Western Africa follow. Countries which belong in Central and South America present a low positive number which means that their exports in petroleum products are more than their imports. Countries from Eastern Asia, such as China and Hong Kong have more imports than exports meaning needs in petroleum products are more than they produce. Members of the Western’s Asia group which show the highest exports in 2011 and 2012 are Kuwait, Iraq, Saudi Arabia, Qatar, United Arab. Emirates etc. made them leaderships in exports of petroleum and petroleum products.
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Developing Economies Specialization Index 1,5 1 0,5
Oceania
Western Asia
South-Eastern Asia
Southern Asia
Eastern Asia
South America
Central America
Caribbean
Western Africa
Southern Africa
Northern Africa
-1
Middle Africa
-0,5
Eastern Africa
0
-1,5 2008
2009
2010
2011
2012
Chart 5.“ Developing Economies Specialization Index 2008-2013” UNCTADSTAT. Press: http://unctadstat.unctad.org/wds/TableViewer/tableView.aspx?ReportId=30953
3. SUPPLY and DEMAND. Since we already analyze the global economic situation and the behavior of each economic group on petroleum products (including as mentioned earlier, the basic clean products) it will be more meaningful now to present factors that affect supply and demand on petroleum products, always based on the global economic situation.
3.1.
Reasons which affect Crude oil and Clean products
As already mentioned clean products are the result of crude oil’s fractional distillation. A 42 U.S. gallon barrel of crude oil yields about 45 gallons of petroleum products such as 19.36 gallons of gasoline, 3.91 gallon of Jet fuel and 10.04 gallons of Diesel. (Source: Energy Information Administration, “Annual Energy Outlook 2009) According to that it is easy to understand that clean products’ supply depends on the crude oil’s supply. All the factors that can affect the crude oil’s supply also affect clean products.
Oil Supply Growth In the below chart the growth of oil supply during 2007 until 2013 is shown. ALBA Business Graduate School MSc in Shipping Management
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The global Oil Supply Growth increased in 2008 (1,4%) but in 2009 notes a decrease of -0,8%. From 2010 until 2013 oil supply shows an upward trend reaching in 2010 the highest percentage of 3%. Although in 2013 it presents only 0,4% it still remains in a positive position by without showing any other negative percentages besides 2009.
Oil Supply Growth 3,5 3 3 2,5 2 2 1,4
1,5 1
0,5
0,4
0,5 0 -0,5
2007
2008
2009
2010
2011
2012
2013
-0,1 -1
-0,8
Chart 6. “Oil Supply Growth 2007-2013” Source: Clarksons “Global Supply Report 2013”
Chart 7 represents the total supply of crude oil measuring in million barrels per day. In comparison with Chart 6 it can be noted that the global oil supply growth in 2009 since it was -0.8% in comparison to 2008 (1.4%) made the total oil supply to reach the 87.2 million of barrels per day. In addition in 2012 the global oil supply growth pushed the total oil supply to 90 million barrels per day.
Chart 7. “World Production of Crude Oil million barrels per day 2007-2013” Source: Clarkson’s “Global Supply Report 2013”
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Limitations in Global Oil Refining Capacity The demand for crude oil and refined products is growing year by year especially due to the rising demand from developing countries such as China and India. In order the growing demand to be covered refineries around the world operate with almost maximum refining capacity. This has as result more new refineries to be built. A key factor influencing the increase in refineries’ numbers is the high investment cost which is required for construction and operation of a new refinery which also increased even more because of the imposition of increasingly stringent international environmental standards, concerning both the environmental performance of refineries and the production of cleaner fuels.
Political instability The political instability in the Middle East continues to cause uncertainty about the availability of crude oil and has a serious impact on price volatility.
Contingencies/ Extreme weather phenomena Extreme weather events such as hurricanes in the USA are possible to temporarily reduce global refining capacity of crude oil. This decline in combination with speculations about the extent of availability or refined products result the price volatility internationally.
Seasonable effects The prices of refined products are influenced by seasonal changes certain products demand in major markets of the northern hemisphere, such as USA, Europe and Japan. During winder in the northern hemisphere the demand for oil (for heating) is increasing. On the contrary during summer the demand for gasoline as citizens of the northern hemisphere tends to move more by their cars etc. due to the increase in tourism.
Market Fluctuations Crude oil and petroleum products available in the market are exchange traded products. Therefore could be subject of speculation which affects the international prices.
Currency Fluctuations Fluctuations The majority of global market trading of crude oil and petroleum products is made in USD. Therefore, any change in the exchange rate of a country’s currency against U.S dollar directly and immediately affect the acquisition cost of crude oil and petroleum products.
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Another factor which affects both supply and demand is the availability of Transportation (capacity in dwt in comparison to market’s needs) and it will discussed on the next chapter.
4. Maritime Transportation 4.1.
Seaborne Trade
Chart 7 represents the seaborne trade of oil products between 2008 until August 2014 (based on Clarksons data). It can be noted that year by year the transportation of oil products is increasing. From the beginning of 2008 to the end of 2014 the difference is about 173 million tons per year.
Seaborne Trade of Oil Products 1200 1000
Million Tones
823
888
833
915
923
965
996
800 600 400 200 0 2008
2009
2010
2011
2012
2013
2014
Chart 8. “Seaborne Trade 2008-2014*” Source: Clarksons.net Note: 2014 data are until August 2014”
Image 1 “Clean Petroleum Product trade”
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4.2.
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ORDER BOOK 2011-2014
In Chart 9 are represented the orders on Product Tankers during the years 2011-2014 (September). In 2011 the total dead weight tonnage on order was 5,278,833 dwt. After 2012 the total tonnage notes a down trend reaching in September of 2014 the 1,410,681 dwt. The number of vessels which represent each year is 168 product tankers between 3000-120.000 dwt for 2011, 198 product tankers between 2000-150.000 dwt for 2012, 152 product tankers between 2000-115000 dwt for 2013 and 60 product vessels between 2000- 115000 dwt for 2014 respectively.
Chart 9. “Order Book 2011-2014*” Source: Clarksons.net Note: 2014 data are until September 2014”
4.3.
Demolition in Product Tankers 2008-2014*
Clean products are transported via special tankers named “clean tankers” and are divided into the following categories:
MR (medium range, 25.000-55.000 dwt) LRI (large range, more than 55,000 dwt) and LRII (large range II, more than 80,000 dwt)
From 2008 until 2014* Handysize product tankers present the highest dead weight tonnage in demolition. Minimum demolitions are noted for Panamax vessel where only 68.157 dwt were demolished in 2011 and almost the same dwt in 2014 (68.232 dwt). In Aframax demolition market prevails almost the same image. In comparison to Charter 9 it can be observed that the order book in 2011 where the highest dwt had been ordered, was a result of the high demolition of 2010 which in total reached 4,034,311 dwt.
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Chart 10. “Demolition in Product Tankers 2008-2014*” Source: Clarksons.net Note: 2014 data are until September 2014”
4.4.
Earnings per day under Time charter
In this case are presented the daily earnings of two product vessels of 37,000 dwt and 4748,000 dwt respectively. It can be noted, compared to Chart 9 and 10 and 1,1 that although demand on product oils each year is increasing earning are decreasing. Based on the Order Book in Chart 9 from 2012 and Demolitions it presented a down trend meaning that the capacity on product tankers is, year by year, increasing. At this point earning starts to show a small increase. In conclusion it can be understood that since demand start to increase shipowners start to order product tankers believing that the capacity in order to cover the market’s future demands is not enough. Since the capacity grew up and clean products could easily be transported , freight rates start to full due to unequal supply- demand (capacity of vessels – capacity of goods).
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Earnigns in $ per Day under 1 year Timecharter 25000
U.S. Dollars
20000 15000 10000 5000 0 2008 21952
2009 13702
2010 11528
2011 12221
2012 12317
2013 13062
2014 13969
47-48,000 dwt 23481
15231
13160
13668
13514
14351
14556
37,000 dwt
37,000 dwt
47-48,000 dwt
Chart 11. “Earnings in $ per day under 1 year Time charter” Source: Clarksons.net Note: 2014 data are until September 2014”
In table 2 is presented the Index on dirty tankers and clean tankers, between 2008 to 2014* (September). As it can be noted the Index on both categories has the same direction meaning that when dirty tanker falls clean tankers follows. This has to do, as it is mentioned in the previous charter, that clean products are affected by crude oil. In 2009 both index, falls from 1510 and 1155 units to 581 and 485 respectively. If we look in Chart 10 we will notice that earning/day follows the same trend, although demand in clean products in Chart 8 show a year by year increase. Low freights and low index is a result of the economic crisis in 2008-2009 and the high prices that crude oil had in 2008. As a result clean products and earnings are affected by this case.
Baltic Exchange Dirty Tanker Baltic Exchange Clean Tanker Index Date Index Index Index 2008 1510 1155 2009 581 485 2010 896 732 2011 782 720 2012 719 641 2013 642 605 2014 763 566 Table 2 “Baltic Exchange Index Dirty- Clean Tanker” Source: Clarksons.net Note: 2014 until September ALBA Business Graduate School MSc in Shipping Management
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“Clean Petroleum Products; Seaborne Trade”
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Conclusions The seaborne trade of clean petroleum products in the past 6 years present a week view. Many facts such as the Economic Crisis in Europe, the high freights of crude oil during 2008 and 2009 in correlation with the small economic growth in main countries it makes it more difficult. Clean products are mainly products of energy such as diesel for transportation, gasoline for more powerful and friendly fuel oils, jet fuel for airplanes etc. Since most countries in Europe are under pressure the trade in this area will obviously be weaker. In countries such as China or India which are considered as developing economies and are included in the most constantly growning countries, the trade is more powerful despite the fact that in the last years are trying to balance their economies. Supply growth in clean products year by year present a slight increase which would be higher if the tonnage capacity on clean tankers had not increased so much. Since the global economy and the political circumstances in “key locations” such as Middle East, are unstable and since transportation capacity is still increasing, freights will continue to reduce. Tanker and clean product market was affected by a combination of factors, such as weak demand, slow imports growth, high oil prices an high tonnage capacity, which at the end lead to low freight rates. Earnings for product tankers due to weak economic growth show low earnings per day. In comparison to high bunker prices and to high free capacity the result is what it seems; an unstable year in 2013 showing 11% decrease in the Baltic Clean Tanker Index. According to the UNCTD “Review of Maritime Transport” 2013 it is mentioned that “in the near future, with the world economies still under pressure, the shipping sector is expected to continue facing the same week demand volumes, especially in Europe” (Chapter 3. Page 71)
ALBA Business Graduate School MSc in Shipping Management
“Maritime Economics”
“Clean Petroleum Products; Seaborne Trade”
23
Bibliography - References
Internet Sources: “Petroleum.co.uk” Press: Available Through: (Accessed on 01 October 2014) ‘Η Χηµεία στο σχολείο’. Press: Available Through: (Accessed on 01October 2014) “Hellenic Petroleum” Press: Available Through: (Accessed on 01 October 2014) “Carib Energy Solutions”. Press: Available Through: (Accessed on 02 October 2014) (Accessed on 02 October 2014) “Finding Petroleum” Press: Available Through: (Accessed on 05 October 2014) “Association for the Study of Peak Oil and Gas USA” ASPO USA. Press: Available Through:< http://peak-oil.org/peak-oil-reference/peak-oildata/production-and-peak-dates-by-country/ > (Accessed on 05 October 2014) “Observatory of Economic Complexity” Press: Available Through: (Accessed on 05 October 2014) “World Trade Organization” Press: Available Through: < http://www.wto.org/english/res_e/statis_e/world_commodity_profiles12_e.pdf > (Accessed on 08 October 2014) “United Nations Conference on Trade and Development” “UNCTADSTAT” Press: Available Through: (Accessed on 08 October 2014) “United Nations Conference on Trade and Development” UNCTAD “Review of Maritime Transports 2013”
ALBA Business Graduate School MSc in Shipping Management
“Maritime Economics”
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