ATLANTIC REPORT NO 13/15 LIQUID/DRY COMMODITIES SCENARIO/PORT AND OTHER DEVELOPMENTS –INDIA

May 6, 2015 2:02 pm Published by
  1. A) LIQUID COMMODITIES SCENARIO

1) STRATEGIC PETROLEUM RESERVE (SPR)

India has made its first crude oil purchases for its strategic petroleum reserve (SPR) in an effort to build up emergency stocks. Indian Oil Corporation has reportedly purchased a cargo of 2 million barrels of Iraqi crude oil from China’s Unipec. The same will be loaded in May 2015 for shipping to the first stage of India’s SPR on the east coast of India. Indian Strategic Petroleum Reserves Limited is responsible for the construction of the oil reserves. India is planning to fill up three strategic oil reserves in April 2015 to take advantage of lower oil prices and to enable security against supply disruptions.

2) CRUDE /GAS IMPORTS

Indian refineries have enhanced gas imports from Mexico, Iraq and Venezuela, while reducing imports from Saudi Arabia and Iran. Indian refiners are also exploring different sources of crude oil for refining on account of availability of cheaper crude variants and in the hope of reduction in shipping costs. Even though the cost of transporting crude from Mexico and Venezuela is higher than from the Middle East, Indian refiners can buy cheaper heavy crude from Latin America.

3) IOC’S PARADIP REFINERY OPREATIONAL

Indian Oil Corporation, on Sunday began crude processing as its 300,000 barrel per day (bpd) Paradip refinery and aims to fully commission on the plant in six months. Output from the $5.2 billion Paradip refinery will complete with rising supplies of fuels from new and expanded plants in West Asia and China.

 

4) PETRONET’S GANGAVARAM LNG TERMINAL GETS GREEN NOD

The Government has given green clearance to Petronet’s proposed liquefied natural gas terminal at Gangavaram Port in Andhra Pradesh. Petronet LNG Ltd has proposed to develop the land-based terminal that will have facilities for receiving, storage and regasification of LNG with an initial capacity of 5 million tonnes a year. The company will develop the project in partnership with Gangavaram Port Ltd on the east coast close to Visakhapatnam. The State has permitted another LNG project at Kakinada, to be anchored by GAIL India in partnership with a state corporation, Shell and GDF Suez. Both Gangavaram and Kakinada projects are expected to play a big role in reviving the stranded gas-based power plants and accelerate the growth of industries in the coastal region.

5) INDIAN’S PETROCHEMICALS SECTOR WILL TOP $ 100 BILLION IN 5 YEARS

The Indian petrochemicals industry is likely to touch $100 billion by 2020 from $40 billion at present after having grown at around 13-14 per cent. Domestic sector had been growing faster than a stagnant global growth rate of 6 per cent. Petrochemicals currently contribute to about 30 per cent to India’s $120-billion chemical industry which is likely to grow at 11 per cent over the next few years. Globally, the contribution of petrochemicals to the chemicals sector is 40 per cent, while in India it accounts for around 25-30 per cent. Polymers, which is the dominant part of Indian petrochemical industry is growing at a superb pace, with the middle class boosting consumption.

6) OILMIN WANTS BP TO MEET CRITERIA FOR SELLING ATF

The oil ministry wants UK’s BP to furnish a bank guarantee and an undertaking that it will meet the minimum investment requirement for getting a licence to retail jet fuel (ATF) to airlines in India. Can BP still get the licence provided it meets the eligibility criteria.

  1. B) DRY COMMODITIES SCENARIO

1) GOVT MAY HIKE IMPORT DUTY ON SUGAR TO 40%

The government is likely to raise import duty on sugar to 40 per cent from the current 25 per cent to check sliding price of the sweetener and enable mills to clear mounting cane arrears. A consensus also emerged on the issue of creating buffer stock, restructuring of loan, promotion of ethanol output, export subsidy on white sugar among others to help solve the current crisis faced by farmers and millers.

 

2) DUTY CUT MAY NOT BOOST IRON ORE EXPORTS

The cut in export duty for low grade iron ore to 10 per cent is expected to provide a slight relief to Goa-based miners, The Government has lowered the export duty on iron ore with 58 per cent iron content, while maintaining the duty at 30 per cent for higher grade ore. Typically, this kind of iron ore is found in Goa, which till 2009-10 was the largest exporter of the mineral from India. International prices of iron ore are so low that there might not be a market for Goa’s low grade iron ore. Today, due to overcapacity, mining giants like Vale, Rio Tinto and others are selling high grade ore (62 per cent iron content and higher) at $55-56 a tonne. The market for low-grade iron ore is diminishing internationally as the Chinese steel mills have reconfigured to use higher grade ore. Low grade iron ore is trading at less than $50 a tonne, which leaves little room to have good margins. Goa’s lower grade iron ore was primarily sold to Chinese mills at a time when 62 per cent iron ore was selling internationally at $177 a tonne, around four years ago. However, after India imposed an export duty of 30 per cent it lost out on market share to other countries.

3) SUGAR IMPORT LEVY HIKED TO 40% ETHANOL EXCISE DUTY WAIVED

The Government raised the import duty on sugar to 40 per cent from 25 per cent on Wednesday. The move will curb imports as sugar prices are depressed, with a fifth consecutive year of surplus output in the offing. Additionally, the Government also removed the 12.36 per cent excise duty on ethanol supplied for blending, for the 2015-16 season (October-September), to pass on price benefits to mills. The ‘Duty Free Import Authorisation’ (DFIA) scheme for sugar would be withdrawn…similarly the period for discharging Export Obligations under the Advanced Authorisation scheme would be reduced to six months so as to prevent any possibility of leakage into the domestic market These measures will significantly improve the adverse price sentiments in respect of sugar and would improve liquidity in the industry, facilitating clearing up of arrears of cane dues to farmers Sugar production in India, the world’s second-largest producer after Brazil, is likely to touch 270 lakh tonnes (lt) for the current season, up from 243 lt last season. Domestic demand is pegged at 248 lt. Mills have repeatedly asserted that the cost of production— has been higher than ex-mill prices.

4) IRON ORE EXPORTS AT 4.38 MT

Iron ore exports were at 4.38 million tonnes (MT) in April-October period of 2014-15 while there are 596 non-working mines in the country, the country has “197 working and 597 non-working iron ore mines” while the estimated reserves of iron ore in the country stand at 31.32 billion tonnes.
5) COAL INDIA OUTPUT UP BY 4MT IN APRIL

Coal India Ltd, which reported 32 million tonnes (mt) higher production last fiscal, has seen out-put rising by 4 mt in April. Coal production grew by a record 10.7 per cent to 41.52 mt last month against the same period last year. The company despatched (off- take) 43.52 mt of coal during the month.

  1. C) CONTAINER SERVICE

1) JNPT TO INVITE RFQ FOR LIQUID BULK TERMINAL

The Jawaharlal Nehru Port Trust (JNPT), India’s largest container terminal, is planning to invite request for qualifications (RFQs) for the second liquid bulk terminal by the end of this month with revised plans for only two berths instead of six that was planned initially. The new berths would have a total capacity of 7.5 million tonnes. The terminal was initially planned to be completed in two phases with a total capacity of 26.5 million tonnes but was held up by the ministry of shipping due to higher projection of throughput, since the Mumbai Port Trust has been handling another liquid cargo that takes care of refineries and other users in and around Mumbai.

2) JN PORT’S FOURTH CONTAINER TERMINAL WORK STARTED

Singapore’s PSA International has started work on its US$350m expansion of Jawaharlal Nehru Port Trust (JNPT), India’s largest container gateway. PSA won the bid to construct and manage a US$1.3bn fourth Container Terminal at JNPT. The new terminal will be known as Bharat Mumbai Container Terminals (BMCT). Phase 1 of BMCT is expected to begin operations in early 2018.

  1. D) PORT DEVELOPMENTS

1) JNPT PLANNING TO BUILD SATELLITE PORT AT VIJAYDURG OR DAHANU

Jawaharlal Nehru Port Trust (JNPT), India’s busiest container gateway near Mumbai, is planning to build a satellite port at either Vijaydurg or Dahanu in Maharashtra. At both Vijaydurg and Dahanu, there is natural draught of 20 metres to receive bigger ships. A feasibility study for a satellite port has been completed internally. JNPT and the Maharashtra government will hold 75% and 25% respectively in the proposed project, Maharashtra needs a large multi-purpose port considering the way the export-import trade is growing. At present, there is no big multipurpose port. JNPT is focused on containers while Mumbai Port is handling more on only liquid cargo. There is need to handle coal and other cargoes for power plants and other industries for the Maharashtra state.

2) ESSAR TO BUILD MARINE LIQUID TERMINAL AT VADINAR

Vadinar Liquid Terminals Ltd, a subsidiary of Essar Ports Ltd, has signed a concession agreement with Kandla Port Trust for development of marine liquid terminal facilities at Vadinar in Gujarat. The term of concession agreement with KPT will be 30 years. The marine liquid terminal facilities to be developed will have a single-point mooring (SPM) and two product jetties at Vadinar on captive use basis for Essar. This work will be completed in the next two to three years. The terminal’s total capacity will be 24.5 million tons per annum (mtpa)-14.5 mtpa for SPM and 10 mtpa for product jetties. All products of Essar refinery at Vadinar will be handled by these facilities.

3) KAKINADA SEZ TO GET SECOND PORT IN EAST GODAVARI

The Kakinada special economic zone (KSEZ) project will be implemented in the right earnest. Industrial units will come up and a port will be built in the KSEZ area at Perumallapuram in Thondangi mandal. The greenfield port at Perumallapuram was originally conceived as a captive port for the KSEZ units, but it would now be developed as a commercial port.

4) MORMUGAO PORT

Attached is a notice from Mormugao Port Trust on restrictions at Port during monsoon period from 10/05/15 to 15/09/15.

5) MUMBAI PORT – MONSOON RESTRICTIONS

Three Circulars dated 21/04/2015 issued by Mumbai Port Trust are attached for information

6) CAVERN STORAGE – VIZAG

HPCL has discharge 12,000 mt from Mt. Nordic Sprinter to cavern storage at Vizag on a trial basis. This is the first parcel to be received in cavern storage

7) MBPT CIRCULAR FOR NAVAL FIRING PRACTICE & GEOTECHNICAL INVESTIGATION

We are attaching herewith Circular received dated 23/05/2015 from Mumbai Port Trust on the above subject.

8) VISHAKHAPATNAM PORT TRUST

We are enclosing herewith Circular dated 04/05/15 received from VPT.

9) PRIORITY BERTHING TO STEEL CARGO VESSELS – KANDLA

Pleased to attach Circular dated 02/05/15 received from Kandla Port Trust on the above subject.
10) IMPORTANT CIRCULAR – REGARDING ROPES ON BOARD SHIP CALLING HAZIRA      

     SPM.

 

Please note the following :

QUOTE

 

While approving ships for SPM operations we very well communicate that ships should have four nos. of 10 inches ropes on board for tying berthing tugs. So far we have allowed ships to arrive Hazira and collect ropes from local agents on rental basis before berthing during non-monsoon days.

Now the monsoon is set in and weather condition is not conducive for rope transfer. During monsoon tugs used for supply of ropes find difficult and at times refuse to come to anchorage due bad weather conditions.

 

Henceforth please note that ships should arrive with the required ropes from previous ports so that ship is ready in all respect to berth at SPM.

 

If the ship arrives without ropes as required by Hazira SPM, we will consider the ship as not ready to berth. We should not be held responsible in case any ship fails to berth at SPM during monsoon in want of ropes.

 

UNQUOTE

  1. E) OTHER DEVELOPMENTS-NIL
  2. F) WEATHER/STRIKE- NIL
  3. G) INTERNATIONAL HIGHLIGHTS

1) MALAYSIAN PALM OIL PLUNGES TO 8- MONTH LOW

Malaysian palm oil futures touched a fresh eight-month low on Wednesday, tracking weakness in comparative edible oils, although traders expect selling pressure to reduce ahead of the long weekend. Malaysian palm, which set the tone for global prices, recorded its sixth straight session of losses on the back of strength in the ringgit and concerns over rising crude palm oil production in key growers. The ringgit retreated 0.1 percent on Wednesday after three days of gains. The benchmark July contract on the Bursa Malaysia Derivatives exchange dropped to 2,070 ringgit in early trade, its lowest since Sept. 22, before rising to 2,081 ringgit ($585) a tonne by the day’s close – down 0.6 percent from the previous session

 

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This post was written by Atlantic Admin