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Thursday, September 20, 2018


Freight costs limit product trade - PIW. PIW says that a looming problem that could limit gasoline exports to the US is the high cost of shipping

Transatlantic freight is pushing $4/bbl from Northwest Europe and $6/bbl from the Mediterranean. With Nymex front-month gasoline at barely $5/bbl above Rotterdam prices, this closes that arbitrage. Russian gas oil is still moving transatlantic. A $6/bbl premium for Nymex front-month heating oil relative to IPE front-month gas oil is enough to cover freight costs of nearly $3/bbl on the Baltic-to-New York Harbour route. Besides rising tanker demand, traders blame tighter shipping rules since the Erika spill off Brittany a year ago.

New world refinery construction and expansion lowest in recent years

According to Petroleum Economist, only 3.44 mbd of refinery distillation capacity is under construction or firmly planned, worldwide. According to their survey this is the lowest recorded in recent years. Close to 60% (2.0 mbd) of the 3.44 mbd construction and expansion is in the Asia-Pacific area. 19 new refineries (2.38 mbd) are under construction, of which 13 (1.79 mbd) are in the Asia-Pacific area. The Asia-Pacific region has now slightly more refining capacity than North America and this region’s capacity is expected to substantially exceed that of North America within the next few years.

 Record scrapping of ships below 200,000 dwt so far this year

Scrapping so far this year has been 13.9 mil dwt, which means that in 2000 it will be below the 17.7 mil dwt scrapped in 1999. However, the scrapping of ships below 200,000 dwt has surpassed last year’s number by some 25 units. The ERIKA accident resulted in a clear out of old product tankers. Some 60 tankers of 20-50,000 dwt with an average age of 28.1 years (the two oldest 55 and 56 years) have been scrapped. The average age of all 141 tankers scrapped this year has been 24 years. For the scrapping development since 1990 and a list of tankers scrapped in 2000 please see our web page:

.coms have management problems

A Pricewaterhouse.Cooper’s survey concludes that the demise of many .coms is due to the management of these companies not adhering to well-known management principles. A survey among 400 companies in UK, Germany France and the Netherlands revealed:

**  unrealistic budgeting

**  failure to follow elementary rules for organisation, marketing and the role of the board

**  board meetings not being conducted properly

**  the .coms not managing their economy properly

**  creativity being valued higher than skills and experience when hiring people

**  management often lacking a sense of direction

The survey says the same problem exists in both big and small companies.

See our web page for previous Weekly NEWS articles on this subject.