Author
Soeren Bo Duvier Nielsen
With close to 20 years of operational and commercial experience in the shipping, energy, and commodity markets, Soeren Bo Duvier Nielsen is a veteran at providing compelling solutions and unlocking business potential for the trading and transportation industries. Currently based in Singapore as manager with Sumitomo Corporation Global Commodities Ltd. (SCGC), Soeren's professional experience goes as far back as 1991 with two years army service in the Royal Guards, before joining A.P. Moeller Maersk in 1993. There, he moved through procurement, sales, marketing, and regional roles from cities including Cairo, Osaka, Tokyo, Singapore and Copenhagen. In 2005 he assumed the regional manager role for Bunker Holding A/S Asia based in Tokyo while also creating International Bunker Services K. K. in Japan as Managing Director. It was as Managing Director for ICAP Shipping that Soeren returned to Singapore in 2008 including a recent stint into the LPG industry with Poten and Partners.
Incorporated in 2006, SCGC, which operates under the charge of the Sumitomo Group's Financial Service Division's Commodity Business Department, is headquartered in London and is involved in all facets of the commodities business globally. The predecessor of SCGC was the non-ferrous and precious metals team of Sumitomo Corporation Europe.
Originally formed in the 1980s mainly to handle precious metals transactions, this team subsequently expanded the range of its activities to include such operations as the packaging and handling of derivatives to meet needs inside and outside the company in coping with volatility in prices of materials.
There has been a surprising uptick in the number of indicators to support an upward trend in oil prices going forward, like better-than-expected figures on global demand growth and pockets of shortages for petroleum products around the world such as in Singapore where there are inventory draws on residue and with regards to the lack of cutter stock, which should keep the visco wide for the time being. Also, with IATA forecasting greater passenger and cargo traffic halfway through 2q and into 3q of this year, another potential pocket would loom in aviation requirements such as jet fuel and kerosene.
Going back to fuel oil, container liners have again brought back on-line a number of previously idled tonnage, amid constant new build deliveries, on the back of a recent mini-market revival, increasing capacity by about 15% (FEA/MED); good news for the bunker industry, if they can deliver this sudden spike in fuel oil requirements.
Taking as many factors into account as possible however, prices should still be leaning towards a bearish attitude. Whilst more fuel oil might be needed initially to support employment of this increase in active container ship numbers, fresh indications are that freight rates have started to drop again, significantly on routes such as those coming out from Shanghai. Revived tonnage have a high chance of finding themselves idled once more.
Current sentiment is uneasy on the back of the recent increase in interest rates in India, although it must be noted that the increase was more symbolic than anything else. Still, many other bearish indicators abound. The markets are mostly still very unsure about the year ahead and the next, despite unexpectedly robust government cheque-writing since 2008, and have to actually adopt and a wait-and-see approach to whether the billions of dollars pumped into the global economies will succeed in maintaining a long-term positive adjustment.
Crucially, supply limitations threaten in abundance and consistency, especially due to stalled investment cash flows and geopolitical issues in key producing countries such as Nigeria, Venezuela, Russia and Iran.
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