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Wednesday, 08 October 14
OIL COULD FALL TO USD80 BEFORE SHALE SUPPLY RESPONSE - FITCH
 COALspot.com: Brent oil could fall as low as USD80 a barrel before triggering a self-correcting supply response with shale-oil drillers cutting investment in new wells, Fitch Ratings says.
According to Fitch, the steep rate at which production from shale wells declines mean companies have to keep drilling new wells to maintain production. We estimate median full-cycle costs for US exploration and production companies have fallen to about USD70. The marginal barrel, not the median one, balances supply and demand and determines price, so the point at which capex falls will probably be higher. Exactly where depends on expectations of future price. Anecdotally we understand that at USD90/bbl capex is likely to continue at full speed, while at USD75-80/bbl it may fall. This would have a relatively rapid impact on production, suggesting a notional price floor.
Fitch noted that, in the short term we consider a resurgence of supply disruptions and positive action from OPEC the most likely catalysts for a rebound in prices. But without these, further declines might be possible, especially if evidence grows of further weakening of global demand or increasing OPEC spare capacity.
The notional floor is well below the USD100/bbl level that many market participants thought was here to stay earlier this year. But in the last two weeks Brent crude has fallen - and stayed - significantly below USD100/bbl, and WTI crude has fallen below USD90/bbl for the first time since 2012. The difference between the two benchmarks has shrunk to around USD2.50, and forward curves also indicate weakness, Fitch noted.
The key supports for USD100+ oil were growing demand, tight OPEC spare capacity, increasing cost of supply, particularly combined with rapid depletion rates for shale wells, OPEC's desire for high oil prices, and political and security issues in key regions.
Fitch further noted, demand has been the clearest change in the short term, but is also the element that may most reliably reverse in the long term. If China and India grow as expected demand could rise by up to a third in the next 20-30 years - but this does not preclude short-term weakness.
OPEC has declared support for prices at USD100/bbl. Some members would prefer this price or higher, but we estimate Saudi Arabia, which would have to absorb the greatest production cuts, would be able to balance its budget at USD94/bbl. A lot will therefore ride on the outcome of OPEC's next meeting in November, said Fitch.
The geopolitical and security picture has not resulted in the predicted fall in production. Progress is being made on Iranian sanctions; Iraqi production has remained robust; Libyan production is starting to recover. Market sentiment suggests the effects of these situations will remain benign - but there is potential for this to reverse quite rapidly.
We do not expect rating implications from the price dip in the short term. Our corporate and sovereign ratings use price assumptions that drop over time, and companies and governments have shown themselves able to adjust spending to weaker prices if necessary. The rising US dollar, which has strengthened against the euro by around 10% since the middle of the year, is also contributing to weakness in oil prices when expressed in dollar terms, as our price decks are.
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Friday, 10 October 14
INDONESIA TO DEVELOP DOWNSTREAM COAL INDUSTRY - JP
The government is planning to launch a program to develop the downstream coal industry to increase the commodity’s added value, an official h ...
Friday, 10 October 14
U.S. PRODUCED 83.2 MMST OF COAL IN SEPTEMBER, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.6 million short tons (mmst) of coal in ...
Thursday, 09 October 14
CAPESIZE MARKET HAS CONTINUED TO SHOW WEAKNESS - FEARNLEYS
Handy
We mentioned last week that after several weeks of rate increase for the Supras, the bigger Panamaxes started to snap up better paying Supr ...
Thursday, 09 October 14
SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. ...
Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
The Dry Bulk market remained under pressure last week, with rates for Capes remaining on the red while those for Panamaxes managed to outperform th ...
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- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Coal and Oil Company - UAE
- Kumho Petrochemical, South Korea
- Parry Sugars Refinery, India
- SMC Global Power, Philippines
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Borneo Indobara - Indonesia
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Mercator Lines Limited - India
- Bhatia International Limited - India
- Formosa Plastics Group - Taiwan
- Mintek Dendrill Indonesia
- Carbofer General Trading SA - India
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Ministry of Finance - Indonesia
- Siam City Cement - Thailand
- Jaiprakash Power Ventures ltd
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Pendopo Energi Batubara - Indonesia
- Latin American Coal - Colombia
- Sarangani Energy Corporation, Philippines
- Holcim Trading Pte Ltd - Singapore
- SN Aboitiz Power Inc, Philippines
- Sojitz Corporation - Japan
- Eastern Coal Council - USA
- GVK Power & Infra Limited - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Manunggal Multi Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Bulk Trading Sa - Switzerland
- Standard Chartered Bank - UAE
- Ambuja Cements Ltd - India
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Gujarat Sidhee Cement - India
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- Bhushan Steel Limited - India
- Parliament of New Zealand
- Sindya Power Generating Company Private Ltd
- Orica Mining Services - Indonesia
- Independent Power Producers Association of India
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- Bangladesh Power Developement Board
- Kobexindo Tractors - Indoneisa
- Bhoruka Overseas - Indonesia
- Bukit Baiduri Energy - Indonesia
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Alfred C Toepfer International GmbH - Germany
- Africa Commodities Group - South Africa
- Global Coal Blending Company Limited - Australia
- Mjunction Services Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Minerals Council of Australia
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- Electricity Generating Authority of Thailand
- Ind-Barath Power Infra Limited - India
- Economic Council, Georgia
- Commonwealth Bank - Australia
- PTC India Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Wood Mackenzie - Singapore
- Savvy Resources Ltd - HongKong
- Trasteel International SA, Italy
- Timah Investasi Mineral - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Vedanta Resources Plc - India
- Oldendorff Carriers - Singapore
- McConnell Dowell - Australia
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Ceylon Electricity Board - Sri Lanka
- Meenaskhi Energy Private Limited - India
- Xindia Steels Limited - India
- Maharashtra Electricity Regulatory Commission - India
- New Zealand Coal & Carbon
- Energy Development Corp, Philippines
- IEA Clean Coal Centre - UK
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Semirara Mining Corp, Philippines
- Banpu Public Company Limited - Thailand
- Deloitte Consulting - India
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Globalindo Alam Lestari - Indonesia
- Madhucon Powers Ltd - India
- San Jose City I Power Corp, Philippines
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Interocean Group of Companies - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Aditya Birla Group - India
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- European Bulk Services B.V. - Netherlands
- London Commodity Brokers - England
- Global Business Power Corporation, Philippines
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Salva Resources Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kartika Selabumi Mining - Indonesia
- Eastern Energy - Thailand
- IHS Mccloskey Coal Group - USA
- The University of Queensland
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Simpson Spence & Young - Indonesia
- Indian Energy Exchange, India
- South Luzon Thermal Energy Corporation
- Directorate General of MIneral and Coal - Indonesia
- Larsen & Toubro Limited - India
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Central Java Power - Indonesia
- Dalmia Cement Bharat India
- Altura Mining Limited, Indonesia
- India Bulls Power Limited - India
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- Coalindo Energy - Indonesia
- Ministry of Mines - Canada
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Kideco Jaya Agung - Indonesia
- Australian Commodity Traders Exchange
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Ministry of Transport, Egypt
- Samtan Co., Ltd - South Korea
- SMG Consultants - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- VISA Power Limited - India
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Price Waterhouse Coopers - Russia
- CNBM International Corporation - China
- Semirara Mining and Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- PowerSource Philippines DevCo
- Cement Manufacturers Association - India
- Planning Commission, India
- MS Steel International - UAE
- Grasim Industreis Ltd - India
- Edison Trading Spa - Italy
- Petrochimia International Co. Ltd.- Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Binh Thuan Hamico - Vietnam
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Rio Tinto Coal - Australia
- Port Waratah Coal Services - Australia
- The State Trading Corporation of India Ltd
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Heidelberg Cement - Germany
- Karbindo Abesyapradhi - Indoneisa
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