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Tuesday, 03 November 15
EU OIL MAJORS FACE FURTHER EARNINGS DECLINE IN Q415 - FITCH RATINGS
 The sharp drop in major European oil companies' third-quarter profits is likely to be extended in the fourth quarter as refining margins, which had cushioned some of the blow from low oil prices, have fallen steeply, Fitch Ratings says.
According to Fitch, with little prospect of a near-term oil-price recovery and refining margins likely to remain thin, companies' ability to stabilize or even grow profits in 2016 will depend on how quickly cost-cutting measures and cost deflation in the supply chain feed through to the bottom line.
Royal Dutch Shell, Total, BP, Eni and BG all reported 3Q15 results last week. On average, their 3Q15 EBITDA fell by 26% compared with 2Q15, and cash flow from operations by 30%. The main reason was lower oil prices as Brent slid 19% from an average USD63/bbl in 2Q15 to USD51/bbl in 3Q15. The majors' 9M15 EBITDA dropped 39%, and cash from operations fell 38%, as Brent plummeted by 48%, from an average of USD107/bbl in 9M14 to USD56 in 9M15.
4Q15 may be even more painful for integrated companies as refining margins have fallen since the middle of the third quarter, which is likely to drag on profits in their downstream operations. In October, Brent Crack Rotterdam Refinery Margin, as calculated by Thomson Reuters, averaged USD4.0/bbl, compared with USD7.9 in 3Q15 and USD8.1 in 2Q15.
Part of this decline is likely to be a seasonal effect from the end of the main driving season in the northern hemisphere. But we also expect an underlying correction in margins due to overcapacity in European refining and strong competition from Middle Eastern, Russian and US refineries, which generally have access to cheaper feedstock and lower energy costs, says Fitch. BG may be the only exception. We expect its earnings to rise in 4Q15 vs 3Q15 provided oil prices do not fall. This is because BG has no exposure to refining and its production is rising due to operations ramping up in Australia and Brazil.
Apart from oil prices, majors' upstream profits will be increasingly affected by the scale of cost deflation. Oil majors are reducing costs and in some parts of the value chain, the fall has already been substantial. For example, in the offshore drilling industry the cost of hiring a rig has fallen by 30%-40% yoy, according to various sources. According to Total, rates for many other services, including marine logistics and well services, are down up to 20%. Overall, however, industry deflation is still insufficient to materially affect profits, as negotiating new contracts may take some time. We expect the impact to be more pronounced in 2016 as oil majors are now re-negotiating prices with their contractors and are aiming to reduce staff costs and streamline operations.
To balance their cash flows, oil majors are reducing capex and continuing divestments. Majors' ability to keep these commitments without jeopardizing the level and quality of reserves and production will drive their ratings in the next one or two years. For example, BP said its 2015-2017 capex will be USD17bn-19bn a year, compared with the original 2015 guidance of USD24bn-26bn announced a year ago. Total's guidance for 2015 is unchanged at USD23bn-24bn, but the company said capex will go down to USD20bn-21bn in 2016 and USD17bn-19bn a year in 2017-2019. Shell said it will prioritize debt reduction over dividends and capex.
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Wednesday, 07 October 15
SHIPPING MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2015 and more specifically during the summer season has been rather remarkable. 421 v ...
Wednesday, 07 October 15
INDONESIA COAL SWAPS HAVE CONTINUED TO DECLINE, FALLING ALMOST 7% M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 2.23 (-5.51%) per t ...
Tuesday, 06 October 15
THE IMPACT OF LOW OIL PRICE ON THE SHIPPING INDUSTRY - LITERATED
The fall in global oil prices over the last one year has been beneficial to the shipping industry. The demand for oil tankers has picked up and the ...
Tuesday, 06 October 15
FOB RICHARDS BAY COAL SWAPS PLUNGE MORE THAN 6 PER CENT M-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 05 October 15
Q1 & Q2 2016 DELIVERY SWAPS DECLINED M-M AND W-W THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.36 per ton (0.85%) month over month to US$ 42.12 per ton. The ...
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- Formosa Plastics Group - Taiwan
- Bharathi Cement Corporation - India
- CIMB Investment Bank - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Interocean Group of Companies - India
- Krishnapatnam Port Company Ltd. - India
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Coalindo Energy - Indonesia
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Intertek Mineral Services - Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Goldman Sachs - Singapore
- Indika Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Java Power - Indonesia
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Price Waterhouse Coopers - Russia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Singapore Mercantile Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- Semirara Mining and Power Corporation, Philippines
- White Energy Company Limited
- VISA Power Limited - India
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- Coastal Gujarat Power Limited - India
- Medco Energi Mining Internasional
- Mercator Lines Limited - India
- Planning Commission, India
- Central Electricity Authority - India
- The University of Queensland
- Global Green Power PLC Corporation, Philippines
- Parry Sugars Refinery, India
- Economic Council, Georgia
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Petrochimia International Co. Ltd.- Taiwan
- Makarim & Taira - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Mjunction Services Limited - India
- Lanco Infratech Ltd - India
- Indogreen Group - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Anglo American - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- GVK Power & Infra Limited - India
- Bangladesh Power Developement Board
- Edison Trading Spa - Italy
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Standard Chartered Bank - UAE
- Independent Power Producers Association of India
- Karbindo Abesyapradhi - Indoneisa
- Petron Corporation, Philippines
- Gujarat Sidhee Cement - India
- Bhatia International Limited - India
- Therma Luzon, Inc, Philippines
- Essar Steel Hazira Ltd - India
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Antam Resourcindo - Indonesia
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Metalloyd Limited - United Kingdom
- Mercuria Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- Bukit Makmur.PT - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- Ambuja Cements Ltd - India
- GN Power Mariveles Coal Plant, Philippines
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- Merrill Lynch Commodities Europe
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- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
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- Kohat Cement Company Ltd. - Pakistan
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- Electricity Authority, New Zealand
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- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Tamil Nadu electricity Board
- Bukit Baiduri Energy - Indonesia
- Meralco Power Generation, Philippines
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Minerals Council of Australia
- Simpson Spence & Young - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- SN Aboitiz Power Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- The Treasury - Australian Government
- LBH Netherlands Bv - Netherlands
- Maheswari Brothers Coal Limited - India
- Renaissance Capital - South Africa
- Tata Chemicals Ltd - India
- Australian Coal Association
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Jaiprakash Power Ventures ltd
- Savvy Resources Ltd - HongKong
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Parliament of New Zealand
- Aditya Birla Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Globalindo Alam Lestari - Indonesia
- Sindya Power Generating Company Private Ltd
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Kepco SPC Power Corporation, Philippines
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- PTC India Limited - India
- Star Paper Mills Limited - India
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Vedanta Resources Plc - India
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- Toyota Tsusho Corporation, Japan
- Latin American Coal - Colombia
- Power Finance Corporation Ltd., India
- Siam City Cement PLC, Thailand
- International Coal Ventures Pvt Ltd - India
- Wood Mackenzie - Singapore
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- TeaM Sual Corporation - Philippines
- Rio Tinto Coal - Australia
- Binh Thuan Hamico - Vietnam
- Bahari Cakrawala Sebuku - Indonesia
- Deloitte Consulting - India
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- CNBM International Corporation - China
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Siam City Cement - Thailand
- The State Trading Corporation of India Ltd
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Banpu Public Company Limited - Thailand
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Thiess Contractors Indonesia
- IHS Mccloskey Coal Group - USA
- Romanian Commodities Exchange
- Bulk Trading Sa - Switzerland
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- Madhucon Powers Ltd - India
- Karaikal Port Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Barasentosa Lestari - Indonesia
- Timah Investasi Mineral - Indoneisa
- ASAPP Information Group - India
- South Luzon Thermal Energy Corporation
- Bank of Tokyo Mitsubishi UFJ Ltd
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