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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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Thursday, 13 August 15
THE RATES FOR CAPES KEPT RALLYING LAST WEEK - INTERMODAL
COALspot.com: Strong Capesize performance kept supporting the Dry Bulk market last week, which noted another positive weekly closing, while rates f ...
Thursday, 13 August 15
FOB RICHARDS BAY COAL SWAPS CONTINUE FALLING
COALspot.com: API4 FOB Richards Bay Coal swap for delivery 4Q' 2015 declined month over month and week over week.
The 4Q swap was down US$ ...
Wednesday, 12 August 15
DRY BULK MARKET: WITHOUT A DOUBT REACHED HEALTHIER LEVEL
A few weeks before the end of the summer season, the BDI is hovering around 1,200 points, providing some much needed optimism to all Dry Bulk marke ...
Wednesday, 12 August 15
REGULATION CURBS POWER OF LOCAL AUTHORITIES IN MINING SECTOR IN INDONESIA - FLORENCE G. SANTOSO
The Indonesian Government appears to be getting serious about stripping Regents of the authority to issue mining licenses. The Government took the ...
Wednesday, 12 August 15
FOB NEWCASTLE COAL SWAP FLAT WEEK OVER WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for 4Q’ 2015 delivery down $ 0.98 per MT (-2.20%) month over month to US$ 43.65 per mt. The swap ...
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- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Sical Logistics Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- Minerals Council of Australia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Bayan Resources Tbk. - Indonesia
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Bukit Makmur.PT - Indonesia
- Standard Chartered Bank - UAE
- South Luzon Thermal Energy Corporation
- McConnell Dowell - Australia
- Kobexindo Tractors - Indoneisa
- Bangladesh Power Developement Board
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Kepco SPC Power Corporation, Philippines
- Mjunction Services Limited - India
- White Energy Company Limited
- San Jose City I Power Corp, Philippines
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Wilmar Investment Holdings
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Samtan Co., Ltd - South Korea
- Global Green Power PLC Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- CIMB Investment Bank - Malaysia
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- Indian Oil Corporation Limited
- Economic Council, Georgia
- Xindia Steels Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Electricity Generating Authority of Thailand
- Energy Development Corp, Philippines
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bhoruka Overseas - Indonesia
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- PowerSource Philippines DevCo
- Gujarat Mineral Development Corp Ltd - India
- Georgia Ports Authority, United States
- The University of Queensland
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Central Electricity Authority - India
- SMC Global Power, Philippines
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- Coal and Oil Company - UAE
- Therma Luzon, Inc, Philippines
- Mintek Dendrill Indonesia
- Sakthi Sugars Limited - India
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Goldman Sachs - Singapore
- Anglo American - United Kingdom
- Indogreen Group - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Central Java Power - Indonesia
- Sojitz Corporation - Japan
- Posco Energy - South Korea
- Latin American Coal - Colombia
- India Bulls Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Global Business Power Corporation, Philippines
- Mercator Lines Limited - India
- Dalmia Cement Bharat India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Ceylon Electricity Board - Sri Lanka
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Parry Sugars Refinery, India
- Commonwealth Bank - Australia
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Jindal Steel & Power Ltd - India
- Electricity Authority, New Zealand
- Metalloyd Limited - United Kingdom
- Orica Mining Services - Indonesia
- Grasim Industreis Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Ambuja Cements Ltd - India
- Alfred C Toepfer International GmbH - Germany
- GN Power Mariveles Coal Plant, Philippines
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Attock Cement Pakistan Limited
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Thai Mozambique Logistica
- Merrill Lynch Commodities Europe
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Chamber of Mines of South Africa
- Maharashtra Electricity Regulatory Commission - India
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- MS Steel International - UAE
- Trasteel International SA, Italy
- Power Finance Corporation Ltd., India
- Altura Mining Limited, Indonesia
- Uttam Galva Steels Limited - India
- Heidelberg Cement - Germany
- Africa Commodities Group - South Africa
- Vizag Seaport Private Limited - India
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Intertek Mineral Services - Indonesia
- Sindya Power Generating Company Private Ltd
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Indika Energy - Indonesia
- Barasentosa Lestari - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Marubeni Corporation - India
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Sinarmas Energy and Mining - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Iligan Light & Power Inc, Philippines
- Makarim & Taira - Indonesia
- IEA Clean Coal Centre - UK
- Australian Commodity Traders Exchange
- Pendopo Energi Batubara - Indonesia
- European Bulk Services B.V. - Netherlands
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- IHS Mccloskey Coal Group - USA
- Eastern Energy - Thailand
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Videocon Industries ltd - India
- Parliament of New Zealand
- GVK Power & Infra Limited - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Thiess Contractors Indonesia
- VISA Power Limited - India
- Eastern Coal Council - USA
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- Australian Coal Association
- GMR Energy Limited - India
- Cement Manufacturers Association - India
- Bulk Trading Sa - Switzerland
- Indonesian Coal Mining Association
- Oldendorff Carriers - Singapore
- International Coal Ventures Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Planning Commission, India
- Petron Corporation, Philippines
- Banpu Public Company Limited - Thailand
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ASAPP Information Group - India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Toyota Tsusho Corporation, Japan
- Savvy Resources Ltd - HongKong
- Asia Pacific Energy Resources Ventures Inc, Philippines
- OPG Power Generation Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Finance - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Baramulti Group, Indonesia
- Essar Steel Hazira Ltd - India
- Aboitiz Power Corporation - Philippines
- Aditya Birla Group - India
- Miang Besar Coal Terminal - Indonesia
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Timah Investasi Mineral - Indoneisa
- Chettinad Cement Corporation Ltd - India
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