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Wednesday, 12 February 20
REFINING SET FOR A CHALLENGING 2020 - WOOD MACKENZIE
 Downstream isn’t the glamorous end of the oil business. And in Big Oil, it’s typically dwarfed by upstream. Yet having been forced to restructure and focus on costs early this century, downstream’s cash flow has underpinned a third of the Majors’ shareholder returns over the last five years.
But a laser-like focus on costs and efficiency can only take you so far. If the external environment turns against you, downstream is as vulnerable as any part of the business. The Majors’ downstream results for Q4 2019 were among the poorest since 2015. Petrochemicals is part of that story, with earnings suffering from over-investment.
Now we’re also seeing refining margins come under increasing pressure, slipping to five-year lows in the last few weeks of 2019 and the first of 2020. Alan Gelder, VP Refining, identifies two main factors.
Firstly, new regulation on marine fuels was expected to boost refining margins this year – but that hasn’t played out as expected yet. The International Maritime Organization (IMO) regulations require all vessels to reduce the level of sulphur in their engine emissions from 3.5% to 0.5% or less from 1 January.
Essentially, IMO should trigger a shift out of low-value product (High Sulphur Fuel Oil, or HSFO) into higher value Very Low Sulphur Fuel Oil (VLSFO). Refinery capacity to make VLSFO is limited, so marine gasoil, which is closely linked to the price of diesel, would top up any shortfall. This shift to high-value products was expected to drive up refining margins in 2020.
It’s only half happened. The price of VLSFO surged in Q4 and HSFO duly collapsed. The surprise was that there’s been much more VLSFO available than expected. Traders had taken advantage of low-price feedstock in late summer 2019 and built up volumes of VLSFO in storage. When the demand came in, they were ready and cashed in, big time. A single tanker loaded with 2 million barrels of VLSFO could make over US$10/bbl on the spread and pull in US$20 million-plus in cash profit.
Producers with the right crude have also fared well. Santos revealed that it had sold a single cargo of heavy sweet crude, ideal feedstock for VLSFO, at an unheard-of US$30/bbl premium to Brent. Nice work if you can get it.
What didn’t really materialise was higher demand for marine gasoil – it’s just not been needed in the volumes anticipated. Weaker marine demand for gasoil has been compounded by soft demand from heating – a much bigger market – because of warm winter weather in the northern hemisphere and lacklustre economic growth. That’s led to a glut of gasoil in inventory which is depressing refining margins.
Second, global oil demand growth forecasts are falling back sharply – potentially a more fundamental problem. The biggest factor is the coronavirus, so we have reduced our demand forecasts in China by almost 0.6 million b/d for Q1 2020. We now expect China demand to fall year-on-year by 125,000 b/d for the quarter, the worst rate since 2009. Global demand will fall by 250,000 b/d, also the worst in over a decade.
So what’s next for refining?
The VLSFO surplus should be a short-term phenomenon. There’s not enough refining capacity to supply all bunker demand with VLSFO. That gap will have to be met by additional gasoil once the surplus VLSFO in inventory is soaked up, by H2 2020 at the latest.
The prospects for oil demand are more worrying and harder to call. At this stage, we have restricted our adjustments to Q1 and left the rest of the year largely unchanged. If the virus can be contained successfully in the coming weeks, demand could bounce back strongly – much as was the case with SARS in 2003.
Refining margins so far in Q1 suggest it will take a while before refining profitability recovers. Meantime, refiners will do what they must to keep costs down and maximise cash flows, including cutting refinery runs to limit the build-up in inventory. It’s about toughing it out, waiting and hoping for demand – China in particular – to perk up again.
Source: Wood Mackenzie
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Friday, 07 February 20
CIL LOOKING TO TAP NON-POWER SECTORS FOR INCREMENTAL COAL, PTI REPORTED
The miner is looking to ramp up production to meet its targets for the current fiscal at a time when the economic slowdown is impacting demand for ...
Friday, 07 February 20
VIRUS - HIT CHINA MAY NEED MORE IMPORTS OF COAL. NOW COMES THE TRICKY PART - SHIPPING IT THERE: REUTERS
China’s domestic coal mines are struggling to ramp up production in the face of the ongoing coronavirus epidemic. That’s a situation th ...
Friday, 07 February 20
CORONAVIRUS IMPACTING THE GLOBAL SHIPPING INDUSTRY - BIMCO
The outbreak of the novel Coronavirus has dented market sentiment and spooked markets around the globe. When China sneezes, we all catch the flu. T ...
Thursday, 06 February 20
CAPE: WEAK SUPPLY/DEMAND RATIO THE STREETS REMAIN BLOODY FOR THE BIG SHIPS - FEARNLEYS
Cape: With still a weak supply/demand ratio the streets remain bloody for the big ships, and actual spot earnings are close to zero on main short-h ...
Thursday, 06 February 20
CHINESE DEMAND KEY UNCERTAINTY FOR SEABORNE COAL MARKET IN 2020 - THE BRICS POST
Coal trader Noble Resources head of research Rodrigo Echeverri Cardozo had penciled in a 3 Mt drop in Chinese import demand for 2020, but it could ...
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- Georgia Ports Authority, United States
- GMR Energy Limited - India
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Global Business Power Corporation, Philippines
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Sakthi Sugars Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Salva Resources Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- Ind-Barath Power Infra Limited - India
- Vedanta Resources Plc - India
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Australian Coal Association
- Meenaskhi Energy Private Limited - India
- Merrill Lynch Commodities Europe
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Directorate Of Revenue Intelligence - India
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Ministry of Transport, Egypt
- Meralco Power Generation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Straits Asia Resources Limited - Singapore
- Binh Thuan Hamico - Vietnam
- Economic Council, Georgia
- Pendopo Energi Batubara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Malabar Cements Ltd - India
- Riau Bara Harum - Indonesia
- Baramulti Group, Indonesia
- Power Finance Corporation Ltd., India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Kobexindo Tractors - Indoneisa
- San Jose City I Power Corp, Philippines
- Sical Logistics Limited - India
- Intertek Mineral Services - Indonesia
- Bhoruka Overseas - Indonesia
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Indogreen Group - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Indika Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Larsen & Toubro Limited - India
- PowerSource Philippines DevCo
- Sinarmas Energy and Mining - Indonesia
- Heidelberg Cement - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Kumho Petrochemical, South Korea
- Kaltim Prima Coal - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bukit Makmur.PT - Indonesia
- Medco Energi Mining Internasional
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercuria Energy - Indonesia
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Star Paper Mills Limited - India
- Thiess Contractors Indonesia
- Semirara Mining and Power Corporation, Philippines
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- Krishnapatnam Port Company Ltd. - India
- Sojitz Corporation - Japan
- Simpson Spence & Young - Indonesia
- International Coal Ventures Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Coal and Oil Company - UAE
- Toyota Tsusho Corporation, Japan
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Billiton Holdings Pty Ltd - Australia
- Grasim Industreis Ltd - India
- CNBM International Corporation - China
- Gujarat Electricity Regulatory Commission - India
- Altura Mining Limited, Indonesia
- SMC Global Power, Philippines
- Anglo American - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Agrawal Coal Company - India
- Wood Mackenzie - Singapore
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Kideco Jaya Agung - Indonesia
- Global Coal Blending Company Limited - Australia
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- SMG Consultants - Indonesia
- Siam City Cement - Thailand
- Holcim Trading Pte Ltd - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Uttam Galva Steels Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Kartika Selabumi Mining - Indonesia
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Aditya Birla Group - India
- Orica Australia Pty. Ltd.
- Vizag Seaport Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Alfred C Toepfer International GmbH - Germany
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- Sarangani Energy Corporation, Philippines
- Electricity Generating Authority of Thailand
- Wilmar Investment Holdings
- Manunggal Multi Energi - Indonesia
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Therma Luzon, Inc, Philippines
- The University of Queensland
- GAC Shipping (India) Pvt Ltd
- Essar Steel Hazira Ltd - India
- Indonesian Coal Mining Association
- Kapuas Tunggal Persada - Indonesia
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- The Treasury - Australian Government
- Marubeni Corporation - India
- Videocon Industries ltd - India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- Thai Mozambique Logistica
- Ministry of Finance - Indonesia
- Coalindo Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Chettinad Cement Corporation Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Deloitte Consulting - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- Jindal Steel & Power Ltd - India
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- TNB Fuel Sdn Bhd - Malaysia
- Ambuja Cements Ltd - India
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Price Waterhouse Coopers - Russia
- South Luzon Thermal Energy Corporation
- Oldendorff Carriers - Singapore
- Mercator Lines Limited - India
- Independent Power Producers Association of India
- Lanco Infratech Ltd - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- Singapore Mercantile Exchange
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Petron Corporation, Philippines
- Energy Link Ltd, New Zealand
- PTC India Limited - India
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Mjunction Services Limited - India
- Borneo Indobara - Indonesia
- PNOC Exploration Corporation - Philippines
- Xindia Steels Limited - India
- IEA Clean Coal Centre - UK
- Samtan Co., Ltd - South Korea
- Tata Chemicals Ltd - India
- Cement Manufacturers Association - India
- Petrochimia International Co. Ltd.- Taiwan
- The State Trading Corporation of India Ltd
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- Chamber of Mines of South Africa
- Kalimantan Lumbung Energi - Indonesia
- Central Electricity Authority - India
- European Bulk Services B.V. - Netherlands
- Planning Commission, India
- GN Power Mariveles Coal Plant, Philippines
- Tamil Nadu electricity Board
- Timah Investasi Mineral - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
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