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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- Semirara Mining and Power Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Altura Mining Limited, Indonesia
- Borneo Indobara - Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Antam Resourcindo - Indonesia
- Carbofer General Trading SA - India
- International Coal Ventures Pvt Ltd - India
- Petron Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Star Paper Mills Limited - India
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Goldman Sachs - Singapore
- Tamil Nadu electricity Board
- Port Waratah Coal Services - Australia
- Kumho Petrochemical, South Korea
- Agrawal Coal Company - India
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Bukit Makmur.PT - Indonesia
- Indogreen Group - Indonesia
- Minerals Council of Australia
- CNBM International Corporation - China
- GN Power Mariveles Coal Plant, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- PowerSource Philippines DevCo
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Maheswari Brothers Coal Limited - India
- Coastal Gujarat Power Limited - India
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Orica Australia Pty. Ltd.
- Billiton Holdings Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Indian Oil Corporation Limited
- Grasim Industreis Ltd - India
- Electricity Authority, New Zealand
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- AsiaOL BioFuels Corp., Philippines
- Karaikal Port Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Uttam Galva Steels Limited - India
- Sakthi Sugars Limited - India
- San Jose City I Power Corp, Philippines
- Latin American Coal - Colombia
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- PTC India Limited - India
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Aboitiz Power Corporation - Philippines
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- LBH Netherlands Bv - Netherlands
- Asia Pacific Energy Resources Ventures Inc, Philippines
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- SMC Global Power, Philippines
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Chamber of Mines of South Africa
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sarangani Energy Corporation, Philippines
- Wood Mackenzie - Singapore
- Commonwealth Bank - Australia
- PetroVietnam Power Coal Import and Supply Company
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Parliament of New Zealand
- Kaltim Prima Coal - Indonesia
- Indika Energy - Indonesia
- Africa Commodities Group - South Africa
- Madhucon Powers Ltd - India
- Global Business Power Corporation, Philippines
- Indonesian Coal Mining Association
- Romanian Commodities Exchange
- Samtan Co., Ltd - South Korea
- Holcim Trading Pte Ltd - Singapore
- Essar Steel Hazira Ltd - India
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Makarim & Taira - Indonesia
- IHS Mccloskey Coal Group - USA
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Sidhee Cement - India
- South Luzon Thermal Energy Corporation
- Simpson Spence & Young - Indonesia
- Global Green Power PLC Corporation, Philippines
- Kapuas Tunggal Persada - Indonesia
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Baramulti Group, Indonesia
- London Commodity Brokers - England
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Eastern Coal Council - USA
- Australian Commodity Traders Exchange
- Vijayanagar Sugar Pvt Ltd - India
- Energy Development Corp, Philippines
- Economic Council, Georgia
- SMG Consultants - Indonesia
- Ambuja Cements Ltd - India
- Kepco SPC Power Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Standard Chartered Bank - UAE
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Toyota Tsusho Corporation, Japan
- OPG Power Generation Pvt Ltd - India
- TeaM Sual Corporation - Philippines
- Kohat Cement Company Ltd. - Pakistan
- Jaiprakash Power Ventures ltd
- Independent Power Producers Association of India
- Parry Sugars Refinery, India
- Deloitte Consulting - India
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- White Energy Company Limited
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- PNOC Exploration Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- IEA Clean Coal Centre - UK
- Global Coal Blending Company Limited - Australia
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
- GVK Power & Infra Limited - India
- Timah Investasi Mineral - Indoneisa
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Attock Cement Pakistan Limited
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pendopo Energi Batubara - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Siam City Cement - Thailand
- Energy Link Ltd, New Zealand
- Vedanta Resources Plc - India
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Marubeni Corporation - India
- Lanco Infratech Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Iligan Light & Power Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Intertek Mineral Services - Indonesia
- Malabar Cements Ltd - India
- Georgia Ports Authority, United States
- Semirara Mining Corp, Philippines
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Planning Commission, India
- India Bulls Power Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Heidelberg Cement - Germany
- Renaissance Capital - South Africa
- Medco Energi Mining Internasional
- Rio Tinto Coal - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bhushan Steel Limited - India
- GMR Energy Limited - India
- Interocean Group of Companies - India
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- SN Aboitiz Power Inc, Philippines
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Xindia Steels Limited - India
- Price Waterhouse Coopers - Russia
- Banpu Public Company Limited - Thailand
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
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