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Wednesday, 29 April 20
OIL CLOSES IN ON PEAK OVERSUPPLY - WOOD MACKENZIE
Are we now deep in the abyss? Up to our necks in it, if the oil price is any guide. Brent has now tested sub-US$20/bbl in this downturn and WTI sub-zero, albeit briefly and in somewhat freakish circumstances. Where are the signs of stress across the oil value chain? And what are the prospects of finding an exit route to recovery? I talked it through with Ann-Louise Hittle of our Macro Oils team.
First, oil demand, which we think may be close to bottoming out. Decline has been sharp and deep as Covid-19 takes its toll on global economic activity. Much of the world is currently in lockdown, with more than 65% of the world’s population under travel restrictions. Global air travel and car use have nosedived in many countries. The big hit has been on jet fuel demand (down 50% year-on-year) and gasoline (down 25%). Diesel and fuel oil – used to transport goods by truck, ship and rail – have held relatively steady.
The net effect will be April’s demand falling by an average of 15 million to 18 million b/d year on year, based on the early April forecast from our Macro Oils Service. It’s a big number but may be bigger still on certain days or weeks in April and May. Some estimates have suggested declines of 20 million b/d or more.
A key question is when the global economic recovery that’s needed to kick start oil demand growth again will begin. Right now, we appear to be in limbo. India, France and the UK, among other big economies, have extended lockdowns into May. Italy, Spain, Austria and others have started to ease restrictions while several US states are considering re-opening in May. There are early signs of US gasoline demand stabilising.
China though is the model to watch as it emerges from lockdown. It has already started ratcheting up crude purchases in April to supply a reviving economy.
Second, inventory is building at superfast rates globally. Cushing, Oklahoma, is a microcosm of the wider picture. Oil prices in Texas have incentivised producers to send crude to the Cushing hub; weak demand from refineries in the Mid-West and Gulf Coast have kept it there. Storage tanks are filling up rapidly – the three largest weekly builds on record were in consecutive weeks from late March, based on Genscape’s proprietary twice-weekly tank monitoring.
Cushing’s tightening storage capacity played a central role in WTI’s ignominious dive into negative prices on 20 April, ahead of the May contract expiry. Traders and financial players were effectively ambushed – having to pay counterparties up to US$37/bbl to roll out of their expiring May contracts and into June.
Storage globally will stay tight so long as oversupply persists. Genscape estimates Cushing‘s spare capacity of up to 15 million b/d will be full within weeks, and other landlocked hubs – the Caspian for one – are in a similar position. But in reality, producers everywhere are worried their crude won’t be able to find a home.
Third, the world is still awash with supply, which unlike demand is still close to pre-crisis levels. Low prices have killed off new investment but have not yet had much impact on production. So far, we estimate barely one million b/d of onstream non-OPEC production has been shut in.
These are sizeable volumes but, given the scale of the market oversupply, insignificant. We estimate over 15 million b/d of production generates negative operating cash flow, now that prices have lurched lower. As storage fills up, more wells and fields will be shut-in during the coming weeks. Curtailed volumes will quickly mount up.
What must happen for the oil market to start rebalancing and prices to recover? May is important for supply, with OPEC+ cuts taking effect and removing up to 7 million b/d from the market by the end of the month. We expect a slow return to “normal” life in H2 2020 to help demand recover, though most likely staying below pre-crisis levels.
A strong bounce in demand as the world emerges from recession will be needed to soak up the overhang of inventory, which threatens to reach record levels by summer. Nothing, however, can be taken for granted while coronavirus still poses a threat to economic – and social – activity.
Source: Wood Mackenzie
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Friday, 24 April 20
CHINA COAL PRODUCER YANZHOU COAL POSTS 9.6 PCT RISE IN 2019 NET PROFIT - XINHUA
China’s major coal producer Yanzhou Coal Mining Co., Ltd. said Thursday that its net profit saw a 9.6 percent rise in 2019.
Th ...
Tuesday, 21 April 20
INDONESIA ACCOUNTS FOR 19% OF JAPAN'S TOTAL COAL IMPORTS - BANCHERO COSTA
Coal trade in Asia is proving remarkably resilient this year, despite the global economic impact from COVID-19.
We have seen China&r ...
Tuesday, 21 April 20
COVID-19: CHARTERPARTY MATTERS FOR SHIPOWNERS - SKULD
KNOWLEDGE TO ELEVATE
Whilst the plight of cruise ships, stranded off shore with sick passengers and crew, may be dominating media headlines, t ...
Monday, 20 April 20
SUPRAMAX: A 52,000DWT SHIP FIXING AN INDONESIA COAL RUN TO CHINA AT $4400 - BALTIC BRIEFING
Capesize
This week was the strongest period seen for the Capesize market in several months. All routes globally succumbed to improved sentiment ...
Friday, 17 April 20
PANDEMIC TO BRING ASIA'S 2020 GROWTH TO HALT FOR 1ST TIME IN 60 YEARS - IMF: REUTERS
Asia’s economic growth this year will grind to a halt for the first time in 60 years, as the coronavirus crisis takes an “unprecedented ...
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- Bukit Asam (Persero) Tbk - Indonesia
- The University of Queensland
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Vedanta Resources Plc - India
- Anglo American - United Kingdom
- Goldman Sachs - Singapore
- Bhoruka Overseas - Indonesia
- ASAPP Information Group - India
- Standard Chartered Bank - UAE
- Aboitiz Power Corporation - Philippines
- IEA Clean Coal Centre - UK
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Australian Coal Association
- Borneo Indobara - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Commodity Traders Exchange
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Indo Tambangraya Megah - Indonesia
- The State Trading Corporation of India Ltd
- Kobexindo Tractors - Indoneisa
- Mintek Dendrill Indonesia
- CNBM International Corporation - China
- PNOC Exploration Corporation - Philippines
- Eastern Energy - Thailand
- Port Waratah Coal Services - Australia
- Makarim & Taira - Indonesia
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- GVK Power & Infra Limited - India
- Deloitte Consulting - India
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- SMC Global Power, Philippines
- Globalindo Alam Lestari - Indonesia
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Aditya Birla Group - India
- Rashtriya Ispat Nigam Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Coalindo Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Heidelberg Cement - Germany
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- New Zealand Coal & Carbon
- Dalmia Cement Bharat India
- Indika Energy - Indonesia
- TeaM Sual Corporation - Philippines
- Ministry of Finance - Indonesia
- Riau Bara Harum - Indonesia
- The Treasury - Australian Government
- Bukit Makmur.PT - Indonesia
- South Luzon Thermal Energy Corporation
- Alfred C Toepfer International GmbH - Germany
- Gujarat Sidhee Cement - India
- Samtan Co., Ltd - South Korea
- Power Finance Corporation Ltd., India
- Savvy Resources Ltd - HongKong
- Kartika Selabumi Mining - Indonesia
- CIMB Investment Bank - Malaysia
- TNB Fuel Sdn Bhd - Malaysia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Latin American Coal - Colombia
- Neyveli Lignite Corporation Ltd, - India
- Price Waterhouse Coopers - Russia
- Barasentosa Lestari - Indonesia
- Posco Energy - South Korea
- Cigading International Bulk Terminal - Indonesia
- Orica Australia Pty. Ltd.
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
- Minerals Council of Australia
- PTC India Limited - India
- Salva Resources Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Orica Mining Services - Indonesia
- Tata Chemicals Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Xindia Steels Limited - India
- Bharathi Cement Corporation - India
- Kepco SPC Power Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Star Paper Mills Limited - India
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Intertek Mineral Services - Indonesia
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Thai Mozambique Logistica
- Manunggal Multi Energi - Indonesia
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Global Business Power Corporation, Philippines
- Sakthi Sugars Limited - India
- IHS Mccloskey Coal Group - USA
- Baramulti Group, Indonesia
- Antam Resourcindo - Indonesia
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Krishnapatnam Port Company Ltd. - India
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bhushan Steel Limited - India
- Billiton Holdings Pty Ltd - Australia
- Global Coal Blending Company Limited - Australia
- Sarangani Energy Corporation, Philippines
- Indogreen Group - Indonesia
- Electricity Authority, New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- International Coal Ventures Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Bangladesh Power Developement Board
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- Essar Steel Hazira Ltd - India
- Central Java Power - Indonesia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Africa Commodities Group - South Africa
- Jindal Steel & Power Ltd - India
- Altura Mining Limited, Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Electricity Generating Authority of Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Romanian Commodities Exchange
- VISA Power Limited - India
- Maheswari Brothers Coal Limited - India
- Wilmar Investment Holdings
- Mjunction Services Limited - India
- Marubeni Corporation - India
- Kaltim Prima Coal - Indonesia
- Jaiprakash Power Ventures ltd
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Gujarat Electricity Regulatory Commission - India
- Kideco Jaya Agung - Indonesia
- Georgia Ports Authority, United States
- Malabar Cements Ltd - India
- India Bulls Power Limited - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- Planning Commission, India
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Oldendorff Carriers - Singapore
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- McConnell Dowell - Australia
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Formosa Plastics Group - Taiwan
- Bhatia International Limited - India
- Rio Tinto Coal - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Kalimantan Lumbung Energi - Indonesia
- Wood Mackenzie - Singapore
- Karaikal Port Pvt Ltd - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- Parry Sugars Refinery, India
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