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Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
 Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitch Ratings says. This is further supported by a commitment to improve compliance from those countries that were unable to reach full conformity with the cuts.
The OPEC+ countries have made radical production cuts in the stress scenario, but it may be more difficult to reach a consensus when the worst of the crisis is over. And it is unclear whether the recovery in oil prices to date is sustainable. Furthermore, demand and production in non-OPEC+ countries, notably the US, will continue to have a significant impact on the supply-demand balance and prices. We believe that a normalisation of oil inventory built up in 1H20 will take at least several months.
Crude oil prices rose significantly in May and continued to improve in early June, because the surplus has been reduced materially. A price differential between the physical and financial markets has disappeared, pointing to crude oil market tightening. We believe that a stress case scenario with prices falling significantly below USD30/bbl is now less likely. The market is likely to experience a production deficit in 2H20 due to gradually improving demand and reduced supply.
The OPEC+ cuts were the major contributor to market rebalancing. We estimate that the OPEC+ countries reduced production by around 7.5mmbpd in May compared to March. The cumulative OPEC+ cuts should exceed 9mmbpd in June as Saudi Arabia, Kuwait and UAE have committed to cut an additional 1.1mmbpd, while Iraq and Nigeria, which underperformed in May, have promised to improve compliance in June. A resumption of production in Libya, which is not subject to the OPEC+ deal, may increase supply but should be more than offset by additional cuts elsewhere.
Furthermore, production fell in the US as a result both of shut-ins and reduced drilling activity by almost 2mmbpd at end-May compared to March, while Canada cut around 1mmbpd. The number of active drilling rigs in the US declined by 64% compared to the beginning of the year. Production in North America may continue to shrink for a while, but the pace is likely to decelerate due to increased prices. We believe that at USD30/bbl, many producers should be able to stabilise production, while at USD40/bbl or above some would be tempted to increase output, which could limit price recovery.
Estimates suggest crude oil demand increased in May compared to April, and we believe it will improve further from June due to the gradual lifting of lockdown restrictions. Implied oil products consumption in the US improved from a 28% drop in April yoy to a 20% drop in May, driven mainly by increased gasoline consumption (a yoy decline of 25% in May compared to a 44% decline in April), while the consumption of jet fuel remained flat. We believe consumption patterns are similar in Europe, while demand in China bottomed out in February.
Demand recovery is now key in achieving balance in the oil market. It could be undermined in the event of a second coronavirus wave and the re-introduction of lockdowns, although it is not our base case. While consumption of gasoline and diesel could recover by the year-end, jet fuel may lag behind as international travel restrictions may remain in place and demand for business travel may be structurally impaired.
Our ratings are informed by companies’ projected performance at end-2021, rather than in 2020, provided their liquidity is adequate, as we rate “through the cycle”. While we may recalibrate our near-term oil price assumptions to the pace of market rebalancing, our ratings already assume that the market will recover gradually; therefore the most recent improvements will not prompt portfolio-wide rating actions.
Source: Fitch Ratings
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Thursday, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
Tuesday, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
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- Economic Council, Georgia
- Aditya Birla Group - India
- Leighton Contractors Pty Ltd - Australia
- Agrawal Coal Company - India
- Energy Link Ltd, New Zealand
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- The University of Queensland
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- The Treasury - Australian Government
- Pendopo Energi Batubara - Indonesia
- Attock Cement Pakistan Limited
- Karaikal Port Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Larsen & Toubro Limited - India
- Gujarat Sidhee Cement - India
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Thai Mozambique Logistica
- Simpson Spence & Young - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Ministry of Mines - Canada
- Electricity Generating Authority of Thailand
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Semirara Mining and Power Corporation, Philippines
- Indonesian Coal Mining Association
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Coalindo Energy - Indonesia
- Maheswari Brothers Coal Limited - India
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Sakthi Sugars Limited - India
- IEA Clean Coal Centre - UK
- Baramulti Group, Indonesia
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- India Bulls Power Limited - India
- Thiess Contractors Indonesia
- Bhoruka Overseas - Indonesia
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Gujarat Mineral Development Corp Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Lanco Infratech Ltd - India
- ASAPP Information Group - India
- Minerals Council of Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Jaiprakash Power Ventures ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Barasentosa Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Standard Chartered Bank - UAE
- Trasteel International SA, Italy
- The State Trading Corporation of India Ltd
- Sical Logistics Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Heidelberg Cement - Germany
- Chettinad Cement Corporation Ltd - India
- Deloitte Consulting - India
- Romanian Commodities Exchange
- Parry Sugars Refinery, India
- Indian Oil Corporation Limited
- VISA Power Limited - India
- Madhucon Powers Ltd - India
- SMG Consultants - Indonesia
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Bahari Cakrawala Sebuku - Indonesia
- White Energy Company Limited
- Meralco Power Generation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- McConnell Dowell - Australia
- Uttam Galva Steels Limited - India
- New Zealand Coal & Carbon
- Bhatia International Limited - India
- Global Coal Blending Company Limited - Australia
- Bulk Trading Sa - Switzerland
- Sinarmas Energy and Mining - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- Rio Tinto Coal - Australia
- Georgia Ports Authority, United States
- Port Waratah Coal Services - Australia
- Banpu Public Company Limited - Thailand
- SMC Global Power, Philippines
- Australian Commodity Traders Exchange
- Directorate General of MIneral and Coal - Indonesia
- Posco Energy - South Korea
- Bangladesh Power Developement Board
- International Coal Ventures Pvt Ltd - India
- Dalmia Cement Bharat India
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Wood Mackenzie - Singapore
- Jorong Barutama Greston.PT - Indonesia
- Therma Luzon, Inc, Philippines
- Videocon Industries ltd - India
- Star Paper Mills Limited - India
- Formosa Plastics Group - Taiwan
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Borneo Indobara - Indonesia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Iligan Light & Power Inc, Philippines
- Mercator Lines Limited - India
- Anglo American - United Kingdom
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Coal and Oil Company - UAE
- Ambuja Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- PowerSource Philippines DevCo
- Bukit Asam (Persero) Tbk - Indonesia
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rashtriya Ispat Nigam Limited - India
- Grasim Industreis Ltd - India
- Indogreen Group - Indonesia
- Sojitz Corporation - Japan
- Siam City Cement PLC, Thailand
- Renaissance Capital - South Africa
- Aboitiz Power Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Mercuria Energy - Indonesia
- Independent Power Producers Association of India
- Global Business Power Corporation, Philippines
- Orica Mining Services - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Coastal Gujarat Power Limited - India
- Sree Jayajothi Cements Limited - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Manunggal Multi Energi - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- San Jose City I Power Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Merrill Lynch Commodities Europe
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Xindia Steels Limited - India
- Planning Commission, India
- OPG Power Generation Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Salva Resources Pvt Ltd - India
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Petron Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Price Waterhouse Coopers - Russia
- Parliament of New Zealand
- Chamber of Mines of South Africa
- Bukit Baiduri Energy - Indonesia
- Electricity Authority, New Zealand
- Kapuas Tunggal Persada - Indonesia
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- GAC Shipping (India) Pvt Ltd
- IHS Mccloskey Coal Group - USA
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Central Electricity Authority - India
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Eastern Coal Council - USA
- Power Finance Corporation Ltd., India
- Billiton Holdings Pty Ltd - Australia
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