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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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Wednesday, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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- Mjunction Services Limited - India
- Xindia Steels Limited - India
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Savvy Resources Ltd - HongKong
- Kepco SPC Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- Dalmia Cement Bharat India
- Semirara Mining and Power Corporation, Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Cement Manufacturers Association - India
- Ministry of Mines - Canada
- European Bulk Services B.V. - Netherlands
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Lanco Infratech Ltd - India
- Indo Tambangraya Megah - Indonesia
- Singapore Mercantile Exchange
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- The State Trading Corporation of India Ltd
- Romanian Commodities Exchange
- Indonesian Coal Mining Association
- Manunggal Multi Energi - Indonesia
- Bhoruka Overseas - Indonesia
- Rio Tinto Coal - Australia
- Vedanta Resources Plc - India
- Karbindo Abesyapradhi - Indoneisa
- Kobexindo Tractors - Indoneisa
- SMC Global Power, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Tamil Nadu electricity Board
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Jindal Steel & Power Ltd - India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Agrawal Coal Company - India
- Goldman Sachs - Singapore
- Cigading International Bulk Terminal - Indonesia
- Ministry of Finance - Indonesia
- Trasteel International SA, Italy
- Merrill Lynch Commodities Europe
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Attock Cement Pakistan Limited
- Videocon Industries ltd - India
- Kapuas Tunggal Persada - Indonesia
- Parliament of New Zealand
- Deloitte Consulting - India
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Economic Council, Georgia
- Medco Energi Mining Internasional
- Interocean Group of Companies - India
- PowerSource Philippines DevCo
- Chamber of Mines of South Africa
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Kideco Jaya Agung - Indonesia
- Coastal Gujarat Power Limited - India
- Intertek Mineral Services - Indonesia
- Bukit Baiduri Energy - Indonesia
- Sojitz Corporation - Japan
- The University of Queensland
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Gujarat Electricity Regulatory Commission - India
- Leighton Contractors Pty Ltd - Australia
- Miang Besar Coal Terminal - Indonesia
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Bhatia International Limited - India
- Sindya Power Generating Company Private Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Karaikal Port Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Larsen & Toubro Limited - India
- Banpu Public Company Limited - Thailand
- Maheswari Brothers Coal Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Marubeni Corporation - India
- Ambuja Cements Ltd - India
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Global Green Power PLC Corporation, Philippines
- Coal and Oil Company - UAE
- GN Power Mariveles Coal Plant, Philippines
- Georgia Ports Authority, United States
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Gujarat Sidhee Cement - India
- India Bulls Power Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- GMR Energy Limited - India
- Uttam Galva Steels Limited - India
- Meenaskhi Energy Private Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Antam Resourcindo - Indonesia
- Ind-Barath Power Infra Limited - India
- Mintek Dendrill Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Kartika Selabumi Mining - Indonesia
- Tata Chemicals Ltd - India
- Sarangani Energy Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Straits Asia Resources Limited - Singapore
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- White Energy Company Limited
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Standard Chartered Bank - UAE
- Bangladesh Power Developement Board
- Ceylon Electricity Board - Sri Lanka
- Formosa Plastics Group - Taiwan
- Thiess Contractors Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Malabar Cements Ltd - India
- Energy Development Corp, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Latin American Coal - Colombia
- IEA Clean Coal Centre - UK
- Directorate Of Revenue Intelligence - India
- Pendopo Energi Batubara - Indonesia
- Siam City Cement PLC, Thailand
- Aditya Birla Group - India
- PNOC Exploration Corporation - Philippines
- Commonwealth Bank - Australia
- SN Aboitiz Power Inc, Philippines
- Siam City Cement - Thailand
- Bayan Resources Tbk. - Indonesia
- Indian Energy Exchange, India
- SMG Consultants - Indonesia
- LBH Netherlands Bv - Netherlands
- Timah Investasi Mineral - Indoneisa
- McConnell Dowell - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Edison Trading Spa - Italy
- Krishnapatnam Port Company Ltd. - India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Makarim & Taira - Indonesia
- MS Steel International - UAE
- Barasentosa Lestari - Indonesia
- Sinarmas Energy and Mining - Indonesia
- ASAPP Information Group - India
- Indogreen Group - Indonesia
- South Luzon Thermal Energy Corporation
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- VISA Power Limited - India
- Bulk Trading Sa - Switzerland
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Price Waterhouse Coopers - Russia
- Wilmar Investment Holdings
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Africa Commodities Group - South Africa
- Global Business Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Chettinad Cement Corporation Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Baramulti Group, Indonesia
- Planning Commission, India
- Mercuria Energy - Indonesia
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Madhucon Powers Ltd - India
- Central Java Power - Indonesia
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- PTC India Limited - India
- Iligan Light & Power Inc, Philippines
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- PetroVietnam Power Coal Import and Supply Company
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