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Wednesday, 08 October 14
OIL COULD FALL TO USD80 BEFORE SHALE SUPPLY RESPONSE - FITCH
 COALspot.com: Brent oil could fall as low as USD80 a barrel before triggering a self-correcting supply response with shale-oil drillers cutting investment in new wells, Fitch Ratings says.
According to Fitch, the steep rate at which production from shale wells declines mean companies have to keep drilling new wells to maintain production. We estimate median full-cycle costs for US exploration and production companies have fallen to about USD70. The marginal barrel, not the median one, balances supply and demand and determines price, so the point at which capex falls will probably be higher. Exactly where depends on expectations of future price. Anecdotally we understand that at USD90/bbl capex is likely to continue at full speed, while at USD75-80/bbl it may fall. This would have a relatively rapid impact on production, suggesting a notional price floor.
Fitch noted that, in the short term we consider a resurgence of supply disruptions and positive action from OPEC the most likely catalysts for a rebound in prices. But without these, further declines might be possible, especially if evidence grows of further weakening of global demand or increasing OPEC spare capacity.
The notional floor is well below the USD100/bbl level that many market participants thought was here to stay earlier this year. But in the last two weeks Brent crude has fallen - and stayed - significantly below USD100/bbl, and WTI crude has fallen below USD90/bbl for the first time since 2012. The difference between the two benchmarks has shrunk to around USD2.50, and forward curves also indicate weakness, Fitch noted.
The key supports for USD100+ oil were growing demand, tight OPEC spare capacity, increasing cost of supply, particularly combined with rapid depletion rates for shale wells, OPEC's desire for high oil prices, and political and security issues in key regions.
Fitch further noted, demand has been the clearest change in the short term, but is also the element that may most reliably reverse in the long term. If China and India grow as expected demand could rise by up to a third in the next 20-30 years - but this does not preclude short-term weakness.
OPEC has declared support for prices at USD100/bbl. Some members would prefer this price or higher, but we estimate Saudi Arabia, which would have to absorb the greatest production cuts, would be able to balance its budget at USD94/bbl. A lot will therefore ride on the outcome of OPEC's next meeting in November, said Fitch.
The geopolitical and security picture has not resulted in the predicted fall in production. Progress is being made on Iranian sanctions; Iraqi production has remained robust; Libyan production is starting to recover. Market sentiment suggests the effects of these situations will remain benign - but there is potential for this to reverse quite rapidly.
We do not expect rating implications from the price dip in the short term. Our corporate and sovereign ratings use price assumptions that drop over time, and companies and governments have shown themselves able to adjust spending to weaker prices if necessary. The rising US dollar, which has strengthened against the euro by around 10% since the middle of the year, is also contributing to weakness in oil prices when expressed in dollar terms, as our price decks are.
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Friday, 10 October 14
INDONESIA TO DEVELOP DOWNSTREAM COAL INDUSTRY - JP
The government is planning to launch a program to develop the downstream coal industry to increase the commodity’s added value, an official h ...
Friday, 10 October 14
U.S. PRODUCED 83.2 MMST OF COAL IN SEPTEMBER, SAYS EIA
COALspot.com – United States the world's one of largest coal producers, produced approximately 18.6 million short tons (mmst) of coal in ...
Thursday, 09 October 14
CAPESIZE MARKET HAS CONTINUED TO SHOW WEAKNESS - FEARNLEYS
Handy
We mentioned last week that after several weeks of rate increase for the Supras, the bigger Panamaxes started to snap up better paying Supr ...
Thursday, 09 October 14
SHIPPING REMAINS CHALLENGED AS GLOBAL GROWTH DISAPPOINTS - BIMCO
The global shipping industry finds no grace from much stronger economic activity going forward, as the global recovery remains fragile and uneven. ...
Wednesday, 08 October 14
CAPES RATE FOR THE W. AUSTRALIA TO CHINA VOYAGE MOVED TO BELOW $8/MT - INTERMODAL
The Dry Bulk market remained under pressure last week, with rates for Capes remaining on the red while those for Panamaxes managed to outperform th ...
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- Videocon Industries ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Ceylon Electricity Board - Sri Lanka
- Cigading International Bulk Terminal - Indonesia
- Intertek Mineral Services - Indonesia
- Tamil Nadu electricity Board
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Commonwealth Bank - Australia
- Sarangani Energy Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Chamber of Mines of South Africa
- Borneo Indobara - Indonesia
- GVK Power & Infra Limited - India
- Central Java Power - Indonesia
- Coalindo Energy - Indonesia
- Aboitiz Power Corporation - Philippines
- Mintek Dendrill Indonesia
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Lanco Infratech Ltd - India
- Economic Council, Georgia
- Madhucon Powers Ltd - India
- Wilmar Investment Holdings
- Sojitz Corporation - Japan
- Indika Energy - Indonesia
- Vedanta Resources Plc - India
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Simpson Spence & Young - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Interocean Group of Companies - India
- Riau Bara Harum - Indonesia
- Bukit Makmur.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Coal Council - USA
- Energy Link Ltd, New Zealand
- Indian Oil Corporation Limited
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Orica Mining Services - Indonesia
- White Energy Company Limited
- Bharathi Cement Corporation - India
- Sical Logistics Limited - India
- Australian Commodity Traders Exchange
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Mercuria Energy - Indonesia
- Savvy Resources Ltd - HongKong
- Kapuas Tunggal Persada - Indonesia
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Electricity Generating Authority of Thailand
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Ministry of Transport, Egypt
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- Leighton Contractors Pty Ltd - Australia
- Kalimantan Lumbung Energi - Indonesia
- Siam City Cement - Thailand
- Parry Sugars Refinery, India
- Trasteel International SA, Italy
- Marubeni Corporation - India
- Bulk Trading Sa - Switzerland
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Gujarat Sidhee Cement - India
- Electricity Authority, New Zealand
- GN Power Mariveles Coal Plant, Philippines
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- India Bulls Power Limited - India
- VISA Power Limited - India
- Ministry of Mines - Canada
- ASAPP Information Group - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Formosa Plastics Group - Taiwan
- Kartika Selabumi Mining - Indonesia
- Cement Manufacturers Association - India
- Thai Mozambique Logistica
- Binh Thuan Hamico - Vietnam
- Singapore Mercantile Exchange
- Krishnapatnam Port Company Ltd. - India
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Petron Corporation, Philippines
- MS Steel International - UAE
- Baramulti Group, Indonesia
- TeaM Sual Corporation - Philippines
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Kohat Cement Company Ltd. - Pakistan
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Sindya Power Generating Company Private Ltd
- Kideco Jaya Agung - Indonesia
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Globalindo Alam Lestari - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- Antam Resourcindo - Indonesia
- IHS Mccloskey Coal Group - USA
- Global Business Power Corporation, Philippines
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Aditya Birla Group - India
- Neyveli Lignite Corporation Ltd, - India
- Barasentosa Lestari - Indonesia
- Bhushan Steel Limited - India
- Ind-Barath Power Infra Limited - India
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- Dalmia Cement Bharat India
- Kaltim Prima Coal - Indonesia
- Metalloyd Limited - United Kingdom
- Jaiprakash Power Ventures ltd
- IEA Clean Coal Centre - UK
- Energy Development Corp, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- ICICI Bank Limited - India
- Minerals Council of Australia
- Romanian Commodities Exchange
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- Maheswari Brothers Coal Limited - India
- Goldman Sachs - Singapore
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jindal Steel & Power Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- London Commodity Brokers - England
- PTC India Limited - India
- Timah Investasi Mineral - Indoneisa
- Bayan Resources Tbk. - Indonesia
- San Jose City I Power Corp, Philippines
- CIMB Investment Bank - Malaysia
- Africa Commodities Group - South Africa
- Miang Besar Coal Terminal - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indian Energy Exchange, India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Tata Chemicals Ltd - India
- Meenaskhi Energy Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- SMG Consultants - Indonesia
- Edison Trading Spa - Italy
- Uttam Galva Steels Limited - India
- Billiton Holdings Pty Ltd - Australia
- Planning Commission, India
- Central Electricity Authority - India
- Heidelberg Cement - Germany
- Sree Jayajothi Cements Limited - India
- Salva Resources Pvt Ltd - India
- Bhatia International Limited - India
- Standard Chartered Bank - UAE
- Larsen & Toubro Limited - India
- Directorate Of Revenue Intelligence - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
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