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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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- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- IHS Mccloskey Coal Group - USA
- Minerals Council of Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Mines - Canada
- Directorate Of Revenue Intelligence - India
- Indian Oil Corporation Limited
- LBH Netherlands Bv - Netherlands
- Central Java Power - Indonesia
- TeaM Sual Corporation - Philippines
- Karbindo Abesyapradhi - Indoneisa
- Coal and Oil Company - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Bulk Trading Sa - Switzerland
- Sakthi Sugars Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Edison Trading Spa - Italy
- Ceylon Electricity Board - Sri Lanka
- Antam Resourcindo - Indonesia
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- PNOC Exploration Corporation - Philippines
- Ind-Barath Power Infra Limited - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Asmin Koalindo Tuhup - Indonesia
- Kobexindo Tractors - Indoneisa
- CIMB Investment Bank - Malaysia
- Semirara Mining Corp, Philippines
- Vedanta Resources Plc - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
- Bhushan Steel Limited - India
- Ministry of Finance - Indonesia
- Formosa Plastics Group - Taiwan
- Bahari Cakrawala Sebuku - Indonesia
- Altura Mining Limited, Indonesia
- Straits Asia Resources Limited - Singapore
- Petron Corporation, Philippines
- Bukit Baiduri Energy - Indonesia
- Jaiprakash Power Ventures ltd
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Cigading International Bulk Terminal - Indonesia
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Tamil Nadu electricity Board
- Global Business Power Corporation, Philippines
- Bayan Resources Tbk. - Indonesia
- Banpu Public Company Limited - Thailand
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Mintek Dendrill Indonesia
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Goldman Sachs - Singapore
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- AsiaOL BioFuels Corp., Philippines
- Eastern Energy - Thailand
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Wilmar Investment Holdings
- Therma Luzon, Inc, Philippines
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Metalloyd Limited - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Riau Bara Harum - Indonesia
- Siam City Cement PLC, Thailand
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- The Treasury - Australian Government
- SN Aboitiz Power Inc, Philippines
- Larsen & Toubro Limited - India
- The State Trading Corporation of India Ltd
- Rio Tinto Coal - Australia
- Manunggal Multi Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Kumho Petrochemical, South Korea
- Karaikal Port Pvt Ltd - India
- Bhoruka Overseas - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Australian Coal Association
- Intertek Mineral Services - Indonesia
- Indonesian Coal Mining Association
- Jindal Steel & Power Ltd - India
- Posco Energy - South Korea
- Global Green Power PLC Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Africa Commodities Group - South Africa
- London Commodity Brokers - England
- Electricity Generating Authority of Thailand
- Grasim Industreis Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Attock Cement Pakistan Limited
- Indian Energy Exchange, India
- GVK Power & Infra Limited - India
- New Zealand Coal & Carbon
- Indika Energy - Indonesia
- The University of Queensland
- Miang Besar Coal Terminal - Indonesia
- Interocean Group of Companies - India
- Eastern Coal Council - USA
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Mining Services - Indonesia
- Xindia Steels Limited - India
- Merrill Lynch Commodities Europe
- Binh Thuan Hamico - Vietnam
- Parliament of New Zealand
- Samtan Co., Ltd - South Korea
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Aditya Birla Group - India
- Latin American Coal - Colombia
- Oldendorff Carriers - Singapore
- Carbofer General Trading SA - India
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- OPG Power Generation Pvt Ltd - India
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Energy Development Corp, Philippines
- Lanco Infratech Ltd - India
- Salva Resources Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- Videocon Industries ltd - India
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Timah Investasi Mineral - Indoneisa
- Sical Logistics Limited - India
- Economic Council, Georgia
- Georgia Ports Authority, United States
- India Bulls Power Limited - India
- Agrawal Coal Company - India
- Semirara Mining and Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Maheswari Brothers Coal Limited - India
- MS Steel International - UAE
- White Energy Company Limited
- Kohat Cement Company Ltd. - Pakistan
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Baramulti Group, Indonesia
- Chamber of Mines of South Africa
- Chettinad Cement Corporation Ltd - India
- Electricity Authority, New Zealand
- Wood Mackenzie - Singapore
- Mercuria Energy - Indonesia
- Siam City Cement - Thailand
- Star Paper Mills Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Thiess Contractors Indonesia
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Uttam Galva Steels Limited - India
- Marubeni Corporation - India
- Trasteel International SA, Italy
- Kalimantan Lumbung Energi - Indonesia
- Parry Sugars Refinery, India
- Renaissance Capital - South Africa
- Barasentosa Lestari - Indonesia
- ICICI Bank Limited - India
- Billiton Holdings Pty Ltd - Australia
- Meralco Power Generation, Philippines
- Sree Jayajothi Cements Limited - India
- Kideco Jaya Agung - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bharathi Cement Corporation - India
- PowerSource Philippines DevCo
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Australian Commodity Traders Exchange
- Gujarat Sidhee Cement - India
- Medco Energi Mining Internasional
- Planning Commission, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- GMR Energy Limited - India
- Romanian Commodities Exchange
- Ambuja Cements Ltd - India
- Aboitiz Power Corporation - Philippines
- Neyveli Lignite Corporation Ltd, - India
- European Bulk Services B.V. - Netherlands
- IEA Clean Coal Centre - UK
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