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