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Tuesday, 03 November 15
EU OIL MAJORS FACE FURTHER EARNINGS DECLINE IN Q415 - FITCH RATINGS
 The sharp drop in major European oil companies' third-quarter profits is likely to be extended in the fourth quarter as refining margins, which had cushioned some of the blow from low oil prices, have fallen steeply, Fitch Ratings says.
According to Fitch, with little prospect of a near-term oil-price recovery and refining margins likely to remain thin, companies' ability to stabilize or even grow profits in 2016 will depend on how quickly cost-cutting measures and cost deflation in the supply chain feed through to the bottom line.
Royal Dutch Shell, Total, BP, Eni and BG all reported 3Q15 results last week. On average, their 3Q15 EBITDA fell by 26% compared with 2Q15, and cash flow from operations by 30%. The main reason was lower oil prices as Brent slid 19% from an average USD63/bbl in 2Q15 to USD51/bbl in 3Q15. The majors' 9M15 EBITDA dropped 39%, and cash from operations fell 38%, as Brent plummeted by 48%, from an average of USD107/bbl in 9M14 to USD56 in 9M15.
4Q15 may be even more painful for integrated companies as refining margins have fallen since the middle of the third quarter, which is likely to drag on profits in their downstream operations. In October, Brent Crack Rotterdam Refinery Margin, as calculated by Thomson Reuters, averaged USD4.0/bbl, compared with USD7.9 in 3Q15 and USD8.1 in 2Q15.
Part of this decline is likely to be a seasonal effect from the end of the main driving season in the northern hemisphere. But we also expect an underlying correction in margins due to overcapacity in European refining and strong competition from Middle Eastern, Russian and US refineries, which generally have access to cheaper feedstock and lower energy costs, says Fitch. BG may be the only exception. We expect its earnings to rise in 4Q15 vs 3Q15 provided oil prices do not fall. This is because BG has no exposure to refining and its production is rising due to operations ramping up in Australia and Brazil.
Apart from oil prices, majors' upstream profits will be increasingly affected by the scale of cost deflation. Oil majors are reducing costs and in some parts of the value chain, the fall has already been substantial. For example, in the offshore drilling industry the cost of hiring a rig has fallen by 30%-40% yoy, according to various sources. According to Total, rates for many other services, including marine logistics and well services, are down up to 20%. Overall, however, industry deflation is still insufficient to materially affect profits, as negotiating new contracts may take some time. We expect the impact to be more pronounced in 2016 as oil majors are now re-negotiating prices with their contractors and are aiming to reduce staff costs and streamline operations.
To balance their cash flows, oil majors are reducing capex and continuing divestments. Majors' ability to keep these commitments without jeopardizing the level and quality of reserves and production will drive their ratings in the next one or two years. For example, BP said its 2015-2017 capex will be USD17bn-19bn a year, compared with the original 2015 guidance of USD24bn-26bn announced a year ago. Total's guidance for 2015 is unchanged at USD23bn-24bn, but the company said capex will go down to USD20bn-21bn in 2016 and USD17bn-19bn a year in 2017-2019. Shell said it will prioritize debt reduction over dividends and capex.
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Monday, 12 October 15
BDI WEIGHED DOWN BY CAPE
COALspot.com: The BDI (Baltic Dry Index) has come back down again this week. The BDI is a benchmark index used to assess the overall cost of moving ...
Sunday, 11 October 15
TANKER SHIPPING: MORE OPTIMISM IN SIGHT FOR TANKERS IN THE WINTER SEASON - BIMCO
Demand:
2015 has been the year of the tanker. The fundamental improvements with slow supply-side growth for some years coupled with low oil pri ...
Friday, 09 October 15
US WEEKLY COAL OUTPUT UP 1.2 PERCENT TO 17.7 MMST
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 17.7 million shor ...
Thursday, 08 October 15
CAPESIZE: MOST PEOPLE AGREE A SPIKE IN RATES WILL HAPPEN; WHEN, HOW LONG AND HOW SUBSTANTIAL? - FEARNLEYS
Cape
Depressives start of the fourth quarter, with c3 approaching USD 12 pmt and c5 presently in the mind 5's. According to Fearnleys ship br ...
Wednesday, 07 October 15
U.S. COAL EXPORTS FOR THE FIRST SEVEN MONTHS DOWN 21 PER CENT COMPARED WITH THE SAME PERIOD IN 2014 - EIA
Coal Supply
Lower U.S.’s domestic coal consumption and reduced exports contribute to a forecast decline of 89 million short tons (M ...
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- Billiton Holdings Pty Ltd - Australia
- Savvy Resources Ltd - HongKong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Salva Resources Pvt Ltd - India
- Ministry of Finance - Indonesia
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- Meenaskhi Energy Private Limited - India
- Port Waratah Coal Services - Australia
- Essar Steel Hazira Ltd - India
- Makarim & Taira - Indonesia
- Straits Asia Resources Limited - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Romanian Commodities Exchange
- Indian Oil Corporation Limited
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Carbofer General Trading SA - India
- White Energy Company Limited
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Orica Australia Pty. Ltd.
- GAC Shipping (India) Pvt Ltd
- Singapore Mercantile Exchange
- Jorong Barutama Greston.PT - Indonesia
- Star Paper Mills Limited - India
- Indo Tambangraya Megah - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- PowerSource Philippines DevCo
- Mercator Lines Limited - India
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Central Java Power - Indonesia
- Planning Commission, India
- Semirara Mining and Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Aboitiz Power Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Global Business Power Corporation, Philippines
- Standard Chartered Bank - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Eastern Coal Council - USA
- Electricity Authority, New Zealand
- Marubeni Corporation - India
- Independent Power Producers Association of India
- Baramulti Group, Indonesia
- Georgia Ports Authority, United States
- CIMB Investment Bank - Malaysia
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- Wilmar Investment Holdings
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- SMG Consultants - Indonesia
- Bhatia International Limited - India
- Central Electricity Authority - India
- CNBM International Corporation - China
- Minerals Council of Australia
- Banpu Public Company Limited - Thailand
- VISA Power Limited - India
- Interocean Group of Companies - India
- PetroVietnam Power Coal Import and Supply Company
- Kideco Jaya Agung - Indonesia
- Orica Mining Services - Indonesia
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Parliament of New Zealand
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- SMC Global Power, Philippines
- European Bulk Services B.V. - Netherlands
- Vedanta Resources Plc - India
- London Commodity Brokers - England
- Bahari Cakrawala Sebuku - Indonesia
- Kartika Selabumi Mining - Indonesia
- GMR Energy Limited - India
- SN Aboitiz Power Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- Uttam Galva Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Global Coal Blending Company Limited - Australia
- Power Finance Corporation Ltd., India
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- Thai Mozambique Logistica
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Latin American Coal - Colombia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- Renaissance Capital - South Africa
- Global Green Power PLC Corporation, Philippines
- Pendopo Energi Batubara - Indonesia
- Bangladesh Power Developement Board
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- The Treasury - Australian Government
- Thiess Contractors Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhushan Steel Limited - India
- Ministry of Mines - Canada
- Altura Mining Limited, Indonesia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Tata Chemicals Ltd - India
- Electricity Generating Authority of Thailand
- Edison Trading Spa - Italy
- Vizag Seaport Private Limited - India
- Indian Energy Exchange, India
- Wood Mackenzie - Singapore
- Aditya Birla Group - India
- Lanco Infratech Ltd - India
- Deloitte Consulting - India
- New Zealand Coal & Carbon
- Miang Besar Coal Terminal - Indonesia
- MS Steel International - UAE
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- PTC India Limited - India
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
- Indika Energy - Indonesia
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- Cigading International Bulk Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Ceylon Electricity Board - Sri Lanka
- The State Trading Corporation of India Ltd
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Commonwealth Bank - Australia
- Bhoruka Overseas - Indonesia
- Chamber of Mines of South Africa
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Tamil Nadu electricity Board
- Coastal Gujarat Power Limited - India
- Formosa Plastics Group - Taiwan
- Posco Energy - South Korea
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Karaikal Port Pvt Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- GVK Power & Infra Limited - India
- Antam Resourcindo - Indonesia
- India Bulls Power Limited - India
- Price Waterhouse Coopers - Russia
- Jaiprakash Power Ventures ltd
- San Jose City I Power Corp, Philippines
- The University of Queensland
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Maharashtra Electricity Regulatory Commission - India
- Neyveli Lignite Corporation Ltd, - India
- Dalmia Cement Bharat India
- Pipit Mutiara Jaya. PT, Indonesia
- Toyota Tsusho Corporation, Japan
- Sakthi Sugars Limited - India
- Sree Jayajothi Cements Limited - India
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- Directorate Of Revenue Intelligence - India
- Riau Bara Harum - Indonesia
- PNOC Exploration Corporation - Philippines
- Rashtriya Ispat Nigam Limited - India
- Goldman Sachs - Singapore
- International Coal Ventures Pvt Ltd - India
- Indogreen Group - Indonesia
- ICICI Bank Limited - India
- Iligan Light & Power Inc, Philippines
- Indonesian Coal Mining Association
- Kalimantan Lumbung Energi - Indonesia
- Australian Commodity Traders Exchange
- AsiaOL BioFuels Corp., Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Medco Energi Mining Internasional
- Ministry of Transport, Egypt
- Gujarat Electricity Regulatory Commission - India
- Madhucon Powers Ltd - India
- Grasim Industreis Ltd - India
- OPG Power Generation Pvt Ltd - India
- Anglo American - United Kingdom
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Gujarat Sidhee Cement - India
- Leighton Contractors Pty Ltd - Australia
- Sical Logistics Limited - India
- Binh Thuan Hamico - Vietnam
- Australian Coal Association
- Merrill Lynch Commodities Europe
- Parry Sugars Refinery, India
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Coalindo Energy - Indonesia
- Coal and Oil Company - UAE
- Attock Cement Pakistan Limited
- Directorate General of MIneral and Coal - Indonesia
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