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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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Wednesday, 07 October 15
SHIPPING MARKET INSIGHT - INTERMODAL
Sale and Purchase activity during the first three quarters of 2015 and more specifically during the summer season has been rather remarkable. 421 v ...
Wednesday, 07 October 15
INDONESIA COAL SWAPS HAVE CONTINUED TO DECLINE, FALLING ALMOST 7% M-M
COALspot.com: Indonesian coal swap for delivery Q4 2015 declined month on month and week over week.
The Q4 swap declined $ 2.23 (-5.51%) per t ...
Tuesday, 06 October 15
THE IMPACT OF LOW OIL PRICE ON THE SHIPPING INDUSTRY - LITERATED
The fall in global oil prices over the last one year has been beneficial to the shipping industry. The demand for oil tankers has picked up and the ...
Tuesday, 06 October 15
FOB RICHARDS BAY COAL SWAPS PLUNGE MORE THAN 6 PER CENT M-M
COALspot.com: API4 FOB Richards Bay Coal swap for delivery Q4' 2015 declined week over week and month over month.
The Q4 swap was down US$ ...
Monday, 05 October 15
Q1 & Q2 2016 DELIVERY SWAPS DECLINED M-M AND W-W THIS PAST WEEK
COALspot.com: API 5 FOB Newcastle Coal swap for Q4’ 2015 delivery decreased $0.36 per ton (0.85%) month over month to US$ 42.12 per ton. The ...
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- Georgia Ports Authority, United States
- European Bulk Services B.V. - Netherlands
- Electricity Generating Authority of Thailand
- Indo Tambangraya Megah - Indonesia
- Siam City Cement - Thailand
- Orica Australia Pty. Ltd.
- Merrill Lynch Commodities Europe
- Standard Chartered Bank - UAE
- Ind-Barath Power Infra Limited - India
- LBH Netherlands Bv - Netherlands
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Grasim Industreis Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Wilmar Investment Holdings
- Heidelberg Cement - Germany
- SMG Consultants - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Indonesian Coal Mining Association
- Interocean Group of Companies - India
- Makarim & Taira - Indonesia
- Mjunction Services Limited - India
- Semirara Mining and Power Corporation, Philippines
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- The State Trading Corporation of India Ltd
- Africa Commodities Group - South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Mercator Lines Limited - India
- Straits Asia Resources Limited - Singapore
- Global Green Power PLC Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Planning Commission, India
- Energy Development Corp, Philippines
- Uttam Galva Steels Limited - India
- ICICI Bank Limited - India
- Central Java Power - Indonesia
- Deloitte Consulting - India
- Bukit Makmur.PT - Indonesia
- Tata Chemicals Ltd - India
- Marubeni Corporation - India
- Sree Jayajothi Cements Limited - India
- San Jose City I Power Corp, Philippines
- Borneo Indobara - Indonesia
- Parliament of New Zealand
- Asmin Koalindo Tuhup - Indonesia
- Banpu Public Company Limited - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Lanco Infratech Ltd - India
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- Bhatia International Limited - India
- Petron Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Salva Resources Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- Maheswari Brothers Coal Limited - India
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- MS Steel International - UAE
- Sindya Power Generating Company Private Ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Kapuas Tunggal Persada - Indonesia
- PowerSource Philippines DevCo
- Singapore Mercantile Exchange
- Sinarmas Energy and Mining - Indonesia
- Kobexindo Tractors - Indoneisa
- Orica Mining Services - Indonesia
- Antam Resourcindo - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Rio Tinto Coal - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Madhucon Powers Ltd - India
- McConnell Dowell - Australia
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Simpson Spence & Young - Indonesia
- Altura Mining Limited, Indonesia
- Ceylon Electricity Board - Sri Lanka
- The University of Queensland
- Independent Power Producers Association of India
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Pendopo Energi Batubara - Indonesia
- Romanian Commodities Exchange
- Ministry of Mines - Canada
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Miang Besar Coal Terminal - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- IHS Mccloskey Coal Group - USA
- IEA Clean Coal Centre - UK
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- CNBM International Corporation - China
- Electricity Authority, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Jaiprakash Power Ventures ltd
- Australian Coal Association
- TeaM Sual Corporation - Philippines
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- India Bulls Power Limited - India
- Malabar Cements Ltd - India
- Savvy Resources Ltd - HongKong
- Formosa Plastics Group - Taiwan
- Latin American Coal - Colombia
- Alfred C Toepfer International GmbH - Germany
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Xindia Steels Limited - India
- Ministry of Finance - Indonesia
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Aboitiz Power Corporation - Philippines
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- South Luzon Thermal Energy Corporation
- AsiaOL BioFuels Corp., Philippines
- Edison Trading Spa - Italy
- Dalmia Cement Bharat India
- Ministry of Transport, Egypt
- Petrochimia International Co. Ltd.- Taiwan
- Chamber of Mines of South Africa
- Sical Logistics Limited - India
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Oil Corporation Limited
- Bharathi Cement Corporation - India
- Trasteel International SA, Italy
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- Bayan Resources Tbk. - Indonesia
- Minerals Council of Australia
- PetroVietnam Power Coal Import and Supply Company
- Semirara Mining Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jindal Steel & Power Ltd - India
- Bulk Trading Sa - Switzerland
- Eastern Coal Council - USA
- Bangladesh Power Developement Board
- Essar Steel Hazira Ltd - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Coal and Oil Company - UAE
- GVK Power & Infra Limited - India
- Eastern Energy - Thailand
- Sakthi Sugars Limited - India
- Samtan Co., Ltd - South Korea
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- VISA Power Limited - India
- Directorate Of Revenue Intelligence - India
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Toyota Tsusho Corporation, Japan
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Global Coal Blending Company Limited - Australia
- PNOC Exploration Corporation - Philippines
- SMC Global Power, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Indogreen Group - Indonesia
- Indika Energy - Indonesia
- Ambuja Cements Ltd - India
- Mercuria Energy - Indonesia
- Karaikal Port Pvt Ltd - India
- Port Waratah Coal Services - Australia
- Bukit Baiduri Energy - Indonesia
- Kumho Petrochemical, South Korea
- Directorate General of MIneral and Coal - Indonesia
- Central Electricity Authority - India
- Price Waterhouse Coopers - Russia
- Medco Energi Mining Internasional
- Intertek Mineral Services - Indonesia
- Riau Bara Harum - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Economic Council, Georgia
- Energy Link Ltd, New Zealand
- Australian Commodity Traders Exchange
- OPG Power Generation Pvt Ltd - India
- Larsen & Toubro Limited - India
- Kohat Cement Company Ltd. - Pakistan
- PTC India Limited - India
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
- GAC Shipping (India) Pvt Ltd
- Meenaskhi Energy Private Limited - India
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