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Wednesday, 12 February 20
REFINING SET FOR A CHALLENGING 2020 - WOOD MACKENZIE
 Downstream isn’t the glamorous end of the oil business. And in Big Oil, it’s typically dwarfed by upstream. Yet having been forced to restructure and focus on costs early this century, downstream’s cash flow has underpinned a third of the Majors’ shareholder returns over the last five years.
But a laser-like focus on costs and efficiency can only take you so far. If the external environment turns against you, downstream is as vulnerable as any part of the business. The Majors’ downstream results for Q4 2019 were among the poorest since 2015. Petrochemicals is part of that story, with earnings suffering from over-investment.
Now we’re also seeing refining margins come under increasing pressure, slipping to five-year lows in the last few weeks of 2019 and the first of 2020. Alan Gelder, VP Refining, identifies two main factors.
Firstly, new regulation on marine fuels was expected to boost refining margins this year – but that hasn’t played out as expected yet. The International Maritime Organization (IMO) regulations require all vessels to reduce the level of sulphur in their engine emissions from 3.5% to 0.5% or less from 1 January.
Essentially, IMO should trigger a shift out of low-value product (High Sulphur Fuel Oil, or HSFO) into higher value Very Low Sulphur Fuel Oil (VLSFO). Refinery capacity to make VLSFO is limited, so marine gasoil, which is closely linked to the price of diesel, would top up any shortfall. This shift to high-value products was expected to drive up refining margins in 2020.
It’s only half happened. The price of VLSFO surged in Q4 and HSFO duly collapsed. The surprise was that there’s been much more VLSFO available than expected. Traders had taken advantage of low-price feedstock in late summer 2019 and built up volumes of VLSFO in storage. When the demand came in, they were ready and cashed in, big time. A single tanker loaded with 2 million barrels of VLSFO could make over US$10/bbl on the spread and pull in US$20 million-plus in cash profit.
Producers with the right crude have also fared well. Santos revealed that it had sold a single cargo of heavy sweet crude, ideal feedstock for VLSFO, at an unheard-of US$30/bbl premium to Brent. Nice work if you can get it.
What didn’t really materialise was higher demand for marine gasoil – it’s just not been needed in the volumes anticipated. Weaker marine demand for gasoil has been compounded by soft demand from heating – a much bigger market – because of warm winter weather in the northern hemisphere and lacklustre economic growth. That’s led to a glut of gasoil in inventory which is depressing refining margins.
Second, global oil demand growth forecasts are falling back sharply – potentially a more fundamental problem. The biggest factor is the coronavirus, so we have reduced our demand forecasts in China by almost 0.6 million b/d for Q1 2020. We now expect China demand to fall year-on-year by 125,000 b/d for the quarter, the worst rate since 2009. Global demand will fall by 250,000 b/d, also the worst in over a decade.
So what’s next for refining?
The VLSFO surplus should be a short-term phenomenon. There’s not enough refining capacity to supply all bunker demand with VLSFO. That gap will have to be met by additional gasoil once the surplus VLSFO in inventory is soaked up, by H2 2020 at the latest.
The prospects for oil demand are more worrying and harder to call. At this stage, we have restricted our adjustments to Q1 and left the rest of the year largely unchanged. If the virus can be contained successfully in the coming weeks, demand could bounce back strongly – much as was the case with SARS in 2003.
Refining margins so far in Q1 suggest it will take a while before refining profitability recovers. Meantime, refiners will do what they must to keep costs down and maximise cash flows, including cutting refinery runs to limit the build-up in inventory. It’s about toughing it out, waiting and hoping for demand – China in particular – to perk up again.
Source: Wood Mackenzie
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Friday, 13 March 20
PANAMAX: SLIGHTLY STRONGER NUMBERS IN BOTH BASINS THIS WEEK - FEARNLEYS
Cape
Still very sad times for the big ships, and merit in further trading at present levels is highly debatable for most tonnage. Spot fixtures ...
Friday, 13 March 20
TOP 4 ACCOUNTING CONSIDERATIONS AFTER THE IMPLEMENTATION OF IMO 2020 - PWC
To install or not to install?
Following the IMO 2020 global low sulphur cap for marine fuel effective since 1 January 2020, many shi ...
Friday, 13 March 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Friday, 13 March 20
KOREA SOUTH-EAST POWER INVITED BIDS FOR 390,000 MT OF THERMAL COAL FOR MAY-JUNE 2020 LOADING
COALspot.com: Korea South-East Power Co., Ltd. (KOEN), has issued an international tender for total 390,000 Metric Tons of coal for May & June ...
Thursday, 12 March 20
INDIA 2019 THERMAL COAL IMPORTS RISE 12.6% TO NEARLY 200 MILLION TONNES - REUTERS
India’s thermal coal imports rose 12.6% to nearly 200 million tonnes in 2019, government data reviewed by Reuters showed, reflecting the seco ...
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- Parliament of New Zealand
- Straits Asia Resources Limited - Singapore
- Mintek Dendrill Indonesia
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Bangladesh Power Developement Board
- The State Trading Corporation of India Ltd
- Gujarat Sidhee Cement - India
- Electricity Generating Authority of Thailand
- Petron Corporation, Philippines
- Malabar Cements Ltd - India
- Thai Mozambique Logistica
- Gujarat Mineral Development Corp Ltd - India
- Directorate Of Revenue Intelligence - India
- Africa Commodities Group - South Africa
- Heidelberg Cement - Germany
- Kartika Selabumi Mining - Indonesia
- The Treasury - Australian Government
- SMG Consultants - Indonesia
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Merrill Lynch Commodities Europe
- Anglo American - United Kingdom
- Karaikal Port Pvt Ltd - India
- Planning Commission, India
- Makarim & Taira - Indonesia
- OPG Power Generation Pvt Ltd - India
- Indogreen Group - Indonesia
- Savvy Resources Ltd - HongKong
- European Bulk Services B.V. - Netherlands
- GMR Energy Limited - India
- Vizag Seaport Private Limited - India
- Bhoruka Overseas - Indonesia
- Globalindo Alam Lestari - Indonesia
- Iligan Light & Power Inc, Philippines
- IHS Mccloskey Coal Group - USA
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- White Energy Company Limited
- Holcim Trading Pte Ltd - Singapore
- Maheswari Brothers Coal Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- South Luzon Thermal Energy Corporation
- Pendopo Energi Batubara - Indonesia
- Bulk Trading Sa - Switzerland
- Metalloyd Limited - United Kingdom
- Rio Tinto Coal - Australia
- Meenaskhi Energy Private Limited - India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- CIMB Investment Bank - Malaysia
- Economic Council, Georgia
- Jaiprakash Power Ventures ltd
- Coastal Gujarat Power Limited - India
- McConnell Dowell - Australia
- Salva Resources Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Ambuja Cements Ltd - India
- LBH Netherlands Bv - Netherlands
- Videocon Industries ltd - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Timah Investasi Mineral - Indoneisa
- GVK Power & Infra Limited - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Central Java Power - Indonesia
- Edison Trading Spa - Italy
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Samtan Co., Ltd - South Korea
- Bayan Resources Tbk. - Indonesia
- Kobexindo Tractors - Indoneisa
- Larsen & Toubro Limited - India
- Leighton Contractors Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Cement Manufacturers Association - India
- Altura Mining Limited, Indonesia
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Singapore Mercantile Exchange
- Xindia Steels Limited - India
- Indonesian Coal Mining Association
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Mjunction Services Limited - India
- Semirara Mining Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Energy Development Corp, Philippines
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Sakthi Sugars Limited - India
- Electricity Authority, New Zealand
- Energy Link Ltd, New Zealand
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Parry Sugars Refinery, India
- AsiaOL BioFuels Corp., Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ind-Barath Power Infra Limited - India
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- SMC Global Power, Philippines
- Intertek Mineral Services - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Gujarat Electricity Regulatory Commission - India
- Asmin Koalindo Tuhup - Indonesia
- Kepco SPC Power Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Wilmar Investment Holdings
- Ministry of Transport, Egypt
- PTC India Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Simpson Spence & Young - Indonesia
- Sical Logistics Limited - India
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Manunggal Multi Energi - Indonesia
- Bukit Makmur.PT - Indonesia
- The University of Queensland
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- VISA Power Limited - India
- Bhatia International Limited - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Alfred C Toepfer International GmbH - Germany
- GAC Shipping (India) Pvt Ltd
- Posco Energy - South Korea
- Orica Australia Pty. Ltd.
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Deloitte Consulting - India
- Banpu Public Company Limited - Thailand
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Essar Steel Hazira Ltd - India
- Medco Energi Mining Internasional
- Bukit Baiduri Energy - Indonesia
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Kideco Jaya Agung - Indonesia
- MS Steel International - UAE
- Sree Jayajothi Cements Limited - India
- Sojitz Corporation - Japan
- Indian Oil Corporation Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Aditya Birla Group - India
- Indo Tambangraya Megah - Indonesia
- Mercator Lines Limited - India
- Global Business Power Corporation, Philippines
- Formosa Plastics Group - Taiwan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- CNBM International Corporation - China
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- India Bulls Power Limited - India
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- PNOC Exploration Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Georgia Ports Authority, United States
- Directorate General of MIneral and Coal - Indonesia
- Mercuria Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Toyota Tsusho Corporation, Japan
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Attock Cement Pakistan Limited
- Bharathi Cement Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Chamber of Mines of South Africa
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Ceylon Electricity Board - Sri Lanka
- Billiton Holdings Pty Ltd - Australia
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