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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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Wednesday, 12 June 24
CHINA ACCOUNTS FOR 16.3% OF AUSTRALIA'S COAL EXPORTS, FOLLOWED BY INDIA 14.4% - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels says Banchero Costa in its latest report.
...
Wednesday, 12 June 24
LNG NEWBUILDING VALUES AT RECORD HIGH: 78 NEWBUILD ORDERS PLACED IN 2024, DOUBLING 2023 - VESON NAUTICAL
The number of LNG newbuilding orders have more than doubled from the same period last year where 34 orders were placed, compared to 78 in the first ...
Monday, 10 June 24
CHINA'S MAY COAL IMPORTS RISE 11% ON LOWER DOMESTIC OUTPUT - REUTERS
China’s imports of coal rose 11% in May from a year earlier, customs data and Reuters records showed on Friday, as lower domestic output this ...
Tuesday, 04 June 24
HOW DO WESTERN SANCTIONS ON RUSSIA IMPACT THE GLOBAL METALS, MINING AND COAL MARKETS - WOOD MACKENZIE
The geopolitical landscape for Russia, as a major supplier of various commodities, has undergone a dramatic transformation since the invasion of Uk ...
Friday, 22 March 24
CASE STUDY: DANGERS OF COAL CARGO - SKULD
Recently, a bulk cargo vessel carrying coal from South Africa to Singapore suffered a fatal accident, resulting in the deaths of three crew members ...
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Showing 21 to 25 news of total 6871 |
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- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- Bayan Resources Tbk. - Indonesia
- Romanian Commodities Exchange
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- Dalmia Cement Bharat India
- Kumho Petrochemical, South Korea
- Straits Asia Resources Limited - Singapore
- Grasim Industreis Ltd - India
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Electricity Authority, New Zealand
- Eastern Energy - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Holcim Trading Pte Ltd - Singapore
- Aditya Birla Group - India
- Standard Chartered Bank - UAE
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- The State Trading Corporation of India Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- Ministry of Mines - Canada
- Sojitz Corporation - Japan
- The Treasury - Australian Government
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Malabar Cements Ltd - India
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- The University of Queensland
- Heidelberg Cement - Germany
- Antam Resourcindo - Indonesia
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Oldendorff Carriers - Singapore
- Australian Coal Association
- Rashtriya Ispat Nigam Limited - India
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Deloitte Consulting - India
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- Global Business Power Corporation, Philippines
- Maharashtra Electricity Regulatory Commission - India
- SMC Global Power, Philippines
- Formosa Plastics Group - Taiwan
- Banpu Public Company Limited - Thailand
- Borneo Indobara - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Pendopo Energi Batubara - Indonesia
- VISA Power Limited - India
- India Bulls Power Limited - India
- Altura Mining Limited, Indonesia
- Ind-Barath Power Infra Limited - India
- Singapore Mercantile Exchange
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Bhushan Steel Limited - India
- Planning Commission, India
- Interocean Group of Companies - India
- Commonwealth Bank - Australia
- Krishnapatnam Port Company Ltd. - India
- Eastern Coal Council - USA
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- GVK Power & Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- European Bulk Services B.V. - Netherlands
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Indogreen Group - Indonesia
- MS Steel International - UAE
- Goldman Sachs - Singapore
- Carbofer General Trading SA - India
- Siam City Cement - Thailand
- ICICI Bank Limited - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Timah Investasi Mineral - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- Coalindo Energy - Indonesia
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- Mjunction Services Limited - India
- Global Green Power PLC Corporation, Philippines
- Anglo American - United Kingdom
- LBH Netherlands Bv - Netherlands
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Orica Mining Services - Indonesia
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- PTC India Limited - India
- Chamber of Mines of South Africa
- Karaikal Port Pvt Ltd - India
- Sindya Power Generating Company Private Ltd
- Cement Manufacturers Association - India
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Jindal Steel & Power Ltd - India
- Kideco Jaya Agung - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Simpson Spence & Young - Indonesia
- Riau Bara Harum - Indonesia
- Bhatia International Limited - India
- New Zealand Coal & Carbon
- Essar Steel Hazira Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Kalimantan Lumbung Energi - Indonesia
- Meenaskhi Energy Private Limited - India
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Parry Sugars Refinery, India
- Central Electricity Authority - India
- Indonesian Coal Mining Association
- Orica Australia Pty. Ltd.
- Mercator Lines Limited - India
- Economic Council, Georgia
- South Luzon Thermal Energy Corporation
- Aboitiz Power Corporation - Philippines
- Ambuja Cements Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- Bangladesh Power Developement Board
- GMR Energy Limited - India
- PNOC Exploration Corporation - Philippines
- AsiaOL BioFuels Corp., Philippines
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Toyota Tsusho Corporation, Japan
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- Uttam Galva Steels Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Binh Thuan Hamico - Vietnam
- Thiess Contractors Indonesia
- Barasentosa Lestari - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Bharathi Cement Corporation - India
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Savvy Resources Ltd - HongKong
- IHS Mccloskey Coal Group - USA
- Asmin Koalindo Tuhup - Indonesia
- Australian Commodity Traders Exchange
- Intertek Mineral Services - Indonesia
- Africa Commodities Group - South Africa
- Bukit Baiduri Energy - Indonesia
- Agrawal Coal Company - India
- Samtan Co., Ltd - South Korea
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Latin American Coal - Colombia
- Meralco Power Generation, Philippines
- Gujarat Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- Baramulti Group, Indonesia
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Larsen & Toubro Limited - India
- Globalindo Alam Lestari - Indonesia
- ASAPP Information Group - India
- San Jose City I Power Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Metalloyd Limited - United Kingdom
- Makarim & Taira - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Central Java Power - Indonesia
- Wilmar Investment Holdings
- Indo Tambangraya Megah - Indonesia
- Medco Energi Mining Internasional
- Sical Logistics Limited - India
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