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Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
 Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitch Ratings says. This is further supported by a commitment to improve compliance from those countries that were unable to reach full conformity with the cuts.
The OPEC+ countries have made radical production cuts in the stress scenario, but it may be more difficult to reach a consensus when the worst of the crisis is over. And it is unclear whether the recovery in oil prices to date is sustainable. Furthermore, demand and production in non-OPEC+ countries, notably the US, will continue to have a significant impact on the supply-demand balance and prices. We believe that a normalisation of oil inventory built up in 1H20 will take at least several months.
Crude oil prices rose significantly in May and continued to improve in early June, because the surplus has been reduced materially. A price differential between the physical and financial markets has disappeared, pointing to crude oil market tightening. We believe that a stress case scenario with prices falling significantly below USD30/bbl is now less likely. The market is likely to experience a production deficit in 2H20 due to gradually improving demand and reduced supply.
The OPEC+ cuts were the major contributor to market rebalancing. We estimate that the OPEC+ countries reduced production by around 7.5mmbpd in May compared to March. The cumulative OPEC+ cuts should exceed 9mmbpd in June as Saudi Arabia, Kuwait and UAE have committed to cut an additional 1.1mmbpd, while Iraq and Nigeria, which underperformed in May, have promised to improve compliance in June. A resumption of production in Libya, which is not subject to the OPEC+ deal, may increase supply but should be more than offset by additional cuts elsewhere.
Furthermore, production fell in the US as a result both of shut-ins and reduced drilling activity by almost 2mmbpd at end-May compared to March, while Canada cut around 1mmbpd. The number of active drilling rigs in the US declined by 64% compared to the beginning of the year. Production in North America may continue to shrink for a while, but the pace is likely to decelerate due to increased prices. We believe that at USD30/bbl, many producers should be able to stabilise production, while at USD40/bbl or above some would be tempted to increase output, which could limit price recovery.
Estimates suggest crude oil demand increased in May compared to April, and we believe it will improve further from June due to the gradual lifting of lockdown restrictions. Implied oil products consumption in the US improved from a 28% drop in April yoy to a 20% drop in May, driven mainly by increased gasoline consumption (a yoy decline of 25% in May compared to a 44% decline in April), while the consumption of jet fuel remained flat. We believe consumption patterns are similar in Europe, while demand in China bottomed out in February.
Demand recovery is now key in achieving balance in the oil market. It could be undermined in the event of a second coronavirus wave and the re-introduction of lockdowns, although it is not our base case. While consumption of gasoline and diesel could recover by the year-end, jet fuel may lag behind as international travel restrictions may remain in place and demand for business travel may be structurally impaired.
Our ratings are informed by companies’ projected performance at end-2021, rather than in 2020, provided their liquidity is adequate, as we rate “through the cycle”. While we may recalibrate our near-term oil price assumptions to the pace of market rebalancing, our ratings already assume that the market will recover gradually; therefore the most recent improvements will not prompt portfolio-wide rating actions.
Source: Fitch Ratings
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Wednesday, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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- Latin American Coal - Colombia
- Antam Resourcindo - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Kaltim Prima Coal - Indonesia
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- Siam City Cement - Thailand
- Parliament of New Zealand
- PetroVietnam Power Coal Import and Supply Company
- TeaM Sual Corporation - Philippines
- VISA Power Limited - India
- Gujarat Sidhee Cement - India
- Essar Steel Hazira Ltd - India
- Sakthi Sugars Limited - India
- Georgia Ports Authority, United States
- Chamber of Mines of South Africa
- Cigading International Bulk Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- Baramulti Group, Indonesia
- Anglo American - United Kingdom
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Renaissance Capital - South Africa
- Indian Energy Exchange, India
- Sree Jayajothi Cements Limited - India
- Samtan Co., Ltd - South Korea
- Gujarat Mineral Development Corp Ltd - India
- Kideco Jaya Agung - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Riau Bara Harum - Indonesia
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Bhoruka Overseas - Indonesia
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Commonwealth Bank - Australia
- Thiess Contractors Indonesia
- Meralco Power Generation, Philippines
- Singapore Mercantile Exchange
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Price Waterhouse Coopers - Russia
- TNB Fuel Sdn Bhd - Malaysia
- Semirara Mining Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Attock Cement Pakistan Limited
- Barasentosa Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Goldman Sachs - Singapore
- IEA Clean Coal Centre - UK
- Iligan Light & Power Inc, Philippines
- ASAPP Information Group - India
- Heidelberg Cement - Germany
- Altura Mining Limited, Indonesia
- Agrawal Coal Company - India
- Oldendorff Carriers - Singapore
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Videocon Industries ltd - India
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- Orica Mining Services - Indonesia
- Malabar Cements Ltd - India
- Australian Coal Association
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Mercuria Energy - Indonesia
- Central Electricity Authority - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Parry Sugars Refinery, India
- Globalindo Alam Lestari - Indonesia
- Xindia Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Indogreen Group - Indonesia
- Madhucon Powers Ltd - India
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Generating Authority of Thailand
- Planning Commission, India
- Borneo Indobara - Indonesia
- Simpson Spence & Young - Indonesia
- Independent Power Producers Association of India
- Bahari Cakrawala Sebuku - Indonesia
- Bukit Makmur.PT - Indonesia
- Coal and Oil Company - UAE
- Bulk Trading Sa - Switzerland
- Tamil Nadu electricity Board
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Energy Link Ltd, New Zealand
- The University of Queensland
- Interocean Group of Companies - India
- SMC Global Power, Philippines
- Eastern Coal Council - USA
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Ministry of Transport, Egypt
- Semirara Mining and Power Corporation, Philippines
- MS Steel International - UAE
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- Ind-Barath Power Infra Limited - India
- Tata Chemicals Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Asia Pacific Energy Resources Ventures Inc, Philippines
- San Jose City I Power Corp, Philippines
- Asmin Koalindo Tuhup - Indonesia
- Marubeni Corporation - India
- GAC Shipping (India) Pvt Ltd
- Siam City Cement PLC, Thailand
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- GVK Power & Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Vizag Seaport Private Limited - India
- Sojitz Corporation - Japan
- SMG Consultants - Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- Bukit Baiduri Energy - Indonesia
- Wilmar Investment Holdings
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Economic Council, Georgia
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Coastal Gujarat Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- The State Trading Corporation of India Ltd
- Ministry of Finance - Indonesia
- PTC India Limited - India
- Indian Oil Corporation Limited
- AsiaOL BioFuels Corp., Philippines
- Karbindo Abesyapradhi - Indoneisa
- Maharashtra Electricity Regulatory Commission - India
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- India Bulls Power Limited - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Central Java Power - Indonesia
- Cement Manufacturers Association - India
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Sarangani Energy Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Dalmia Cement Bharat India
- LBH Netherlands Bv - Netherlands
- Sinarmas Energy and Mining - Indonesia
- Merrill Lynch Commodities Europe
- Intertek Mineral Services - Indonesia
- Indo Tambangraya Megah - Indonesia
- Karaikal Port Pvt Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Chettinad Cement Corporation Ltd - India
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Aditya Birla Group - India
- Krishnapatnam Port Company Ltd. - India
- IHS Mccloskey Coal Group - USA
- Sindya Power Generating Company Private Ltd
- Star Paper Mills Limited - India
- Kohat Cement Company Ltd. - Pakistan
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Power Finance Corporation Ltd., India
- Medco Energi Mining Internasional
- McConnell Dowell - Australia
- Formosa Plastics Group - Taiwan
- New Zealand Coal & Carbon
- Bank of Tokyo Mitsubishi UFJ Ltd
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Coalindo Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
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