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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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Friday, 27 March 20
CHINA'S BULKS: THE SENTIMENT GAP BETWEEN STEEL AND COAL WIDENS - WOOD MACKENZIE
China seems to be containing its local coronavirus situation, with imported cases now posing the greater threat. While quarantine measures remain t ...
Friday, 27 March 20
S.KOREA Q1 THERMAL COAL IMPORTS SET FOR 10-YR LOW ON ANTI-POLLUTION MEASURES - REUTERS
South Korea’s first-quarter thermal coal imports are set to fall to a decade-low due to stricter air pollution measures, while the coronaviru ...
Friday, 27 March 20
PORT OF NEWCASTLE OPERATIONS CONTINUE WITH COVID-19 RESPONSE MEASURES IN PLACE
Port of Newcastle, like many organisations, is taking a precautionary approach to help manage COVID-19 risks in the community. Our focus is on ensu ...
Thursday, 26 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 ...
Wednesday, 25 March 20
CORONAVIRUS CRISIS IS CRUSHING GLOBAL GDP GROWTH - FITCH RATINGS
The coronavirus crisis is crushing global GDP growth according to Fitch Ratings in its latest quarterly “Global Economic Outlook” (GEO) ...
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- The Treasury - Australian Government
- Cement Manufacturers Association - India
- Petron Corporation, Philippines
- Meralco Power Generation, Philippines
- PTC India Limited - India
- Krishnapatnam Port Company Ltd. - India
- Ministry of Finance - Indonesia
- New Zealand Coal & Carbon
- PetroVietnam Power Coal Import and Supply Company
- SMC Global Power, Philippines
- Billiton Holdings Pty Ltd - Australia
- Semirara Mining Corp, Philippines
- Romanian Commodities Exchange
- Planning Commission, India
- Gujarat Sidhee Cement - India
- Baramulti Group, Indonesia
- GAC Shipping (India) Pvt Ltd
- Directorate Of Revenue Intelligence - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Bukit Makmur.PT - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Parliament of New Zealand
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SN Aboitiz Power Inc, Philippines
- Manunggal Multi Energi - Indonesia
- Toyota Tsusho Corporation, Japan
- Holcim Trading Pte Ltd - Singapore
- ICICI Bank Limited - India
- GMR Energy Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Therma Luzon, Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- Oldendorff Carriers - Singapore
- Salva Resources Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Latin American Coal - Colombia
- Bukit Baiduri Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Chettinad Cement Corporation Ltd - India
- Central Java Power - Indonesia
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Jaiprakash Power Ventures ltd
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- GVK Power & Infra Limited - India
- Edison Trading Spa - Italy
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Orica Australia Pty. Ltd.
- Thai Mozambique Logistica
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Dalmia Cement Bharat India
- Standard Chartered Bank - UAE
- Kartika Selabumi Mining - Indonesia
- Deloitte Consulting - India
- Coastal Gujarat Power Limited - India
- Metalloyd Limited - United Kingdom
- VISA Power Limited - India
- White Energy Company Limited
- OPG Power Generation Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- CNBM International Corporation - China
- Indogreen Group - Indonesia
- Renaissance Capital - South Africa
- Kalimantan Lumbung Energi - Indonesia
- European Bulk Services B.V. - Netherlands
- Bhushan Steel Limited - India
- Jindal Steel & Power Ltd - India
- Global Coal Blending Company Limited - Australia
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Formosa Plastics Group - Taiwan
- Offshore Bulk Terminal Pte Ltd, Singapore
- Orica Mining Services - Indonesia
- Electricity Generating Authority of Thailand
- Parry Sugars Refinery, India
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- IHS Mccloskey Coal Group - USA
- Agrawal Coal Company - India
- Kobexindo Tractors - Indoneisa
- Georgia Ports Authority, United States
- Trasteel International SA, Italy
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Sree Jayajothi Cements Limited - India
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- The State Trading Corporation of India Ltd
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- Singapore Mercantile Exchange
- Chamber of Mines of South Africa
- San Jose City I Power Corp, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indian Energy Exchange, India
- Lanco Infratech Ltd - India
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Samtan Co., Ltd - South Korea
- Riau Bara Harum - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Simpson Spence & Young - Indonesia
- Bangladesh Power Developement Board
- Heidelberg Cement - Germany
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Eastern Energy - Thailand
- Semirara Mining and Power Corporation, Philippines
- LBH Netherlands Bv - Netherlands
- Tata Chemicals Ltd - India
- PowerSource Philippines DevCo
- Pendopo Energi Batubara - Indonesia
- Economic Council, Georgia
- Karaikal Port Pvt Ltd - India
- Borneo Indobara - Indonesia
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Bhoruka Overseas - Indonesia
- Energy Link Ltd, New Zealand
- Larsen & Toubro Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Sakthi Sugars Limited - India
- Marubeni Corporation - India
- Coal and Oil Company - UAE
- Sical Logistics Limited - India
- Vedanta Resources Plc - India
- Straits Asia Resources Limited - Singapore
- Rio Tinto Coal - Australia
- Carbofer General Trading SA - India
- Maharashtra Electricity Regulatory Commission - India
- IEA Clean Coal Centre - UK
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- AsiaOL BioFuels Corp., Philippines
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Tamil Nadu electricity Board
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Kaltim Prima Coal - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Miang Besar Coal Terminal - Indonesia
- Malabar Cements Ltd - India
- Indika Energy - Indonesia
- London Commodity Brokers - England
- Uttam Galva Steels Limited - India
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- The University of Queensland
- Bank of Tokyo Mitsubishi UFJ Ltd
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Sindya Power Generating Company Private Ltd
- Sojitz Corporation - Japan
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Iligan Light & Power Inc, Philippines
- Australian Coal Association
- Price Waterhouse Coopers - Russia
- Madhucon Powers Ltd - India
- Globalindo Alam Lestari - Indonesia
- Makarim & Taira - Indonesia
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Cigading International Bulk Terminal - Indonesia
- Power Finance Corporation Ltd., India
- Barasentosa Lestari - Indonesia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Africa Commodities Group - South Africa
- Thiess Contractors Indonesia
- Independent Power Producers Association of India
- SMG Consultants - Indonesia
- Bharathi Cement Corporation - India
- Global Business Power Corporation, Philippines
- Eastern Coal Council - USA
- Savvy Resources Ltd - HongKong
- Merrill Lynch Commodities Europe
- Posco Energy - South Korea
- Siam City Cement - Thailand
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Antam Resourcindo - Indonesia
- Coalindo Energy - Indonesia
- Indo Tambangraya Megah - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Aditya Birla Group - India
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