Commodities: Volatility is King
WTI crude advanced 2.89% to US$33.08 per barrel on Nymex Thursday (Feb 25), while Brent crude closed above US$35.19. This lifted shares of oil and gas producers. US coal production for the week ended February 20, meanwhile, dropped 20.2% from the comparable week in 2015, but failed to lift shares of coal producers.
First Resources vs Astra Agro
First Resources Limited, a palm oil company listed on SGX but controlled by Indonesian business family, booked net profit of US$107.9 million last year, dropped 37.8% from 2014 due to falling prices of palm oil and squeed refining & processing margins. First Resources, however, performed significantly better than Astra Agro Lestari.
Oil & Gas Journal
Average selling price of oil and liquids were US$40.18 per barrel last year, crashed 60.2% from 2014, but SGX-listed KrisEnergy Ltd—which acquired lots of oil and gas blocks in Indonesia in recent years—reported 21.6% increase in EBITDAX to US$37.15 million last year. Also in this report: Elnusa’s full year 2015 results.
Astra Agro: Results & Outlook
Astra Agro Lestari (AALI) booked net profit of Rp619 billion last year, dropped significantly by 75.3% from 2014 due to falling prices of palm oil and derivatives. The plantation company, however, reported stronger bottom line in the fourth quarter, despite deeper corrections of CPO prices.
Coal Falls Further to New Low
Shares of coal producers were mixed in the region Monday (Feb 22) as WTI crude oil retreated to below US$30 per barrel. Coal prices yet to recover, where the reference price of Indonesian thermal coal for February 2016 declined further to US$50.92 per ton. The reference price is 19.07% below February 2015 and 4.3% below January 2016.
Palm Oil Journal
KPB Nusantara, the joint marketing office of state plantations, sold CPO packages at Rp7564 per Kg Friday or around US$558 per ton. That means the commodity has jumped 33% from its bottom in Jakarta’s physical market. The average spot month settlement price of CPO (FCPO) for February 2016, meanwhile, is RM2483/ton on Bursa Malaysia Derivatives, an increase of 9.3% year-on-year.
Persistent Volatility in Energy & Metals
Volatility remains in the energy and mining market. Shares of energy companies retreated worldwide Friday (Feb 19) to tracking crude oil, which fell 3.41% to US$29.72 per barrel on Nymex (WTI crude) after gaining significantly Thursday. Rally in crude oil was short-lived. Shares of coal producers also retreated despite reports about consistent production cut in the United States.
ChemOne’s Coal-to-Chemical in Kalimantan: Another JAC?
Media reported yesterday that Singapore-based ChemOne will be working with Indonesian counterparts in the development of US$1.7 billion methanol plant in East Kalimantan, using coal as feedstock. This is not the first time we read such news. In fact, lots of companies have announced initiatives to develop coal-to-chemical projects in the country, but none has materialized.
Further Pressures on IUP Holders of Coal
Indonesia is determined to further rationalise its coal production. Other than external pressures from falling prices of thermal coal, ongoing pressures from the government will likely kick out more producers from the market.
Revisiting Medco-Newmont Acquisition
It’s been nearly three months since Arifin Panigoro, significant shareholder of Medco Energi (MEDC), announced a plan to acquire 76% shares in PT Newmont Nusa Tenggara (NNT) for US$2.2 billion. Newmont Mining Ltd yet to release anything about the proposed acquisition. Gold prices, however, have gained more than 15% since then.