Oil Rises Above $71 on Brighter Demand Outlook

(Reuters)11 December 2009

LONDON - Oil rose on Friday as forecasts for higher demand growth next year and strong Chinese industrial output boosted sentiment, ending a seven-day losing streak which saw prices dip below $70 a barrel for the first time in two months.


U.S. crude for January delivery edged up 52 cents to $71.06 a barrel by 1107 GMT, after touching a session low of $69.81 a barrel on Thursday. Over the past seven trading days, front month crude has sunk almost $7 or 10 percent.

Brent crude futures rose 55 cents to $72.41 a barrel.

World oil demand will rise by almost 1.5 million barrels per day (bpd) in 2010 to 86.3 million bpd and the rate of demand growth will also accelerate, the International Energy Agency (IEA), which advises 28 industrialised nations, said on Friday.

“Oil demand looks a bit stronger,” said David Fyfe, head of the oil industry and markets division of the IEA. “Looking at 2010, it is an adjustment in a bullish direction.”

The report came after the U.S. Energy Information Administration revised its own world oil demand for 2009 lower on Tuesday

Strong industrial growth figures out of China also helped to reverse this week’s price slump.

China’s November industrial output surged to its strongest since June 2007, underscoring the economy’s robust recovery from the global downturn, and analysts expected the trend to continue in coming months.

Refining rates in the world’s second largest oil user also posted a record high in November, up 21 percent from a year earlier to 8.12 million bpd, signalling recovering demand.

“The IEA shows demand is slightly up and the Chinese data has been positive. Prices are likely to stabilise around these levels,” said Olivier Jakob of Petromatrix, adding $70 a barrel was set to be a key technical support level moving forward.
Oversupply

Analysts however cautioned the supply concerns that drove prices lower this week were likely to hold sway over the market and could temper any future rallies.

Earlier this week, the EIA reported stocks at the U.S. delivery hub of Cushing in Oklahoma rose 2.5 million barrels to 33.4 million barrels.

This inventory overhang has depressed front month U.S. crude prices relative to oil futures, resulting this week in the widest WTI crude market contango since August of more than $2 a barrel.

“There is a strong message in the oil market and that is weakness. The contango is widening significantly and this points to physical oversupply,” said analyst David Wech at JBC Energy, referring to both inventories on land and in floating storage.

The volume of refined oil products stored on ships floating in the sea increased to 98 million barrels at the end of November, the IEA said on Friday.

Data out of the United States later is likely to provide further direction as traders look for clues about the pace of demand recovery in the world’s largest oil consumer.

U.S. retail sales for November are due at 1330 GMT and preliminary December consumer confidence figures at 1455 GMT.

These data will also be important drivers for the U.S. dollar and this could in turn steer oil, analysts said.

Weakness in the U.S. dollar has been a factor behind this year’s oil price rally from below $40 a barrel last December.

A cheap dollar tends to drive oil higher as it makes it more attractive for buyers using other currencies.

quoted from: Khaleej Times

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Solvay Launces Tender Offer on Shares Vinythai

Offer will allow Solvay to support development of Vinythai’s businesses

Solvay today announces that in line with its strategy of growing in emerging markets, its Dutch subsidiary Solvay Chemicals and Plastics Holding B.V. is launching a tender offer on the shares of Vinythai, the Thai Vinyl and Chlor-alkali producer. Solvay’s participation in Vinythai recently has crossed the threshold of 50% of the shares of its Thai subsidiary. The tender offer price is 6.15 Thai Baht per share, and the offer period will run from December 16th 2009 to January 21st 2010. Solvay has no intention to increase the price or to extend the term of the Tender Offer.
The offer will allow Solvay to support the development of Vinythai’s businesses, including the Epicerol (R) project recently transferred to Vinythai. Epicerol is an innovative and environment friendly production process for epichlorohydrin, protected by 38 patent applications, some of them already granted in different parts of the World. It is based on the transformation of natural glycerine mainly obtained as by-product from the production of biofuels.
Epichlorohydrin is an essential feedstock for the production of epoxy resins, increasingly used in applications such as corrosion protection coatings as well in the electronics, automotive or aerospace industry. Demand for epichlorohydrin to produce wind turbine blades of windmills is also soaring.

VINYTHAI is a Vinyl and Chlor-alkali producer listed on the Stock Exchange of Thailand. Its major shareholders are the Solvay Group (50%), PTT Chemical Public Company (24.98%), and the Charoen Pokphand Group (11.87%).
In 2008 Vinythai recorded total revenues of 13,312 MTHB (EUR 275 million) and booked a net profit of 1,035 MTHB (EUR 21 million). Vinythai employs 390 people.

A year ago Vinythai increased its PVC capacity at Map Ta Phut in Thailand by 70,000 tonnes to 280,000 tonnes, and has a plan to raise capacity in stages to 400,000 tonnes.
The site is also home to the 100,000 tonnes glycerine-to-epichlorohydrin Epicerol process plant being built by Solvay, and due to be operational about now. The Epicerol process makes epichlorohydrin from the glycerine by-product of biodiesel production. Epichlorohydrin is a feedstock for the production of epoxy resins and Solvay says demand for it has significantly outpaced the growth of the world economy in recent years.

quoted from: New Kaznak

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Dubai Stock Market Registers Biggest Two-day Gain

14 December 2009
DUBAI — The Dubai stock market continued to rally on Sunday, building on a 7 per cent surge it made before the weekend on Thursday, to post the biggest two-day gain in more than a year.

Abu Dhabi’s index also gained the most since March on hopes that Dubai World would make a last-minute move to avoid a default on its property unit Nakheel.

Investors see the $3.5 billion Nakheel bond maturing today, but with a two-week grace period ending on December 28, as a key test for Dubai’s ability to meet its financial obligations.

The DFM General Index, which nose-dived 19 per cent since Dubai World’s debt standstill announcement on November 25, rose 3.3 per cent to 1,695.35, bringing its two-day gain to 11 per cent, the most since October 2008. Abu Dhabi’s index added 4.5 per cent, the biggest one-day jump since March 24.

Property developer Emaar Properties jumped 6.8 per cent, while National Bank of Abu Dhabi, the UAE’s second biggest lender by assets, rose the most in 10 months.

Emaar shares, which triggered the market rally on Thursday with a 14.84 per cent surge in the wake of a decision to abandon a merger with three real-estate units of Dubai Holding LLC, were trading more than 8.0 per cent up on Sunday. Emaar rose to Dh3.14, the highest close in almost a week. The stock has soared 23 per cent since it said on December 9 it abandoned the merger move.

“Now with the overhang cleared, we believe investors should direct their focus back to Emaar’s fundamental value as a standalone entity,” EFG-Hermes investment bank said in a report on Sunday.

Nasdaq Dubai-listed DP World, majority owned by Dubai World, last traded 8.6 per cent higher at $0.38.

National Bank of Abu Dhabi rose 9.7 per cent to Dh11.85 and Aldar Properties added 8.7 per cent to Dh4.53.

Construction major Arabtec’s shares also went up by 7 per cent, while the stocks of budget airline Air Arabia were up just over one per cent.

Dubai Islamic Bank shares appeared to shrug off a rate downgrading by Moody’s as they surged by nearly 10 percent. Emirates NBD bank, also downgraded, seemed to react negatively, dropping by over four per cent.

“The market has come to a critical level and many investors believe the recent selloff was not justified,” said Vyas Jayabhanu, head of Al Dhafra Financial Brokerage LLC in Abu Dhabi. “We already know that there were meetings with the banks and there is a buzz that there might be agreements with the bondholders, so the market is remaining really hopeful.”

If there’s no news about the Nakheel bond tomorrow the markets could see another selloff, but not with the same momentum of the past few weeks, he said.

Issac John (With inputs from agencies)

issacjohn@khaleejtimes.com

Quoted from: Khaleejtimes.com

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The Immediate Dubai Impact

On A Very Sticky Wicket

www.theage.com.au

By John Richardson

As one my colleagues said - it's a good job the US stock markets were closed for Thanksgiving.

Lots of efforts are being made to talk the Dubai World crisis and down - and despite drops in Middle East market equities - Asian markets rallied today.

But the next few days could still be important with a lot depending on how neighbouring governments respond.

Oil markets have been pretty much out-of-sync with real demand since 2003.

But with the rise in the US dollar carry trade and Western growth so fragile, the risk of another sharp correction is higher now than when the world economy was in good shape. Such a collapse would be a mini version of what happened in Q4 last year.

I did a very unscientific survey of 30 traders, producers, buyers and logistics people at the APPEC oil and gas conference in Singapore a few weeks ago.

Twenty three said oil prices, based on fundamentals, should be $40-50 a barrel (three of those who disagreed and thought should be where they are now were financial analysts!).

So perhaps the biggest immediate risk from Dubai is a big strengthening of the dollar and a connected drop in equities and crude.

As I mentioned in my previoust post, I was in Shanghai last week. The local linear-low density polyethylene (LLDPE) polyvinyl chloride (PVC) and purified terephthalic acid (PTA) futures contracts all dipped sharply when the Dubai news broke.

My colleagues at CBI China said that because of the dip in these contracts, very few buyers were willing to acquire physical cargoes on Thursday and Friday.

This could continue as long as the markets worry that this might be another Lehman Bros (fortunately, this seems very unlikely at the moment).

quoted from: ICIS/Asian Chemical Blog

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LAS Prices Resilient Despite Low Demand

Gordon Graff -- Purchasing, 12/2/2009 1:58:26 PM

Despite a decline in demand, prices for surfactant linear alkylbenzene sulfonate have remained stubbornly higher than other chemicals, steadily increasing off a cyclical bottom in April. Prices did dip in November, however.

Overall business conditions in the surfactants market were "chronically depressed" during the first half of 2009, says Neil Burns, managing partner at Neil A. Burns a private equity firm that invests in specialty chemical companies. While activity began to recover in the second half of the year, he notes, total demand for surfactants in 2009 will be "significantly below that of 2008 in volumes, revenues and profitability."

Considering how much demand retreated, prices of surfactants have been fairly resilient. For example, according to Purchasingdata.com, tags for LAS hit a high point of $1.03/lb. in July 2008, slid to a low of 89¢/lb in April, and had bounced back to 97¢/lb by September.

quoted from: Purchasing.com

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Copper Prices Continue to Rise

Paul Teague -- Purchasing, 12/2/2009 2:01:33 PM

Buyers tell Purchasing that they paid more than twice as much for copper cathode in November as they paid in December 2008. The average transaction price last month, they said, was $3.06/lb versus $1.49 last December.

The transaction price has climbed steadily all year. Strong demand in China is among the reasons for the price increases. But another factor, especially lately, has been fears of supply shortages due to labor strife at two South American mines.

Another factor could be production slowdowns at Kazakhsatn-based copper miner Kazakhmys PLC, one of the world's ten largest producers. Reuters reported that the miner produced 13.5% less copper cathode from its own concentrate in the third quarter. The cutback, Reuters said, was part of the miner's efforts to cut its overall costs.

But a new source of copper is coming on line. The Chinese company Golden Dragon has opened a mine in northern Mexico expected to have a capacity of 120,000 tons, according to the Chinese news agency Xinhua.

Meanwhile, copper on the COMEX exchange was priced at $3.22 earlier today. The price on the London Metal Exchange was $3.17 yesterday.

quoted from: Purchasing.com

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