Business Global Scene
India’s diesel imports scaling new highs
India will lift diesel imports this fiscal year to the highest this
decade to meet stronger demand fuelled by a booming economy and to cover
shortfalls caused by major refinery maintenance works.
Asia’s third-largest oil user may keep importing ample diesel volumes
till 2010, when most refinery upgrades and new units will be ready,
while lagging domestic supply from private refiners will add to the
burden of state firms, industry officials said.
But company officials said inflows may ease next year as top state
refiner Indian Oil Corp may halt diesel imports due to a slower
maintenance plan and some added capacity, while Hindustan Petroleum Corp
may ship in some volumes.
India’s imports of low-sulphur diesel this year, averaging 200,000
tonnes a month, will help sustain high premiums in Asia, which could
make barrels from this region and the Middle East too pricey to ship to
Europe or Latin America, traders said.
“Diesel demand is growing at a very high speed. We see a growth of 7
percent this year over a high base of last year,”said G.C. Daga, IOC’s
director marketing.
A strong economy growing around 9 percent and shutdowns removing 7
percent of refining output, will spur state refiners to import about
1.24 million tonnes of diesel this fiscal year (April-May), up 36
percent on a year ago, as demand rises between 5.6 and 7.0 percent, a
Reuters poll found.
During April to July, India’s diesel imports were already up nearly
146 percent on year to 786,100 tonnes, data showed.
Reuters
German-Chinese spat threatens to overshadow Frankfurt auto show
Auto experts flock to Frankfurt Tuesday for a preview of glittering
new models, with some looking to see if two Chinese cars are on display
amid charges they are knock-offs of German vehicles.
Cleaner cars were to star at the 62nd International Motor Show (IAA)
but much pre-fest buzz centered on whether China Automobile Deutschland
would display the CEO and Nobel models it planned to import despite
threats of legal action.
“We will show the CEO and will not let ourselves be intimidated,”
China Auotomobile Deutschland chief executive Karl Schloessl said on a
programme on Germany’s ZDF television Monday.
On Friday, German automaker BMW said it had launched legal action
against the importer but declined to provide details.
BMW claims the CEO is a copy of its X5 sports utility model that is
no longer in production, while DaimlerChrysler says the Nobel is a
knock-off of its Smart city car.
Daimler also says it reserves the right to pursue the matter before
German courts.
Others played down the dispute however, in particular the president
of the Germany Automobile Federation VDA, which organises the fair, one
of the biggest in the world.
VDA president Matthias Wissmann also told media Monday that failed
safety tests by some Chinese models did not mean the auto sector had
seen the last of groups like Chery, Geely, and the Shanghai Automotive
Industry Corporation (SAIC).
None of those firms produce cars currently targetted by German
manufacturers.
“My personal advice is don’t point your finger at them because of the
first crash tests,” the VDA president said, adding that Chinese cars
would be commonplace in Europe in a few years’ time.
“In the long run they will have their share of the market,” he said.
German auto expert Ferdinand Dudenhoffer, who carries out research at
a university in Gelsenkirchen, said the Chinese were simply copying a
Japanese approach that has seen companies like Toyota become global
leaders.
“It’s the same as what happened with the Japanese,” he told AFP.
“The Japanese also started by copying concepts but today they show
that they are very strong in specific sectors of technology or design.”
Elsewhere meanwhile, more than 1,000 companies from around 40
countries were ready with everything from a project to revive the
communist-era East German Trabant to a Mercedes SLR roadster with a
price tag of around 500,000 euros (690,000 dollars). The show has set
this year’s theme as “sustainable mobility,” alongside the slogan: “See
What Will Move Your Future.”
Hybrid electric and petrol or diesel motors, and stop-and-start
technology that turns cars off at red lights are to be shown by several
manufacturers, which are under pressure from the European Commission to
cut carbon dioxide emissions sharply by 2012.
AFP
Aban’s Singapore unit to raise $400 mln in IPO-sources
The Singapore unit of Indian oil services firm Aban Offshore plans to
list on the Singapore Exchange and may raise around $400 million next
year, two sources said on Tuesday.
“It will be between $350-$400 million and on the SGX,” a source close
to the deal told Reuters.
A second source said the initial public offering will likely be
launched in the first half of 2008 and could raise as much as $500
million.
Banking sources said Merrill Lynch and UBS have been mandated as lead
managers.
Aban Singapore Pte Ltd earlier this year sold $150 million of
convertible bonds to four investors in a private placement.
The bonds, due to mature in 2014, were sold to finance the purchase
of shares in Norwegian offshore oil services firm Sinvest ASA, bankers
told Reuters in February.
The bondholders had the option to convert bonds into shares if the
company is listed.
Sinvest delisted from the Oslo exchange on March 29.
Merrill Lynch was also the lead manager for the bond deal.
Aban Singapore and Sinvest both have offshore drilling rigs under
construction at yards owned by Singapore’s Keppel Corp and SembCorp
Marine , the world’s two largest rig builders.
Aban Offshore provides oil field services for offshore exploration
and the production of hydrocarbons. It is part of the Indian
conglomerate Aban Group, whose interests range from wind energy and
conventional power generation to information technology and hotels.
Singapore, which is home to the world’s biggest bunkering port, is
also Asia’s top physical oil trading centre and a major oil refining
hub. This has made the Southeast Asian city-state an increasingly
popular capital market for Asian oil services firms.
Reuters
Downward revisions to EU growth small -IMF official
The International Monetary Fund’s downward revisions to European
growth forecasts for 2007 and 2008 are likely to be small, an IMF
official said on Monday as the lender also considers lower growth for
the United States and Japan.
Michael Deppler, head of the IMF’s European division, said there was
some uncertainty, however, whether freezes in Europe’s interbank lending
market will have a lasting impact.
“The revisions are likely to be moderate. We’re talking decimal
points and we’re talking more in 2008 than 2007,” Deppler told reporters
on a conference call.
The downgrade, in the IMF’s upcoming World Economic Outlook in
October, was based on weak second-quarter data and a slowing in U.S.
growth prospects, he said.
Earlier, IMF Managing Director Rodrigo Rato that the United States,
European and Japanese economies are likely to grow more slowly because
of financial market turmoil, but that the global economy remains in a
sustained expansion.
“How this will affect the United States economy is something we are
looking at,” Rato said in Lisbon. “Even if some stability returns soon,
the adjustment process and the implications of the financial market
turbulence are likely to be protracted and not uniformly distributed,”
he added.
European banks, which have become highly reliant on the U.S.
interbank market to finance their dollar demand, were hard hit by a
global credit crunch in early August caused by defaults on U.S. subprime
home loans to borrowers with poor credit histories. The loans were sold,
via packages of asset-backed securities, to institutional investors
around the world.
Fears that a bank could fail prompted a freeze in interbank lending,
or overnight lending — money lent from one bank to another.
To avoid a lock-down of the international financial system, central
banks pumped billions of dollars of temporary funds into the market to
ensure the system kept functioning. Deppler said it was unclear what the
impact of the freezes in the interbank market would be.
“The uncertainty, of course, is whether the freezes in the interbank
market will have a lasting effect and we don’t have a good handle on it
... no-one does,” Deppler said, adding: “At this point, they are risks
and not things we can quantify will happen.” “Clearly the world has
become somewhat less certain but we’re not talking about at this point a
major shock to the system,” he said.
Speaking at the launch of a new book by IMF economists entitled
“Integrating Europe’s Financial Markets,” Deppler said the market
turmoil revealed that governments were not aware of the risks some
institutions were taking.
“So there is a need simply from a national point of view to revisit
whether or not the information flows and comprehensiveness of those
flows is adequate,” he added.
AFP
Economists see risks rising, US will avert recession
Leading US business economists foresee softening growth ahead that
will prompt the Federal Reserve to cut interest rates, but they believe
a recession will be averted, a survey showed Monday.
The National Association of Business Economists panel concluded that
recession is a growing risk, but that the world’s biggest economy will
maintain modest growth.
The NABE panelists cut their outlook for the fourth quarter of 2007
by a tenth of a point to 2.2 percent growth in gross domestic product.
They made a sharper revision to their 2008 outlook to show growth of 2.8
percent instead of 3.1 percent.
“The NABE panelists see reduction in economic growth across major
spending categories,” said Ellen Hughes-Cromwick, NABE president-elect
and chief economist at Ford Motor Company.
“They trimmed the outlook for residential investment, marked down
expectations for productivity growth, and expect the Fed to cut rates by
50 basis points this year.”
In light of continuing weak data and the turmoil in the subprime
mortgage market, the panel reduced further its outlook for residential
investment, cutting its forecast for 2008 housing starts by about
100,000 units, to 1.4 million.
Over 60 percent of the economists cited recession as the biggest risk
facing the economy over the next year, while only a third cited
inflation as the greatest problem.
Yet most said they believed the US would avoid a full-blown
recession.
Respondents most concerned about the risk of recession cited problems
in the subprime mortgage market and potential declines in home values as
the most likely triggers.
The panel sees the federal funds rate moving down 50 basis points in
late 2007 and early 2008 and then holding steady at 4.75 percent.
AFP
Oil prices near fresh record -OPEC
World oil prices came within sight of a fresh record in Asian trade
on Tuesday as OPEC ministers headed into crunch talks over the cartel’s
output.
There were signs in Vienna that the group might bend to the will of
Saudi Arabia and increase production.
At 10:50 am (0250 GMT) New York’s main futures contract, light sweet
crude for delivery in October, was 41 cents higher at 77.90 dollars a
barrel from 77.49 dollars in late US trades on Monday.
The price was not far off its record high of 78.77 dollars set on
August 1.
Brent North Sea crude for October delivery was at 75.76 dollars a
barrel.
Analysts warned that inaction by the Organisation of the Petroleum
Exporting Countries could send prices above 80 dollars.
A majority of ministers in the cartel have rejected pressure from
consuming nations for higher supplies, but Saudi Arabia, the biggest
producer in the 12-member cartel, may still prevail with a campaign for
an output increase of 500,000 barrels per day, analysts said.
“There is some suspense going into the meeting,” said Victor Shum,
senior principal at Purvin and Gertz Inc in Singapore.
In an indication that some members were willing to concede to an
increase, Kuwaiti Acting Oil Minister Mohammad al-Olaim told reporters
on Monday: “We have to take our responsibility as producers.”
Kuwait had previously dismissed demands for a production increase,
along with most of the other OPEC members, arguing that the market was
adequately supplied.
Algerian Energy Minister Chakib Khelil also opened the door to an
output hike, acknowledging the danger of supply shortages heading into
the peak demand period for oil in the northern hemisphere winter.
“Right now, as of today, there is no problem between supply and
demand,” he said, before adding: “Maybe we’ll have a problem in the next
few months.”
High oil prices have become an added burden for the world economy in
addition to financial market turbulence and a crisis in the US subprime
housing market.
Saudi Arabia is believed to be worried that high oil prices could
drag on economic growth, which would reduce demand for oil in the
long-term.
The International Energy Agency, the energy watchdog for the world’s
rich, oil-consuming countries, warned again on Monday about a shortage
of supply in coming months.
“The current market is very tight. We see demand increasing towards
the end of the year, certainly towards the beginning of next year,” new
IEA chief Nobua Tanaka said in Berlin.
Vera de Ladoucette, analyst at consultancy Cambridge Energy Research
Associates, added: “There is speculation about an increase of 500,000
barrels.”
Shum, in Singapore, said that if such an increase actually happened,
“it would psychologically calm the market some.”
AFP
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