SPC   

SPC

i absolutely agree with "The trend in global markets is leaning towards a gradual depreciation of the US Dollar and the rapid development of China. As such energy stocks will remain high and should rebound after a correction. It will become the most defensive type of stock in the future." 

Now that we are in agreement... lets chiong...!!!!!!  

 

nickyng...

yeaaahh...

That's the right spirit to have for playing stocks...

Have fun... and little stress... :)

 

well...up or down..as long as the stock trading band is wide...contra or short can still make $$$ :D ok...enought craps....SHORT or CONTRA today? hee...

 

Extract from Professor Chan Yan Chong in the 300 issue of Shares Investment. He writes.

 

I also read on the internet once that gasoline price tends to follow inline with crude oil price's increase and decrease

 

Hi Chinkiasu,

Hey thanks for the article:). Actually I aware of a shortage in refining capacity. It takes 3-4 years to build a new refinery. So I am looking at year 2009-2010 to see the impact on oil product prices when new refineries come online. Then there is also alternative fuel. Bush already emphasised the use of ethanol.



But I am thinking that even though more refineries come online, demand is also going to increase. Well let's see in 3-4 years. For now there is no worry:) 

 

My dear Livermore, sir... the following is an extract from the Washington Post:

Oil-refinery capacity

TODAY'S EDITORIAL
September 2, 2005

The Bush administration announced the other day that crude oil in the nation's Strategic Petroleum Reserve, which contains about 700 million barrels, would be made available to oil refineries. That was in response to a decline of more than 90 percent of oil output in the Gulf of Mexico, which normally produces 1.5 million barrels per day, or more than a quarter of the nation's total crude-oil output.
    That announcement, at least temporarily, seemed to stabilize the price of oil on the New York Mercantile Exchange (NYMEX), keeping it below $70 per barrel through yesterday. But it has done little to affect NYMEX's closing wholesale price of gasoline, which has increased by more than one third since Hurricane Katrina devastated the Gulf Coast region. Closing Wednesday at $2.65 per gallon, the September wholesale gasoline contract price, which excludes taxes and dealer profits, amounted to $111.30 per barrel, reflecting a "refinery premium" of more than $40 per barrel compared to the $70 cost of crude oil. (Each barrel contains 42 gallons.) October contracts increased more than 7 percent.
    The fact that gasoline prices have soared while crude oil prices have stabilized strongly suggests that today's bottleneck in the evolving energy crisis has less to do with the total supply of crude oil and much more to do with current refining capacity. The petroleum reserve could be emptied; but if refinery capacity is not available to process the crude into gasoline, diesel, jet fuel, heating oil and other petroleum products, then the extra crude emptied onto the market will have little impact on the ultimate price of gasoline and other fuels. Today, with nine Gulf Coast refineries closed because of Katrina, there is a massive shortage of refinery capacity. Those nine refineries represent 12 percent of U.S. refining capacity, or about 2 million barrels of oil per day. Several factors have contributed to the refinery shutdowns, including massive flooding, the loss of power and the evacuation of thousands of skilled technicians needed to operate these particularly persnickety plants. Katrina also inflicted substantial damage on major pipelines bringing crude to operating refineries and finished products to market.

 

Business Times 24 March 2007 - Shell and Exxon move ahead with petrochem projects.



Shell yetserday said it has just begun construction proper of its estimated US$3 billion petrochemical projects here. Exxon Mobil announced that it had completed the expansion of its US$2 billion cracker.



Some 1400 workers are employed on constructing Shells' project coded named "Houdini" At its peak in 2008- 2009, "Houdini" will require 6000 and 8000 workers. Exxon Mobil is expected to make its final investment decision for its Singapore Parallel Train (SPT) project around the middle of the year.



Demand for chemicals is growing to about 2-3% faster than world gross domestic products - and growth is particularly strong in this region. "Over the next 10 years, some 60% of the world's petrochemical growth will occur in Asia and China alone will account for one -third of that growth,"Sherman Glass, Exxon Mobil Chemical's senior vice -president said.



"Asia could account for 50% of global demand for commodity chemicals and China alone will account for 25% of global demand." he said 

 

Back in around 2002, crude oil price was at a very low price. I cannot remember the exact price. Maybe about US$20 a barrel. Refineries were not making much money. But times have changed when crude oil price have risen to present levels.

 

Hurrican Katrina only affected the US. The US refineries do not constitute the world refining capacity. But that it not the main point. As it was reported in the business times quite some time ago, during that time, as crude oil price increased, gasoline price increased by 1.5 - 2 times.

 

Hurricane Katrina knocked out of action a number of refineries in the area reducing overall world refinery capacity.

 

If refineries do not make money when crude oil price goes up, then how is it refineries were enjoying big profits in 2005 when Hurrican Katrina caused crude oil price to shoot up to US$75 a barrel? 

 

dear Idesa168 & Shplayer,

I understand from a friend, who has a some knowledge of refining business, that the refining margins earned are not neccessary in cash but rather in proportions of distillates produced.. i.e the crude oil producer does not pay oil refinery $$ but give them distillates which are then sold by the refinery... therefore correlation refinery performance is more direct with crude prices...  however, perhaps some oil man forumner may wish to clarify this.....

 

Yongjiu...

You're welcome...

O, such friendly post, I must say!... :)

 

idesa168,

That is exactly my analogy. SPC's performance should be determined by refining margins. But, having monitored this counter since 2004, sad to say, the market does not rationalise SPC's performance by refining margins.....but more closely correlated by crude prices.

 

SPC core biz is refinery. And refinery raw material is crude oil. How can SPC benefit if the crude oil rises? I have doubt the share price will appreciate in the coming week. Infact it should be down if not because of the fat divy that is supporting the share price. My guess is that SPC will trade within a tight range, sideway. Nicky won't benefit from the sideway movement! Take care Nicky, try shorting the banking stock lah, I see opportunity.

 

ipunter, agree we must know how to exit promptly when we are wrong!!!!
thnx for putting money into our pocket =)

 

won't short spc coming monday, crude oil up from below 61 to 62 (spc px follows crude...don't know why), iran situation wud cause crude px to go up, spc wud cross resistance point of 4.64 on monday.....next resttnc level is 5.00....nicky, take care.

 

alamak, Nicky... you have nine lives...!!  close at 4.64... testing current ceiling...  next week see it soar...?

you win some, today you are lucky to lose some...what if had gone up like CAO today?

 

alamak, Nicky... you have nine lives...!!  close at 4.64... testing current ceiling...  next week see it soar...?

you win some, today you are lucky to lose some...what if had gone up like CAO today?