RIL may not renew Iran crude deal

It is not immediately clear why Reliance is not renewing its annual deal, but it could be due to a price disagreement when the refiner has easy access to competing grades, the report quoted sources as saying. "For 2010 as of now, we don't have a term contract," a National Iranian Oil Company (NIOC) source told Bahrain's Gulf Daily News. "It has nothing to do with the US," he said, adding, the deal had not been renewed due to differences over pricing of Soroush and Nowruz crudes. While the 90,000-100,000 barrels per day (bpd) of Iranian crude Reliance bought last year made up only eight per cent of its purchases and 2.4 per cent of Iran's sales, the move underscores a drift in Asia away from Iranian crude, the report said. Japan's imports in 2010 are set to fall by 11 per cent on year to the lowest in 17 years, the report said, citing high prices for Iranian grades, while China's purchases fell nearly 40 per cent in the first two months of the year. Reliance did not respond to enquiries and Iranian officials declined to comment, the report said. Reliance's sophisticated complex in Jamnagar in western Gujarat state can refine 1.24m bpd of crude as varied as light West African to heavy sour Middle East grades, allowing it to switch to whatever crude is cheapest, it said. "It could be they are not happy with the NIOC's reluctance to drop its prices, especially with more attractive competing grades like Russia's ESPO coming onto the market," a trader told the newspaper. Crude from the ESPO pipeline is gaining favour among refiners in Asia due to its attractive price and quality versus the Gulf's heavier sour grades. ESPO offers Reliance an option.

Japan Manufacturers Least Pessimistic Since 2008 on Export Rise

Japan’s largest manufacturers became the least pessimistic about the economy since 2008 as a global rebound drove demand for exports. The Tankan index of sentiment rose to minus 14 in March from minus 25 in December, the fourth straight gain, the Bank of Japan said in Tokyo today. The biggest companies plan to cut capital spending by 0.4 percent in the fiscal year starting today, the least in March surveys for three years. Stocks rallied on optimism demand from abroad will sustain Japan’s recovery from its worst postwar recession, which has been tempered by persistent deflation. The survey came as China reported manufacturing accelerated and may prompt Bank of Japan Governor Masaaki Shirakawa to refrain from boosting liquidity injections at a board meeting next week. “Exports have been stronger than we initially expected, so that’s helped the economy continue its recovery with momentum,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “It’s unlikely we’ll see further easing from the bank in this upcoming meeting.” The Nikkei 225 Stock Average gained 0.7 percent to 11,168.91 at the lunch break in Tokyo, heading for its highest close since October 2008. Benchmark 10-year notes gained after yesterday posting their worst month since October. The Tankan sentiment reading matched the median forecast of 23 economists in a Bloomberg News survey. A negative number means pessimists outnumber optimists.

Asian Stocks Advance; Lihir Gold, CSR Surge on Takeover Bids

Asian stocks rose, lifting the MSCI Asia Pacific Index for the fourth time in five days, on higher commodity prices gained and takeover offers in Australia. Mitsubishi Corp., which gets about 40 percent of sales from commodities, rose 1.3 percent in Tokyo. Lihir Gold Ltd. soared 29 percent in Sydney after the company rejected a takeover offer. CSR Ltd. jumped 6.7 percent after Bright Food Group Co., Shanghai’s biggest food company, raised its bid on the company. Dai-ichi Life Insurance Co., Japan’s second-largest life insurer, is poised to gain in the world’s biggest initial public offering in two years when it starts trading in Tokyo later today. “A gain in commodity prices is showing strong business confidence,” said Mitsushige Akino, who oversees the equivalent of $450 million in Tokyo at Ichiyoshi Investment Management Co. The MSCI Asia Pacific Index increased 0.3 percent to 125.43 as of 10:30 a.m. in Tokyo. The gauge has climbed 9.8 percent from a more-than-two-month low on Feb. 8 as improving U.S. jobs data, a Federal Reserve pledge to keep borrowing costs low and a Japanese bank-lending program eased concern that budget deficits in Europe will derail the revival in the global economy. The Nikkei 225 Stock Average rose 0.5 percent in Japan, where a government report showed confidence among the country’s largest manufacturers rose for a fourth straight quarter. South Korea’s Kospi Index gained 0.8 percent, while Australia’s S&P/ASX 200 Index rose 0.4 percent. Mitsubishi, BHP Futures on the Standard & Poor’s 500 Index were little changed. The gauge decreased 0.3 percent yesterday as private reports showed employers unexpectedly cut jobs this month and business activity grew less than forecast. Mitsubishi increased 1.3 percent to 2,482 yen. BHP Billiton Ltd., the world’s largest mining company, rose 0.9 percent to A$43.97. Rio Tinto Group, the world’s third-largest mining company, advanced 1.3 percent to A$79.40. Crude oil for May delivery surged 1.7 percent to $83.76 a barrel yesterday in New York, the highest settlement since October 2008. The London Metals Index, a measure of six metals including copper and zinc, gained 0.2 percent yesterday, rising for the fifth straight day. The gauge has risen 6.2 percent since March 24. Lihir Gold, the second-largest gold mining company on the Australian stock exchange, surged 29 percent to A$3.92. The company said a A$9.2 billion ($8.4 billion) cash and stock takeover from Newcrest Mining Ltd. was inadequate. Newcrest sank 2 percent to A$32.16.

Ukraine, Nigeria Beating BRIC Countries as Mobius Says Rally Isn't Over

Stocks in the smallest developing markets are beating their larger peers by the most in almost five years and Templeton Asset Management Ltd.’s Mark Mobius says they will keep rallying as consumer demand picks up.

Reliance to tighten grip on world fuel markets

India’s top privately run refiner, Reliance Industries Ltd, is expected to raise crude oil imports by around 22% this year as it ramps up production at its giant complex, further stamping its mark on world markets.Powerful refinery: Reliance Industries’ Jamnagar refinery in Gujarat. To maximize profit margins with its sophisticated refining capability, the firm is set to limit African crude imports this year. AFP To maximize profit margins with its sophisticated refining capability, Reliance Industries is also set to limit African crude imports this year in favour of West Asian grades, if light crude prices continue to strengthen against heavy-sour grades, traders and analysts said.“I expect Reliance refineries to run at full steam, even if in between there is a small shutdown, they can easily run at about 65 million tonnes,” said a trader familiar with refining operations. Reliance declined comment on traders’ estimates.This means that the company’s two refineries—the largest facility in the world—will run above their full combined capacity of 1.24 million barrels per day (bpd), higher than last year when its second plant began operating at full rate in the second half.After the world first saw increasing flows from Reliance in the summer of 2008, with the start of its new 580,000 bpd plant, this year will see the full blast of exports of high-value diesel and petrol made from a diverse slate of the cheapest available crudes.This will put pressure on weak Western refineries and arbitrage traders at a time oil demand is just starting to pick up, but is still in defensive mode, analysts said.“It’s a powerful refinery, and if they get the right logistics, they can probably penetrate Western markets, gain market share and push some out of the market entirely,” said John Vautrain, senior vice-president of Purvin and Gertz Inc.The refiner’s 2009 crude shipments from Africa including Egypt and Sudan rose at least fivefold to over 200,000 bpd, making the continent its No. 2 supplier, overtaking Latin America. This is in line with a 74% jump in total imports.It bought crudes as varied as Cameroon’s Lokele, Chad’s Doba, Venezuela’s Corocoro, and China’s Penglai, while resuming Iraqi crude imports that it shunned in 2006.Reliance for the first time imported Gimboa crude from Angola, which positioned itself as the fourth biggest supplier, surpassing Venezuela. It also took crude from Gabon, Ivory Coast, Congo, Colombia, Ecuador, Syria and Yemen.Though West Asian crude remains Reliance’s main staple, supply cuts by the Organization of the Petroleum Exporting Countries (Opec) in end-2008—around the time the refiner started its new plant—prompted it to turn to African crude to make up for the gap when Gulf grades became costlier last year.This was made possible after the Brent-Dubai price spread, an approximation of the premium at which Atlantic basin light-sweet crude trades to Gulf heavy-sour grades, reversed into steep discounts three times last year, making some West African crudes cheaper, traders said.The structure has returned to normal this year. The front-month Brent/Dubai Exchange of Futures for Swaps (EFS) for May rose to $2.50 (Rs113) a barrel on 18 March, the highest since Opec producers began record supply curbs.Though the EFS has since eased to around $1.68, its premium continues to make West Asia crude attractive to Indian refiners, traders said.“I believe they will definitely try to process more Middle East heavy crude because we do not expect light-heavy differentials to maintain at these levels,” said Sushant Gupta, a senior analyst with energy consultancy Wood Mackenzie.“They are expected to widen from current levels and Reliance will go back to its old strategy of processing heavier crudes and discounted crude so that they can get the advantage of complexity of their refineries.”At a time of slow global demand during the deepest recession of the post-War era, Reliance still managed to obtain refining margins of $5.90 a barrel in the December quarter of fiscal 2009, as it diversified its crude sources and markets for its products.Though these almost halved the year-earlier levels, they exceeded market estimates and outperformed average Asian complex refining margins of $3.50 over the past year, and Reliance’s chief financial officer said the firm expected better refining margins in 2010.

India has edge over China as it's less open, says Roubini

Addressing a private gathering of corporate leaders and financial market professionals, Prof Roubini said inflationary pressures in emerging economies warrant a policy tightening, but many emerging markets including China are going slow on tightening in an attempt to prevent their currencies from strengthening against the dollar. However, India may not fall in that league he indicated. “India is at a relatively advantageous position than China as India is less open,” said professor Roubini. The future global growth will come largely from emerging economies from Asia to Latin America, he said adding that India and China together had a higher potential than the rest of the world. However, he did not discount the US because even in a recessionary phase it was an around $15-trillion economy as against China’s $5 trillion. China cannot remain the engine for growth,” he said. In terms of consumption expenditure, the US spends $10 trillion annually, while China and India spend $1.5 trillion and $600 billion, respectively. But by another 20 years or so India and China could be a major force to reckon with. In a panel discussion with Ajit Gulabchand, CMD of HCC, Venu Srinivsan, chairman, TVS Motor Company, Rakesh Jhunjunwala, head of Rare Enterprises and Ajit Ranade, chief economist of the Aditya Birla Group, Prof Roubini underscored India’s potential in the future growth trajectory of the global economy along with China. He also emphasised upon the need to spur up infrastructure investments. The event was organised by Edelweiss Securities.

SBI reaches out to the unbanked

In what would herald a radical shift from the brick-and-mortar model of banking, State Bank of India (SBI), the country’s largest bank, has decided to hire 15,000 new banking correspondents (BCs) in 2010-11, its chairman OP Bhatt told FE. SBI’s grand plan on BCs is to add thousands of new correspondents to its network every year, a move that would dramatically expand rural banking. The network of BCs would have a direct linkage to sundry social security schemes, Bhatt said. Pilot projects in states like Andhra Pradesh have shown that the BC model can enhance the utility of such schemes. “To make the business correspondents network the most credible and useful link between millions of farmers in rural areas and the bank branches, it will have to be expanded in a big way,” Prime Minister’s Economic Advisory Council chairman C Rangarajan said. SBI’s move is in tune with the Budget decision to provide banking facilities in all domiciles with more than 2,000 people. The prime role of BCs would be to accept deposits and remit money. They would also provide basic financial services like insurance to the half-a-billion low-income rural people who are outside the banking network. Starting with India Post, SBI has roped in organisations with pan-India presence like ITC, Reliance Dairy Foods, Drishtee Foundation and Zero Microfinance & Savings Support Foundation to expand its BC network. According to Bhatt, the bank would also rope in petrol pump operators, rural kirana shops, retired teachers and agents of small saving scheme as BCs. What complements the BC network would be the technology platform being set up. “Apart from opening more branches, we plan to serve the customer better by leveraging all other channels--ATMs, Internet banking, mobile banking…” said Bhatt. The BCs can act as a mini-bank branch with facilities of cash withdrawals and deposits up to Rs 10,000. The BC is connected to a local branch that supervises the functioning of all BCs in the area. SBI has covered more than 50,000 un-banked villages, including in far flung North Eastern, Eastern and Central parts of the country. Currently, the bank spends Rs 115 on each account managed by the BC and the return may be around Rs 3, as the average bank balance of a BC account is estimated to be around Rs 30.