Posted by qqq3 > Apr 20, 2018 10:10 AM | Report Abuse

the butt spread quotes are supposed to be used by refineries for hedging purposes, every day zero volume means no hedging is possible.

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My Take:

If u look at the charts, there was some volume in Feb and March when volumes were higher. Refiners would have sold when contracts spreads were higher. The current low spread, due to higher crude prices, is a refection of geopolitical tensions.

As it is not due to anticipation of greater economic activity, prices of refined products have not increased in tandem and therefore the normal spreads during this period have shrunk.

Refiners are therefore not trading the futures probably in anticipation that spreads will go back to the normal levels when geopolitical events subside.

Posted by stockraider > Apr 19, 2018 05:47 PM | Report Abuse

GENERALLY HIGHER PRICE OF CRUDE IS POSITIVE FOR HENGYUAN BOTTOM LINE LOH.....!!

WHY LEH ??
ONE TIME INVENTORY GAIN MAH....!!
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Agreed. Higher price will offset any losses in refining margins. But prices do move up and down...so the inventory gains are unlikely to be permanent. Hedging smooths out the differences.

Posted by John_Lee > Apr 19, 2018 05:30 PM | Report Abuse

Refinery is not a business that you buy and hold for 5 or 10 or 15 years. It is a cyclical business. Catch it when the timing is right, let go when it hits your target. Repeat in the future. It will always come and go.

If you want to buy super long term counters, please look into utilities, banks etc
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It is a consumer business affected by cyclical nature of crude oil prices which impacts the value of inventories. If prices plunge steeply than the refinery suffers losses. Hedging can mitigate this loss but adds some costs. Nevertheless, hedging operations may not anticipate steep changes in prices thus not being able to limit losses sufficiently.

So you are right John...have to catch the right timing and let go when TP is reached.

Posted by vivoviva > Apr 19, 2018 03:31 PM | Report Abuse

jururawat auntie why u today want to buy at 9? yesterday 6. today 9. u like 69?

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ngam ngam she has 69 posts...LOL

Posted by titus > Apr 19, 2018 03:01 PM | Report Abuse

thanks gator......so gomen subsidise....great ........but for now.....
if like that after ge??....better go buy some barrel and pump some to store at home.....hehe

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Depend who win lo...LOL

Posted by titus > Apr 19, 2018 02:47 PM | Report Abuse

HY mainly sell to shell malaysia fuel price last 5 weeks remain same while brent oil uptrending. Who is subsidising???
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Titus, gomen will subsidy.Read these articles

https://syukrishah.wordpress.com/2015/03/01/automatic-pricing-mechanism-apm-and-mean-of-platt-singapore-mops/

https://paultan.org/2009/02/15/how-fuel-prices-are-calculated-in-malaysia/

It seems to me if the r4finers can source lower cost products they keep the difference.

Posted by SALAM > Apr 18, 2018 05:22 PM | Report Abuse

Posted by gator > Apr 18, 2018 04:59 PM | Report Abuse

Not much IDSS shorts today. 15 lots only...

Gator, don't mind share with us where to look for IDSS transaction data
Many thanks ..
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Its from my remisier

Not much IDSS shorts today. 15 lots only...

Posted by Jun Yi Lim > Apr 14, 2018 11:32 PM | Report Abuse

Thanks Gator, I buy heng Yuan recently because of Syria war will cause oil price rally and it did. But I was wrong because oil price increase doesn't increase the profit margin of heng Yuan. It will make sapura energy and hibiscus rally instead. Gonna cut heng Yuan Monday, and buy hibiscus .

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if u are a trader, profit margin are less important...sentiments and TA should be your considerations

Posted by Jun Yi Lim > Apr 14, 2018 10:56 PM | Report Abuse

DOES HIGHER CRUDE OIL PRICE AND BRENT OIL IMPROVE HENG YUAN PROFIT MARGIN? SYRIA WAR JUST HAPPENED WTI AND BRENT WILL RALLY!

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JY Lim, my 2 cents,

In general, it should be beneficial despite lagging effects. the greater danger is a steep plunge over a short time frame.

Brent spreads generally used as a guide. Different refineries have different blends to cater to different products and to capture higher margins.

For information and general knowledge

https://www.e-education.psu.edu/eme801/node/514

"The crack spread, of course, is not a perfect measure of refinery profitability. What it really measures is whether the refinery will make money at the margin – i.e., whether an additional barrel of crude oil purchased upstream will yield sufficient revenues from saleable products downstream. In reality, existing refineries must consider their refining costs in addition to just the cost of crude oil. These costs include labor (though that is generally a small part of refinery operations); chemical catalysts; utilities; and any short-term financial costs such as borrowing money to maintain refinery operations. These variable costs of refining may amount to perhaps $20 per barrel (depending on conditions in utility pricing and financial markets). In the example above, the true margin on refining would be $6.58 per barrel of crude oil – much lower than the simple crack spread would suggest."

Dragon...I am buaya's father...used to feed them...LOL

Anyway, I like 69 so my TP 69 la..what the heck...hahaha

The upgrade this year is to comply with EURO 4 MOGas and that probably means they do not have to purchase the expensive light sweets to produce RON97. In the long run, the higher margins will pay of the upgrade expenditure. A wise investment.

" Your Company secured the most value adding crudes, moving the slate closer to sweet crudes in 2015 as the sweetsour price gap narrows. The resulting gains were USD44 million in business optimisation and USD14 million in improvement tactics in 2015. To capture the higher margins from the premium RON97 and help Malaysia achieve its environmental aspirations, your Company started production of Euro 4 compliant ULG97 Gasoline through the recalibration and reformulation of existing components and without additional investment."

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The above statement in 2015 AR, suggests that SRC had been buying more sweet crude to capitalize on the higher margin RON97 through reformulation of blends, That explains the higher percentage of Malaysian sweet at 48% compared to 2014 which was about 35%

Posted by probability > Apr 14, 2018 09:29 PM | Report Abuse

those listed are all super sweet and light crudes...

with upgrade they can only Handle Brent level (slightly more sour and heavier).

look at all their annual reports...referenced is only given to Brent.

even after acquisition by Shandong - its clear mentioned how the selling price to Shell retail would be derived based on MOPS Singapore cracks relative to Brent.

This is clearly stated in the Annual Report 2016.
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FIRSTLY YOUR STATEMENT WHICH I QUOTE BELOW IS CLEARLY UNTRUE

>>>look at all their annual reports...referenced is only given to Brent.<<<<

Clarification below:

Look at page 34, 2015 Annual Report shows the change in blend (FiG. 3) due capture higher refining margin

" Your Company secured the most value adding crudes, moving the slate closer to sweet crudes in 2015 as the sweetsour price gap narrows. The resulting gains were USD44 million in business optimisation and USD14 million in improvement tactics in 2015. To capture the higher margins from the premium RON97 and help Malaysia achieve its environmental
aspirations, your Company started production of Euro 4 compliant ULG97 Gasoline through the recalibration and reformulation of existing components and without additional investment."
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SECONDLY, THE STATEMENT BELOW IS MISLEADING

>>> its clear mentioned how the selling price to Shell retail would be derived based on MOPS Singapore cracks relative to Brent.<<<<

CLARIFICATION:

The above statement refers to the SELLING PRICE TO SHELL RETAIL to be based on MOPS Singapore Brent cracks. That is all.

It does not mean that HY is buying BRENT oil as their feedstock!

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LIAR, LIAR PANTS ON FIRE !!!

Posted by probability > Apr 14, 2018 09:03 PM | Report Abuse

Hengyuan do not have the ability to handle high sulfur crude liao...it cannot handle heavier crude than Brent.

all these are very much sweeter than Saudi/Dubai Crude liao:


The refinery uses a wide range of crudes
Tapis, Bach, Ho, Oman, Labuan, Minas, Murban, Bintulu, Ruby, Bintulu Condensate, Kekwa, XiJiang, Widuri, Cinta


source:

http://abarrelfull.wikidot.com/shell-port-dickson-refinery

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Probability,
Extract from the above source says this is 2010 info

"Ongoing Projects
There is an upgrading project underway (2010)
The project comprises a new 6,000 tonnes-per-day diesel processing unit located in Port Dickson, Malaysia. Fluor will perform engineering, procurement and construction management (EPCM) services as a follow-on scope of work to its previous front-end engineering and design (FEED) work."

Posted by probability > Apr 14, 2018 08:47 PM | Report Abuse

aiyo ...

i think after monday...most of these commentors like little John, gator, superpanda all go missing liao...

i want to see who sticks around after Monday...

even more...who are the true hardcore warriors of HY till results out...

kikiki
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Up or down I m okay. I won't go missing. Down I will buy more as I have sold those I bought at lower levels, freeing up my capital. Up I will continue selling, until my breakeven level. Than I will hold until 15 and start selling slowly until I am left with 40-50% which I will hold as core holdings.

Question is if up on Monday will u still be around???

osted by probability > Apr 14, 2018 06:01 PM | Report Abuse

aiyo gator...where got contradiction....

i see no contradiction ma...

Dubai Crude is both sour and heavier...meaning both characteristics are difficult to process...

so it sells at a huge discount to Brent

Tapis very sweet and lights sells at a huge premium to Brent..

you blend the most expensive oil with cheapest oil u still get somewhere close to inbetween....almost similar to Brent price ma...


Blending is for a small advantage of 0.3 USD/brl...

Dubai crude sells at almost 4USD/brl againts Brent...

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Don't try and pull wool over our eyes with such a simple explanation. u did say blend is for economic optimization and do u think management will just do a blend for 30 cents savings???

FYI, the blend in 2013 was almost one third each of Far East/Mid-east/African, Russian and Malaysian...Note that shipping costs for Malaysian will be very low...Product blend will change according to circumstances for maximum savings ....

My opinion is Management will save much much more than your suggested meagre 30 cents!!!

John, make sure u chop the right prick ya..not lanjiolang arr...LOL

Posted by probability > Apr 14, 2018 04:35 PM | Report Abuse

Hengyuan refining technology is so old and inefficient it will be barely able to compete with the margins achieveable by the latest state of the art technology refineries from China and like the new RAPID refinery which can even handles Saudi/Dubai crude.

Dubai crude is at a discount of almost 4USD/brl againts Brent...

they can easily wipe out HY margins achievable using Brent.

China refineries uses Saudi/Dubai crudes too.

Posted by probability > Apr 14, 2018 05:36 PM | Report Abuse

aiyo Brent equivalent la....Crude oil can be graded based on sour level and density (heaviness) level...

if both these specs are the same...it can be used liao...some RSPO oil from russia have these same characteristics...

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Posted by probability > Apr 14, 2018 05:39 PM | Report Abuse

they use blending at certain ratios based on price each product sells...for economic optimization...

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LIAR, LIAR PANTS ON FIRE !!!

LIAR, LIAR PANTS ON FIRE

Posted by probability > Apr 14, 2018 05:36 PM | Report Abuse

aiyo Brent equivalent la....Crude oil can be graded based on sour level and density (heaviness) level...

if both these specs are the same...it can be used liao...some RSPO oil from russia have these same characteristics...

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Posted by probability > Apr 14, 2018 05:39 PM | Report Abuse

they use blending at certain ratios based on price each product sells...for economic optimization...

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THIS CONTRADICTS WITH YOUR POST ABOUT HY MARGINS BEING WIPE OUT USING EXPENSIVE BRENT !!!!

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Apr 14, 2018 04:35 PM | Report Abuse

Hengyuan refining technology is so old and inefficient it will be barely able to compete with the margins achieveable by the latest state of the art technology refineries from China and like the new RAPID refinery which can even handles Saudi/Dubai crude.

Dubai crude is at a discount of almost 4USD/brl againts Brent...

they can easily wipe out HY margins achievable using Brent.

China refineries uses Saudi/Dubai crudes too.

posted by probability > Apr 14, 2018 04:35 PM | Report Abuse

Hengyuan refining technology is so old and inefficient it will be barely able to compete with the margins achieveable by the latest state of the art technology refineries from China and like the new RAPID refinery which can even handles Saudi/Dubai crude.

Dubai crude is at a discount of almost 4USD/brl againts Brent...

they can easily wipe out HY margins achievable using Brent.

China refineries uses Saudi/Dubai crudes too.

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From where u get info that HY using Brent??

HY in 2013 report says they are using a blend of crude diet including Dubai, Malaysian and other Far East crude to keep costs down and also the fact that HY has complex refinery..

Posted by probability > Apr 14, 2018 04:43 PM | Report Abuse

To capture Shell Retails markets....the 600 Million investment to acquire the PD refinery was peanuts.

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How you get 600 m???

Shandong bought for US66 m

Posted by gsi723 > Apr 14, 2018 05:20 PM | Report Abuse

My questions sound stupid but if Anyone can help :-
>>>
Crude oil price increase, but our petrol selling price is 'fixed' for this few weeks & probably next few weeks,... Any idea HY or Petron margin will be good/ hurt?
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I remember reading an article whereby govt will subsidize in certain situations perhaps this is one of the scenario...especially when it is clearly fixed for obvious reasons in the face of rising crude..

Sorry, GSI I know it's not much help but food for thought..LOL

Posted by stockraider > Apr 14, 2018 03:44 PM | Report Abuse

ASK YOURSELF WHETHER HENGYUAN AT RM 9.28 REBOUNDING FROM RM 6.00 LOW IS IT STILL THAT CHEAP LEH ???

THE ANS IS YES IT IS CHEAP LOH....!!

ANALYSIS OF HENGYUAN
2005
PRICE RANGE RM 8.50 TO RM 12.30
EPS RM 1.74

2006
PRICE RANGE RM 9.55 TO RM 11.20
EPS RM 0.86

2007
PRICE RANGE RM 9.50 TO RM 11.60
EPS RM 1.98

2008
PRICE RANGE RM 7.95 TO RM 11.80
EPS RM (1.10} LOSS

2009
PRICE RANGE RM 8.05 TO RM 11.30
EPS RM 0.97

2010
PRICE RANGE RM 10.40 TO RM 11.00
EPS RM 0.36

2011
PRICE RANGE RM 9.11 TO RM 11.20
EPS { RM 0.41} LOSS

2012
PRICE RANGE RM 8.38 TO RM 10.38
EPS RM { 0.32 } LOSS

2013
PRICE RANGE RM 6.40 TO RM 11.20
EPS { RM 0.52} LOSS

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2008 huge loss coincided with crude prices plunging from about $160 to about $60 in a matter of 6 months. Hedging cannot cope or wrong positions???

Posted by Investor48 > Apr 14, 2018 05:03 PM | Report Abuse

Any TA specialist here?
Chart reading how?

Too much FA liaw
Only can be proven after Q1 or after upgrade

Hehe...
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Bro, instinct suggests next week break 10...want to tikam???

Posted by Investor48 > Apr 14, 2018 02:56 PM | Report Abuse

Probability don't just talk.
If you want to short pls do it.
If you can double up.

Hehe...

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I really wish Probability can short...see how big his canon is...I think its a pea shooter !!!

Posted by trulyinvest > Apr 14, 2018 10:19 AM | Report Abuse

High oil px no good to refiners. As stated in petronm quarterly report. Refined products does not go up as fast as crude oil. Laging

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When oil prices move north, there's enough mechanism to absorb the higher costs. As lower cost inventories can last about 4 weeks or more ( please check HY annual report), there's an immediate gain. Subsequent higher costs products will be retailed at higher prices, which in the local context will be through the weekly Wednesday adjustments.

Apart from that HY management will be hedging against fuel costs and forex movements. Management will buy crude futures as a hedge against rising prices.

For investors, the proof of the pudding is in the eating as I said in my earlier posts..so we await their Q1 results.

Mid-east tensions and geo-politics will push crude prices higher. Crude oil going up is better than going down for refiners. Ideally it should be stable but volatility is here to stay..just pray it doesn't plunge steeply like what happened few years back.

I doubt the Syrian strikes will have much impact...if anything markets may pull back slightly before recovering...

In the early nineties (could be late eighties) when US had their first strikes against Iraq, market dip slightly couple of days and then went up higher.

Will overshoot your TP of 9.60..

My TP 15

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responding to qqq3

Will overshoot your TP of 9.60..

My TP 15

Posted by Apabagus > Apr 13, 2018 07:32 PM | Report Abuse

Wow,what about a half donkey?Half an ass,not even a full ass.

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LOL

A donkey is an ass, an ass is a donkey...

Bagus, bagus!

Bagus, bagus!

For information and general knowledge

https://www.e-education.psu.edu/eme801/node/514

"The crack spread, of course, is not a perfect measure of refinery profitability. What it really measures is whether the refinery will make money at the margin – i.e., whether an additional barrel of crude oil purchased upstream will yield sufficient revenues from saleable products downstream. In reality, existing refineries must consider their refining costs in addition to just the cost of crude oil. These costs include labor (though that is generally a small part of refinery operations); chemical catalysts; utilities; and any short-term financial costs such as borrowing money to maintain refinery operations. These variable costs of refining may amount to perhaps $20 per barrel (depending on conditions in utility pricing and financial markets). In the example above, the true margin on refining would be $6.58 per barrel of crude oil – much lower than the simple crack spread would suggest."

For those interested in crack spreads

https://stillwaterassociates.com/crack-spread-a-quick-and-dirty-indicator-of-refining-profitability/

Crack spreads are quoted in CME are mainly for hedging and traders who wish to speculate.

The common formula use is 3:2:1, But bear in mind that this includes 1 part of heating oil... Question is does HY produce heating oil????

Crack spreads can only be a quick and dirty indicator of profitability. The proof of the pud is in its eat...

Raider, apa la lu...copy my post???

Posted by Jon Choivo > Apr 12, 2018 08:28 PM | Report Abuse

Crack spread, it fluctuates depending on supply and demand.

It does not rise in line with inflation.
......

I think refiners will expect a gross margin of 10% to 12% of their feed stock. It's not so much of Shell (at the time when they suffered huge losses) not been able to capture the spreads but more due to the massive crash in crude oil prices coupled with the depreciating ringgit. I think whatever hedging operations would still not be able to arrest the losses caused by this double whammy.

Posted by probability > Apr 12, 2018 08:18 PM | Report Abuse

aiyo gator another younger kid surfaced...let me handle the victim myself liao...

if you mother is not a whore why u so marah?

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Your response shows your character. Enuf said...

Posted by probability > Apr 12, 2018 08:10 PM | Report Abuse

aiya John_Lee...this is real adult talk ma....we can talk like and can still shake hand at the end.....kids wont understand this liao..

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I wonder whether u are like that without your hidden identity?? calling someone son of whore ..spreading legs etc...and expect people to regard u as a gentleman and shake hands?! U must have some issues....

Posted by Investor48 > Apr 12, 2018 07:52 PM | Report Abuse X

@gator bro

What happened here today?
macam Trump declares war...

Today green & above 9...
Shouldn't we be celebrating?

Cheers..!

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Macam tu bah bro...Anyay, it's green so Aramaiti bro!

Posted by probability > Apr 12, 2018 07:54 PM | Report Abuse

aiyo...me no credible kah?

accusation without any base and prove is considering false accusation liao...

like that i simply say you have vested interest which are conflicting with the facts i am presenting lor...very clear already
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Ya la..changing melody ...just because u sell out but if u didn't sell out than it's even worse...

Of course I have vested interest as I am still holding a lot of scrips..

@ Investor, hahaha...macam tu bah bro...Aramaiti !!!

Probability,

I never once mentioned your emotional and wealth state..

I think u are just no longer credible!

RAIDER COMMENT;

THATS THE REASON WHY HENGYUAN NOW ENJOY, VERY GOOD CRACK SPREAD USD 7 TO USD 9 PER BARREL COMPARE TO USD 1 TO 3 PER BARREL IN 2008 LOH...!!

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This is acceptable as it reflects a normal refiners margin of 10% to 12% of crude oil price..

correction: u do not mock others

Probability,

If you want people to trust u or your facts, you do not make mock others. By so doing u mock yourself.

Now its entertainment...