Readings: Gulf breakeven oil, Iron ore defaults, Cement utilization
- Paul Kedrosky: Breakeven Oil Prices in Gulf States
These numbers have risen in recent years, but not with exploration and extraction costs, but with higher country-level program expenditures causing higher oil prices to be required to balance their budgets.
Also see, Times Online: ‘Axis of Diesel’ forced to change its ways by plummeting oil price
Deutsche Bank estimated in a recent research note that Iran and Venezuela need an oil price of more than $95 a barrel to balance their budgets, and Russia requires a price of $75. That compares to a break-even figure of $55 for Saudi Arabia.
- Hindu Business Line: Iron ore exporters to China hit by payment defaults
Iron ore exporters have been hit by a cash flow crisis with Chinese importers defaulting on payment obligations. Besides, Chinese banks are also refusing to honour the letters of credit issued on behalf of the importers.
Each LC is valued at about $3 million. All trade between India and China is invoiced in US dollars. At least 15 LCs have been dishonoured by the banks, translating into $45 million.
The Chinese importers had lifted Indian iron ore at prices as high as $120 a tonne. Currently these prices are ruling at around $40 a tonne.
- Business Standard: Cement firms’ capacity use dips to four-year low
The capacity utilisation of cement-makers, which has been on the wane since April 2008, has dropped to 82 per cent in the second quarter ended September 2008 as compared to 90 per cent in the corresponding quarter a year earlier.
The drop was also exacerbated by the addition of 31 million tonnes of fresh capacity in the past year. Growth in cement demand for the rest of the current financial year is estimated to moderate further to 6-8 per cent.”
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