Cuban cigars hit record sales thanks to increasing Chinese demand

Cigars from the special edition of Trinidad brand, which is celebrating its 50th anniversary, are arranged in a cigar humidor during the inauguration ceremony for the XXI Cigar Festival in Havana, Cuba, Monday, Feb. 18, 2019.
Updated 19 February 2019

Cuban cigars hit record sales thanks to increasing Chinese demand

  • Unlike in Europe, sales in China have not been affected by toughening anti-tobacco laws

HAVANA: Boosted by growing demand from China, sales of Cuban cigars reached a record $537 million in 2018, a seven percent increase over the previous year despite global laws against tobacco, the partially state-owned Habanos said Monday.
“China has surpassed France as the second biggest market for Habanos” behind Spain, said the cigar company’s vice president Jose Maria Lopez Inchaurbe.
Sales in China grew by 55 percent with east Asia as a whole up nine percent, said Lopez.
Marketing manager Ernesto Gonzalez said the figures showed “the strength of our sales despite the difficulties faced during the year.”
The French market was hit by a 17 percent increase in taxes on tobacco products, which meant Habanos had to push up its prices by eight to 10 percent, said Lopez.
Gonzalez said the impressive figures came despite the global luxury tobacco market growing by just one percent in 2018.
Unlike in Europe, sales in China have not been affected by toughening anti-tobacco laws.
“The tobacco market regulatory environment is getting increasingly complicated,” said Lopez.
The growth also comes despite the continuing embargo on Cuban products being sold in the hugely lucrative US market.
Habanos is half-owned by Spanish tobacco firm Altadis, which is itself the property of British giant Imperial Brand.
In 2017, Habanos saw sales grow by 12 percent to reach a then-record $500 million, again pushed by a huge upsurge in Chinese demand.

ADNOC wants its flagship crude as global benchmark

Updated 44 min 48 sec ago

ADNOC wants its flagship crude as global benchmark

  • Abu Dhabi oil giant’s ambitious call comes amid falling Brent volumes and new UAE exchange plan

ABU DHABI: Abu Dhabi National Oil Co. (ADNOC) is aiming to have its Murban futures contract eventually replace North Sea benchmark Brent whose volumes are declining, an ADNOC executive said on Tuesday.

Intercontinental Exchange Inc. plans to launch a new exchange in the UAE, ICE Futures Abu Dhabi (IFAD), in the first half of 2020 to host ADNOC’s flagship Murban crude grade.

“We want to give the industry Murban as a replacement for Brent crude futures,” Philippe Khoury, head of trading at ADNOC group, told an energy conference in the UAE capital Abu Dhabi.

“We still have to demonstrate that over time the community can trust the crude as a benchmark,” he added.

Oil majors BP, Total, Inpex, Vitol , Shell, Petrochina, Korea’s GS Caltex, Japan’s JXTG and Thailand’s PTT have agreed to become partners in the new exchange.

Vitol CEO Russel Hardy said that it will take time to build liquidity on the new exchange, and that Brent, a basket of different crude qualities, and US West Texas Intermediate (WTI) were very established.

“There is a great deal of different constituents playing in those markets. These things will take time to build up on the exchange here,” he said at the same panel discussion.

“It is right to have that level of ambition but it will take some time to build that level of liquidity,” he said of ADNOC’s plans for Murban.

The new contract will create an alternative benchmark to the most commonly used Middle East standard, the Dubai/Oman benchmark operated by the Dubai Mercantile Exchange (DME) and traded on CME’s electronic platform.

Abu Dhabi’s Supreme Petroleum Council last week approved the launch of a new pricing mechanism for Murban crude as part of ADNOC’s broader transformation strategy. It authorized the state energy firm to remove destination restrictions on Murban sales.

ADNOC plans to implement new Murban forward pricing between the second quarter and third quarter of 2020.

UAE Energy Minister Suhail Al-Mazrouei said earlier on Tuesday that he saw no conflict between his country’s compliance with OPEC output cuts and plans to list Murban.

He said the UAE remained committed to cuts agreed by the Organization of the Petroleum Exporting Countries, plus allies led by Russia. These countries have since January implemented a deal to cut output by 1.2 million barrels per day (bpd) which lasts until March 2020, in an attempt to boost prices.

“I don’t think there is a conflict in floating Murban with the fact that UAE is going to comply with whatever we agree to with OPEC. I am not worried about that,” Mazrouei said.

Murban light crude output is around 1.6-1.7 million barrels per day. The UAE has traditionally sold oil directly to end-users, mainly in Asia, based on retroactive pricing rather than forward pricing used by Saudi Arabia, Kuwait and Iraq.

The UAE, the third-largest OPEC producer behind Saudi Arabia and Iraq, pumps around 3 million bpd, produced mostly by ADNOC.