OPEC+ sees little impact from SPR on market

OPEC+ sees little impact from SPR on market
Short Url
Updated 02 December 2021

OPEC+ sees little impact from SPR on market

OPEC+ sees little impact from SPR on market
  • Oil producers’ alliance to decide future crude output strategy today

RIYADH: The Organization of the Petroleum Exporting Countries and its allies, a grouping called OPEC+ does not see crude releases from the strategic petroleum reserves of several countries led by the US creating an meaningful impact on the global oil market as some are voluntary and some exchanges.

The alliance of world’s top oil producers on Wednesday began two days of deliberations to discuss the current market situation and to decide whether to release more oil into the market or restrain supply amid big gyrations in crude prices and fears about weaker energy demand because of the omicron coronavirus variant.

Shortly after the OPEC talks began, a delegate told Reuters that the group was not discussing changes to output policy for now.

Russia and Saudi Arabia, the biggest OPEC+ producers, had said ahead of this week’s meetings that there was no need for a knee-jerk reaction to amend policy.

Iraqi Oil Minister Ihsan Abdul Jabbar said he expected OPEC+ to extend existing output policy in the short term, Iraq’s state news agency reported.

Since August, the group has been adding an additional 400,000 barrels per day of output to global supply, as it gradually winds down record cuts agreed in 2020, when demand cratered because of the pandemic.

Even before concerns about omicron emerged, OPEC+ had been weighing the effects of last week’s announcement by the US and other major consumers to release emergency crude reserves to temper energy prices.

OPEC+ internal data, in a report seen by Reuters, forecast a 3 million bpd surplus in the first quarter of 2022 after the release of reserves, up from a previous forecast of 2.3 million bpd.

“Generally, the impact of Omicron seems to be jet-fuel related for now, particularly in Africa and Europe,” the report said, as many countries barred travelers from southern Africa and some European states imposed new coronavirus restrictions.

“Transportation fuel demand within Europe might be also affected,” the report added.

Diamantino Pedro Azevedo, Angola’s minister of mineral resources and petroleum, who is also president of the OPEC Conference, stressed the need for a joint strategy to deal with “downside risks associated with inflation spikes, rising debt levels and supply-chain disruptions.”

“We need to remain united, focused and ready to adapt to any changing market dynamics,” Azevedo said.

He praised Saudi Energy Minister Prince Abdulaziz bin Salman and Russian Deputy Prime Minister Alexander Novak who the alliance “moving in the direction of recovery and stability.”

OPEC+ has been gradually scaling back last year’s record output cuts of 10 million bpd, equivalent to about 10 percent of global supply. About 3.8 million bpd of cuts are still in place.

But OPEC’s November oil output has again undershot the level planned, as some OPEC producers have struggled to hike output.


Dairy giant Saudia to ‘grow as fast as Saudi GDP’ as it delights customers, CEO says

Dairy giant Saudia to ‘grow as fast as Saudi GDP’ as it delights customers, CEO says
Updated 13 sec ago

Dairy giant Saudia to ‘grow as fast as Saudi GDP’ as it delights customers, CEO says

Dairy giant Saudia to ‘grow as fast as Saudi GDP’ as it delights customers, CEO says

RIYADH: One of the oldest Saudi dairy firms is betting on the Kingdom’s economic growth this year to see better performance.

The CEO of Saudia Dairy and Foodstuff Co. said he wants the company to grow at a similar pace as the GDP, which is forecasted by analysts to increase somewhere between 5 and 7 percent over the next 11 months.

“We want to grow as fast as Saudi GDP,” Patrick Stillhart told Arab News in an interview.

Established in 1976, Jeddah-based Saudia, or SADAFCO, operates sales and distribution depots in 24 locations across the Kingdom, Bahrain, Qatar, Jordan, and Kuwait, exporting to several countries in the MENA region.

It is known for its flagship long-life milk products that are becoming a symbol in the market. It also introduced other products throughout the years as it wanted to expand its reach.

The company’s product portfolio today comprises a wide range of items including long life milk, Tomato Paste, ketchup, snacks, ice cream, cheese, instant milk powder, cream, fruit nectars, butter and french fries.

Patrick Stillhart

Before joining SADAFCO in October last year, Stillhart led DKSH’s Consumer Goods business in Southeast Asia and Oceania, where he doubled the company’s size in three years, tripled the profit while improving the cash flow threefold.

During his time at Cereal Partners Worldwide, he accelerated growth in existing markets by driving household penetration, launching new products, and entering new countries.

At Nestle, Stillhart held several executive positions worldwide, from Nestle Indonesia to the Middle East and Switzerland.

Going forward, Stillhart said the business will focus on strengthening its three core divisions – long-life milk, tomato paste, and ice cream – to accelerate growth.

He is taking a very consumer-centric approach to grow the business.

As a long-renowned dairy player in the Kingdom, a key pillar for Saudia is to “delight end consumers” which is and will remain the center of all operations, he noted.

Applying the environmental, social, and corporate governance framework to SADAFCO is a major priority for the new CEO, who also said that he doesn’t see a need for the company to borrow or issue debt any time soon due to its strong cash position. 

In line with wider sustainability efforts and Vision 2030, Saudia has incorporated ESG measures to flourish the green environment, which Stillhart considered to be a major stakeholder.

Stillhart’s ambitious plans for the dairy maker come amid pandemic-driven challenges.

When asked about his financial outlook for the company, Stillhart conveyed being “conservatively optimistic” about the next fiscal year.

“Closing the year, I do not expect too many surprises,” he said, adding that costs will not burden the financials in the near term given they have already been incurred.

Profits of the homegrown dairy maker have tumbled by 29 percent during the nine months ending Dec. 31, 2021, as the pandemic weighed on sales volumes.

Addressing profitability barriers, Stillhart stressed the importance of “producing more with less” to drive efficiency whilst simultaneously delighting end consumers.

Highlights

  • SADAFCO is expected to “grow as fast as the Saudi GDP,” CEO Patrick Stillhart told Arab News in an interview
  • Company has no plan to borrow anytime soon as it enjoys strong cash position
  • To “delight end consumers” is a key pillar for the company
  • The net profit of SADAFCO went down by 29 percent in the first nine months of its fiscal year ending March 2022 
  • Commenting on his outlook for the financial performance going forward, Stillhart said “closing the year I do not expect too many surprises” 

 


Abu Dhabi stock exchange paves the way for its first SPAC listing

Abu Dhabi stock exchange paves the way for its first SPAC listing
Updated 1 min 19 sec ago

Abu Dhabi stock exchange paves the way for its first SPAC listing

Abu Dhabi stock exchange paves the way for its first SPAC listing

RIYADH: Abu Dhabi’s stock exchange, known as ADX, has paved the way for its first Special Purpose Acquisition Company listing as it approved the Gulf Cooperation Company’s first SPAC framework.

The approval, provided by the UAE’s Securities and Commodities Authorities, brings the region a step closer to global peers, according to Bloomberg.

Through such a move, the UAE aims to grow its capital markets in line with global exchanges, including the US which has raised $250 million from SPAC-led offerings since 2020. 

SPACs, also known as blank-check companies, allow private businesses to go public with less strict disclosure rules, through raising money to acquire companies.

Sponsors in Abu Dhabi shall raise a minimum of 100 million dirhams ($27 million) in the initial public offering and will be offered warrants with units sold, giving them the right to convert them into shares.

Fellow GCC countries including Saudi Arabia, have also taken steps to encourage blank-check offerings, with a proposed framework in place for Dubai's bourse.

Elsewhere in the Middle East, Egypt is set to see its SPAC framework launched no later than February, the head of the country's financial regulatory authority said. 

SPACs, also known as blank-check companies, allow private businesses to go public with less strict disclosure rules, through raising money to acquire companies.

 


Dubai solar project to power 250,000 homes

Dubai solar project to power 250,000 homes
Updated 13 min 25 sec ago

Dubai solar project to power 250,000 homes

Dubai solar project to power 250,000 homes

RIYADH: Dubai’s latest solar power project is set to supply 250,000 homes in the city with green energy.

The project, by Dubai Electricity and Water Authority, is located on 10 square kilometers of the Mohammed bin Rashid Al Maktoum Solar Park. It has an accumulated capacity of 900 megawatts, the National News reported.

It is the first project in the fifth phase of the of the solar installation, featuring over 2.5 million photovoltaic cells to capture as much sunlight as possible.

The project also falls in line with the Dubai Clean Energy Strategy 2050.

“Once complete, this project will result in the reduction of more than 1.1 million tons of CO2 annually,” the National News reported, citing Omar Al Hassan, chief executive of Shuaa Energy 3, the firm operating the plan.

A US firm’s intelligent solar tracker solutions, known as Nextracker, is also helping to increase the project’s output.

A second project in the same phase is set to take place in December 2022 with a final phase set for the following December.


Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves

Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves
Hyundai Motor Company Dealership
Updated 21 min 6 sec ago

Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves

Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves
  • Major automakers and dealers, such as Tesla Inc. and Honda Motor Company, have already raised car prices over the past year

South Korea’s Hyundai Motor Co. forecast on Tuesday its vehicle production would rebound in the first half of this year as a global chip shortage is expected to ease gradually from the second quarter.


“The normalization of auto chip supply and demand is expected in the third quarter, when the capacity of semiconductor companies is expected to rise,” Executive Vice President Seo Gang Hyun said on Hyundai’s conference call.


The shortage will continue in the first quarter due to the spread of the omicron variant, Seo said, adding it was the prolonged COVID-19 pandemic in Southeast Asia and resulting chip sourcing troubles that pushed Hyundai’s sales to less than the targeted 4 million vehicles in 2021.


Southeast Asia is central to the supply of basic chips that drive the world’s cars, smartphones and home devices, with Malaysia’s chip assembly industry accounting for more than a tenth of a global trade worth over $200 billion. COVID-related lockdowns in the region have disrupted several industries since last year.


Hyundai said it expects a 20 percent sales jump in its biggest market, North America, in 2022.


Hyundai and its affiliate Kia Corp, together among the world’s top 10 automakers by sales, have forecast a 12.1 percent jump in their combined global sales for 2022, after their sales fell almost 4 percent short of a target of 6.92 million vehicles last year due to the chip shortages.


Hyundai posted a nearly 50 percent drop in its profit for the quarter ended December, significantly short of analysts’ estimate, mainly due to the payment of corporate taxes.


It reported a net profit of 547 billion won ($456 million), versus 1.1 trillion won a year earlier. That compared with an average analyst forecast of 1.5 trillion won compiled by Refinitiv SmartEstimate.

HIGHER PRICES, OMICRON


Analysts warn that soaring raw material prices, component shortages and logistical bottlenecks caused by the pandemic are likely to further drive up costs in the current quarter.


“It is still difficult to forecast how the chip shortage will pan out ... also there will be other uncertainties involving the spread of the omicron variant and potential issues related to Ukraine tensions,” said Lee Jae-il, an analyst at Eugene Investment & Securities.


Japanese automakers Toyota Motor Corp. and Honda Motor Co. Ltd. have said they plan to curb their production this month due to rising COVID cases and part supply issues.


As supply chain and distribution disruptions continue, delaying deliveries and production, analysts expect Hyundai to raise vehicle prices to mitigate the impact.


Major automakers and dealers, such as Tesla Inc. and Honda Motor Company, have already raised car prices over the past year.


UK manufacturers plan biggest price rises since 1977: CBI

UK manufacturers plan biggest price rises since 1977: CBI
Image: Shutterstock
Updated 37 min 19 sec ago

UK manufacturers plan biggest price rises since 1977: CBI

UK manufacturers plan biggest price rises since 1977: CBI

British manufacturers expect to raise prices by the most since 1977 over the next three months, after facing the biggest increase in costs since 1980 and intense labor shortages, a quarterly survey showed on Tuesday.


The Confederation of British Industry survey showed a rise in orders and the strongest export demand growth since July 2018, but overall optimism fell as businesses battled intense inflationary pressures.


“Global supply chain challenges are continuing to impact UK firms, with our survey showing intense and escalating cost and price pressures,” CBI chief economist Rain Newton Smith said.


British consumer price inflation is rising sharply and hit its highest in almost 30 years in December at 5.4 percent, though there had been some signs in other surveys that the pace of cost growth for businesses was beginning to slow.


Tuesday’s data from the CBI is likely to reinforce the Bank of England’s concern that high inflation is getting baked into businesses’ pricing plans.


The survey showed that the balance of manufacturers expecting domestic prices to rise over the next three months was its highest since April 1977.

The export prices expectations balance was the highest since January 1980.


Average unit costs for manufacturers in the three months to January rose by the most since April 1980, and the percentage of firms reporting difficulties from a lack of skilled workers was the highest since October 1973.


Optimism about the current business situation and prospects for the year ahead both fell to their lowest since January 2021, when the economy was still in lockdown.


However, new orders picked up over the past three months and January’s monthly gauge of new orders held unchanged at +24, just below November’s record reading of +26.

Economists polled by Reuters had forecast a drop to +22.