The Refining update the other day was pretty gloomy about demand
http://nzx-prod-s7fsd7f98s.s3-websit...350/319261.pdf
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The Refining update the other day was pretty gloomy about demand
http://nzx-prod-s7fsd7f98s.s3-websit...350/319261.pdf
Big top up payment required by the fuel companies including Z to reach the floor price too. NZR also had a very gloomy outlook whereas ZEL said in their most recent guidance statement they thought skinny refining margins wouldn't persist past the current quarter. More implications for ZEL FY21 profitability ?
I cannot for the life of me fathom how anyone who has done a simple analysis of Z is "perplexed" by the fall in share price....
Seriously, the Herald paywall is worth it.
The estimate in the article is based on a 50% reduction in Jet Fuel demand. Likely to be a lot more at Alert level 2 or 3. Beagle, your comment on debt in an earlier post is also valid. Purchase of Caltex (mostly debt) at a time of high margins => high asset values. Margins are now low, therefore asset value not there.
(Disclosure: author of article)
As an aside - I can't work out why people on this thread think fuel prices are too high. May have been true a year or two ago, I seriously doubt it right now. It is a long-run cyclical industry, and, yes times have been good for the last 7-8 years for the petrol companies. But the 15 years before that were garbage. And the next 10 years...well....they are not likely to be great. Only need to look at the state of Z's P&L right now to work that one out.
Oil on the rebound ............
Look like the float financials has come back to bite it, is there toooooooo much gearing going on here?
Perhaps not strictly relevant but I happened to be watching a documentary on the Middle East yesterday. It reminds us that in the first oil shock in the early 1970's, the POO quadrupled - from $3 to $12! Now, that was a shock!
I see no evidence of cruise ship captains ramming one another in order to jump the queue at the bunker wharf nor stories of frustrated airline passengers having to wait for their flights while Z rushes fuel from the refinery or tales of queues found the block at service stations.
Whatever is causing oil prices to rise it is not demand.
Boop boop de do
Marilyn
Jet fuel demand will be just a few percent now. Plenty of price gouging going on. Local Z wanted $1.97 for 91 octane yesterday which is absolutely scandalous for where oil is currently priced. That's how Z are able to meet their previous guidance. Massive price gouging. "Z is for New Zealand". Yeah right.