CHI - Channel Infrastructure Ltd (NZR)

[Sharp737]

Margins are down for this month...quite a bit apparently. Might account for a drop in SP. However, they are up and down so it might just be a glitch at the moment

Sharp "All things are possible"

[k1w1]

What is your source ?

[k1w1]

Well that was a resounding and telling silence.

SP has pulled up from its recent dive and has hit a higher low, now all it needs is the higher high.

[Snow Leopard]

quote:Originally posted by k1w1 [on the MFT thread]

I looking forward to reminding you of your comments on the NZR thread at a later date.


For your assistance, crude oil price has nothing to do with NZR profits, which correlate directly to the Singapore refiners margin and the $US/$NZ exchange rate. The higher they go, the larger the profits.

I am positioning on the basis that both of them will remain at present levels or above.

You cant find a source for me that gives a daily of the margin can you PT ?

Heh k1w1, all I said was, well read the post again...
You may know what affects the NZR margins, but the short term traders do not [care]. If you are happy to hold NZR then I have no gripe with that, you are as likely to be right as I am. I saw good news and bought and saw the market reaction the next day and sold out .
I may well have bought at yesterdays end of day prices had I not been in transit. Even with todays close I think it looks a reasonable bet, short term.

regards

Paper Tiger

[Sharp737]

k1w1, sorry I havn't got back to you. Let's just say...I know the margins are down somewhat for this month...but that's not to say that next month will be back up again.
And no, I am not NZ Refining Company employee.

Sharp

[k1w1]

No worries Sharp, I wonder if you could work out the margin by knowing the price of a barrel of their local crude and the price of a barrel of refined petrol and subtracting the former from the latter to work out the refining margin .

Is it a state secret or something that it is not readily published ?

[Base Trader]

A refineries margins are relative to the ability of it to produce higher quantities of desired products (remember the cracking process produces bitumen, fuel oil, jet fuel, naptha, gasoline etc) from the relative qualities of available crude. The recent past has seen the US importing a large amount of gasoline and as a result the global prices for the higher temperature distillates has increased. Note with this point that gasoline alternatives going to the US market will no longer be available for other markets such as NZ. A further important consideration is the relative freight rates on crude vs refined products.

Also as the US has strict gasoline rules this means it can only import from advanced refineries or refineries that have used sweet crude (low sulphur) for the purpose of higher distillate output. As more gasoline is produced from high API crudes (such as WTI and Brent) these have sold at a premium. Lower API and Sour crudes has sold at a widening discount. Marsden Point is not a particularly modern facility and has not overly benefitted from this crude quality spread change but rather in the global increase in refining spreads.

The refining spreads have pulled back over Nov as the US driving season abates and this will be across the board. However, on the positive side there is a lack of refining volume globally and it takes 4 years for a non-US refiniery and 8 years for a US refinery on average to be built so in the shocks the refineries will cream it.

A final point is that all the major oil companies have a share of NZR so there is a general lack of competitive edge which may aid it over the longer term.

[Lizard]

For anyone interested, this is the response I got from NZR when I queried what types of crude quality they could handle:

NZRC's refinery can process a variety of crude oil grades and other feedstock. The crude oil diet typically includes more than 50% of medium to heavy sour crude oil (mostly from the middle east). The refinery also consumes imported residue, (ie the portion of crude oil that remains after the petrol, jet fuel and diesel components have been distilled off in other refineries) and upgrades this very heavy material to petrol, jet fuel and diesel in the hydrocracker. The hydrocracker produces fuels with very lower levels of sulphur from heavy/sour residue. The Future Fuels project, to be started later this year, will enable the refinery to remove even more sulphur and will enable the refinery to meet the strict new product specifications (maximum of 50ppm sulphur in diesel) that will apply from 2006. This will ensure that the refinery maintains its ability to process a variety of feedstock, including sour crude oil, while meeting tight product specifications.

(received April 2005)

[Sharp737]

Not to mention the big project on the table to increase through put. Design being done now and then to go before the Board.
Future Fuels Project is now up and running and all running well.
Wish I had of got into these shares a few years ago...

Sharp "All things are possible"

[k1w1]

I think this is a very decent result. Having signalled they would only increase profits by 30% NZR have instead increased them by 40%. A fully imputed yearly divy of 32 cents is not to sneered at either. Share closed at $6.10. This is a company which will benefit from a falling NZ dollar provided that the gap between refining capacity and demand continues in the Asian region.