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Singapore Airlines plans debut 5-year dim sum bond
Singapore Airlines announced on Monday that it plans to sell its first benchmark five-year dim sum bond, a offshore yuan debt issued outside of mainland China. Four banks have been hired to help arrange the deal. The benchmark size of offshore yuan bonds is usually 1 billion yuan (147.6 millions dollars), which means they are large enough to be traded easily by investors. Singapore Airlines hasn't revealed the size of its planned expansion. The airline?said that it tapped Bank of China, DBS HSBC Standard Chartered and Standard Chartered to help with the bond sale. ? The decisions were reported earlier on Monday based on a document. The company said in an email that it had been "monitoring the offshore renminbi market (CNH). We view current conditions as being favourable for the issuance of CNH bonds." CNH is yuan that's traded outside of mainland China. Singapore Airlines announced that the planned deal would be a five-year benchmark CNH bond, under its existing S$10 Billion ($7.7 Billion) medium-term notes programme. The proceeds will be used to finance aircraft purchases, related payments, corporate working capital, and existing debts. Singapore Airlines has said that execution will take place in two days. The final coupon size and interest rate - paid to investors - will be determined at the pricing. Singapore Airlines said that it regularly reviewed its funding needs against its cash position. "We have regular access to capital markets, and we tap them whenever conditions are favorable." The statement said that more details would be released in an announcement by the Singapore Exchange once the transaction has been priced. Documents seen earlier by us on Monday indicated that the airline would be holding a global investors call?on Monday. Document showed that the deal could be launched as early as Tuesday depending on'market conditions. In January, the airline sold S$500,000,000 of 10-year notes.
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Saudi Arabia is the top buyer of Russian fuel oil by sea in May, according to data?
Data from traders and LSEG revealed that Russia's seaborne fuel oil and vacuum -gasoil exports fell by about 6% on a month-to-month basis to 3.2 -million metric tonnes in May. This was due to Ukrainian drone strikes against infrastructure which curtailed shipments and output. Saudi Arabia remains a major destination for fuel oil, VGO and air conditioning products, as the high temperatures of summer have boosted demand. However, calculations based on data show that shipments to Saudi Arabia were down 17% since April, at 1.23 million tonnes. The increase in exports was attributed to disruptions caused by the Iran War, which changed flows and boosted demand for crude oil. Also, the temporary lifting of U.S. restrictions on Russian oil products also contributed. Analysts say that Saudi Arabia will burn more imported fuel oil this summer because of the loss of natural gas from shut oilfields after the Iran War curbed oil exports. Since the European Union's full ban on Russian oil products came into effect in February 2023, the Middle East and Asia are the main markets for Russia's VGO and fuel oil. LSEG data shows that Russian fuel exports to Singapore and Malaysia - major hubs for bunkering and storing - fell 39% a month on a monthly basis in May, to around 0.4 millions tons. Nearly 140,000?tons VGO and fuel oils loaded at Russian ports last month, were bound for transfers near Port Said, Egypt. The final destination is unclear. Shipping data shows that exports to India, which was once one of Russia's biggest markets for fuel oil, dropped by 28%, to 120,000 tons. All data is based upon the departure date of the cargo. (Reporting and Editing by Alexander Smith).
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Wall Street Journal, June 22,
These are the most popular?stories from the Wall Street Journal. ? This information has not been verified and we cannot vouch for their accuracy. China has added 10 defense contractors and two rare earth producers to its export control list. Pakistan and Qatar, who are acting as mediators in the talks between Iran and the U.S., have confirmed that the two countries had agreed to establish a'mechanism to ensure the termination of military operations?in Lebanon. Castlelake, a U.S. investment company, said that easyJet's board had rejected its third 4,74 billion pound ($6.26 billion),?takeover offer. The firm encouraged shareholders to seriously consider the proposal as it sought to privatize the airline. Donald Trump, the U.S. president, expressed frustration with the problems at the Lincoln Memorial Reflecting Pool. He said that multiple people were arrested and that the pool may need to be drained in order to make repairs. After a campaign that centered on his promise to dismantle the armed groups,?far-right 'populist'?Abelardo de la Espriella narrowly won Sunday’s presidential election in Colombia with 49.6%. SoftBank-backed Chinese robotics firm Coowa is preparing to file for a Hong Kong IPO within the next 2 to 3 months. ($1 = 0.7571 pound) (Compiled from Bengaluru Newsroom)
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Investors weigh U.S. Iran talks as they muzzle European shares
Investors waited for any signs of progress in the latest round of U.S. and Iran negotiations to resume shipping through the Strait of Hormuz - a vital artery for the global oil trade. Brent Crude prices fell 1.6% and traded below $80 a barrel after mediators Qatar and Pakistan announced that Washington and Tehran agreed on a roadmap and measures to protect shipping through the Strait of Hormuz. Tehran declared the waterway closed on Sunday, casting doubt on its sustainability. By 0711 GMT, the pan-European STOXX 600 Index was up 0.05% at 635.92. Tech stocks led the sectoral gains with a 1.2% rise. Chipmaker Infineon gained?4.5%, and semiconductor equipment manufacturer Aixtron gained?2.3%. These gains were in line with those of Asian equity markets. M&A activity saw shares of?easyJet rise 2.3% following a US investment firm's?public offering?of PS4.74 billion ($6.26billion). Danone shares fell 0.4% following the announcement that the French food giant would acquire Australian company MADE Group for an undisclosed sum. Babcock, a UK defence and engineering group, dropped 3.3% after a sharp drop in its annual profit due to a PS140m frigate charge.
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Experts say China's efforts to use green energy in AI projects face hurdles.
China's efforts to increase renewable energy for its rapidly expanding AI data centre sector are running into obstacles. Industry experts warn that it is difficult to forecast peak demand and grid operators do not want to take on additional risk. In China's work report for 2026, released earlier this summer, the government highlighted that ensuring reliable electricity is a priority. It also pledged a stronger integration of computing infrastructure with power supply networks. An ambitious plan is a key component of this effort to direct more green?electricity into the rapidly expanding data centre industry. The authorities aim to have renewables supply four-fifths (from just 11%) of the total electricity consumption in the data centre sector by 2030. According to Pei Shapeng, director of the Chinese power company State Power Investment Corp., China's data centers are expected to increase their electricity consumption by 300 billion to 500 billion kilowatt hours between 2026 to 2030. This represents 18% of overall growth in total demand. The estimate's lowest range is equivalent to the UK?s entire annual electricity consumption. Despite the booming demand from China's data centers, this sector is not a good fit for green energy providers, especially compared to traditional energy-intensive industries like aluminium smelting. This is because its peak demands are harder to predict. Pei, speaking at a conference on the industry in Beijing last Thursday, said that "at least for now they don't appear to be very versatile (in managing energy demand)." We understand that data centres cannot adjust their power consumption loads very much. Once GPUs have been purchased, operators will want to use them quickly and intensively. He said that the move to increase green power usage by data centres was more about reducing emissions than it was about lowering electricity prices. Grid operators may also be reluctant to adopt a wider range of "direct green-power connections" to data centres. They are concerned that electricity sales will decline, and it would become harder to recover large investments made in transmission and distribution infrastructure. Experts say that China's fast-tracked rollout of data centres has already begun to strain the power sector, increasing average and peak grid loads and forcing operators balance rising demand with reliability risks. Wang Zelin is deputy director of State Grid Jibei Electric Power Research Institute. He said that if 15% of the power consumption load can be reduced, this will reduce the capacity expansion pressures on the grid in the next 3 to 5 years. (Reporting and editing by Eduardo Baptista and Che Pan; Miyoung Kim, Shri Navaratnam and Miyoung Kim)
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Qatar brings LNG tankers into Hormuz despite shipping slowdown
Shipping data revealed that four liquefied?gas tanks controlled by Qatar headed into the Strait of Hormuz despite a drop in?ship traffic following Iran's announcement over the weekend that the waterway had been closed again. Shiptracking data by analytics firm Kpler revealed that the tankers - Wadi Al Sadd, Mekaines Al Sadd, and Mesaimeer – entered the strait via Iran for the first since the U.S./Israeli war against Iran began. QatarEnergy's LNG exports, which have been severely curtailed since the beginning of the war on February 28, didn't immediately respond to an inquiry for comment. LSEG data shows that the dry bulk vessel Summit Success, which is registered in Marshall Islands and sails under its flag, also entered Gulf waters on Monday. Kpler data revealed that five vessels crossed the Strait of Gibraltar on Sunday. This is down from 26 ships seen a day before. Three Very Large Crude Carriers were among them, each carrying 2,000,000 barrels of Saudi crude oil and fuel oil. One of these vessels was headed to Japan. It is possible that more ships could be plying the Strait with their transponders turned off. Iran lifted its effective Blockade of Hormuz after agreeing to extend a ceasefire in April for 60 days with the United States, to allow peace negotiations. But Tehran's Islamic Revolutionary Guard Corps declared the waterway closed once again on Saturday, as retaliation for Israeli attacks in Lebanon. OIL EXPORTS MOVING U.S. Central Command reported that 55 merchant ships with over 17 million barrels for global markets transited through the strait Saturday. The data revealed that three VLCCs were carrying crude oil from the United Arab Emirates (UAE), Kuwait, and Iraq and three tankers were carrying various products of oil. The data shows that there were 13 ships, including two VLCCs. Hamid Bovard from the National Iranian Oil Company told state television on Sunday that over 25 million barrels of Iranian crude oil had passed through the virtual blocking line since Monday. Gulf producers Abu Dhabi National Oil Co. and Kuwait Petroleum Corporation have issued tenders for selling crude oil with the option of loading it from within or outside the Strait of Hormuz. Seoul's Ministry of Oceans and Fisheries announced on Monday that two?vessels operated South?Korea passed through the strait following the U.S. and Iran signing their interim peace agreement last week. The ministry did not name the vessels. Kpler data and LSEG data showed that two ADNOC controlled?LNG tanks were delivering cargoes on Monday to India, after having recently exited the strait. Data reveals that the Al Hamra tanker discharged at Ennore LNG Terminal, while the Mubaraz tanker would be offloading its cargo on the Kochi terminal at the end of June. The data showed that both tankers had been seen last in ballast, east of the strait, in late May or early June. They then reappeared on the ship tracking data at the weekend with their cargos loaded off the coast of India. ADNOC didn't immediately respond to an inquiry for comment. Al Hamra has completed two "dark voyages" out of Hormuz. Reporting by Florence Tan and Emily Chow; Editing by Stephen Coates, Sonali Paul and Sonali Paul
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Kuwait's KPC issues first spot naphtha tender since US-Iran conflict, sources say
According to trade'sources' and a document that was reviewed by, Kuwait Petroleum Corp (KPC), has made its first offer to?sell spot naphtha -cargoes from its ports for?July. This is the company’s first tender since the start of the U.S.Iran War. Documents showed that the state-owned oil company is offering 55,000 metric tons (495,00 barrels) of petrochemical feedstock or 80,000 tonnes, with the loading scheduled for the weekend of July 5-7 at any port in Kuwait. The bid closes on 22 June with same-day valid. KPC didn't immediately respond to a request for comment made outside the working hours of the company. Two sources confirmed that the refiner had last bid for February shipments in January. KPC offered prompt June-loading of refined fuels, such as naphtha and diesel via ship-to -ship transfers off the west coast of?India and?Oman or from Fujairah tankers.
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Authorities say 54 injured and 18 missing following explosion at Qatar LNG site
Authorities said that 54 people were injured and 18 others are missing following an explosion on Sunday at Qatar's main liquefied gas processing site, Ras Laffan. In a statement, QatarEnergy said that an incident occurred during the start-up operations of Ras Laffan industrial city which resulted in "an explosion and fire" at the Barzan gas supply facility Sunday evening. It said that emergency response teams had been deployed to control the fire. The fire was now under control. In a statement, the Interior Ministry of Qatar said that 54 people were injured and 18 people are missing. The ministry attributed the blast to a "technical error" and said there was no danger to public safety. QatarEnergy has not indicated whether the explosion caused any damage to its plant that supplies gas for the domestic market. Witnesses reported hearing a loud boom in Doha's capital, south of Ras Laffan. Barzan's gas facility is capable of producing 1.4 billion cubic foot per day and provides pipeline gas for local industries as well as Qatar's electricity generation sector. The Barzan gas facility has the?capacity of producing ethane and condensate for both domestic?and international markets. The facility is located at Ras Laffan, QatarEnergy’s main site for LNG export and production. It has a total 77 million tons of LNG per year via 14 trains. In the midst of a U.S./Israeli war against Iran, two of Qatar's LNG train and one of its gas-to liquids facility were damaged by strikes. This knocked out 17% of Qatar's LNG export capacity. Repairs are expected to take many years.
Fuel relief from the Iran deal may keep airline ticket prices high.
Oil prices are expected to fall after the interim U.S. Iran peace agreement, but it is unlikely that passengers will see any immediate relief. Carriers may be able to maintain fares above those of pre-war.
The U.S. market is the most obvious example. Fuel costs have risen this year, but fare increases are still behind. Domestic seat growth is also limited. This gives airlines the opportunity to use lower fuel costs to rebuild margins, rather than reverse recent price hikes.
U.S. Jet Fuel Spot Prices were $2.85 per gallon on 17th June, down from a high of $4.88 in early April. According to calculations based on fuel consumption, a decline that large would reduce the U.S. airlines' annual fuel bill by over $40 billion.
FARES STILL LAG FUEL As jet-fuel prices rose, U.S. Airlines raised ticket prices, bag fees, schedules and reduced them, but these steps only offset part of the increase in fuel costs.
Jet fuel prices increased three times faster than airfares between January and May, according to industry data. Deutsche Bank estimates that U.S. carriers will only recover 60 cents for every dollar more spent on fuel - $14.4 billion of higher revenues against $24.1 billion of higher fuel costs. Alaska Air reported that it would recover about one-third of the fuel cost increase. Delta Air Lines and United Airlines, as well as American Airlines, estimated second-quarter recapture to be between 40% and 50%. JetBlue Airways, Frontier Group and other airlines expect to recover less that half.
United CEO Scott Kirby said that his airline is getting closer to recouping fuel costs through price: "We're going to recover 100% by the end the year."
Raymond James data shows that domestic average fares were up by 34.1% compared to a year ago as of June 8th.
Fuel prices are falling, so the question that needs to be answered is whether or not airlines can maintain their recent increases in fares. Conor Cunningham, Melius Research analyst, said that the ability to maintain prices is crucial. Lower gasoline prices may ease consumer pressure on high fares.
Uneven Pass-Through
Fare relief outside the U.S. is likely to be uneven. Jet fuel prices will not fall immediately because crude oil prices are still low. Until jet fuel prices drop to levels seen at the beginning of the year, airlines may keep their fares steady or even increase them if demand permits, according to Dudley Shanley.
Europe could see a split. Ruairi Cullinane, RBC analyst, said that long-haul fares will be more lenient because airlines are more successful in passing on fuel costs on these routes. Short-haul prices may be firmer, if bookings and demand are supported by the peace agreement. Analysts at HSBC said that China's three largest airlines are facing weak pricing power, and falling aircraft utilization. Hong Kong's Cathay Pacific, however, is in a better position, as higher fares and cargo revenues, along with premium demand, could offset fuel costs. Middle East traffic was disrupted by the war, which is why it's the only exception. Aviation analyst John Strickland said that some airlines could use promotions to gain back traffic. However, fuel is still too expensive to offer widespread discounts. He added that United Arab Emirates airlines could be more aggressive, and get stronger government support.
Earnings Before Discounts
The length of time that prices remain low will determine how much benefit airlines receive. Fuel bills are based on purchases made over time and not spot prices. Even after the most recent declines, jet fuel costs 54% more than it did a year earlier, according to the International Air Transport Association.
Southwest Airlines Chief Operating Office Andrew Watterson summarized the pressure. Watterson replied, "When is fuel going to drop?" when asked by a reporter about Southwest's return to its pre-pandemic profit margins.
As airlines attempt to rebuild their earnings, there is little incentive to reduce fares.
Jefferies estimates that each?5% decrease in its $3 per gallon fuel cost forecast for 2027 would increase projected earnings by 10 to 15% for Delta and Southwest, and as much as 50% for American Airlines.
No Broad Fare War
In previous U.S. fuel cycle, falling oil prices would often trigger a race to increase capacity that drove fares down. These conditions do not exist in most cases. The 'risk' of a wide-scale domestic fare war is being limited by aircraft delivery delays, tight capacity at airports and weaker low cost carriers. Industry data shows that U.S. domestic airlines seats are expected to increase by just 0.4% in the third quarter compared to 4.6% before the latest Middle East tensions.
J.P. Morgan analysts say that limited aircraft deliveries, and the pullback of budget carriers in the United States reduces the risk of "meaningful" capacity creep. This gives airlines an easier time than usual to maintain current pricing.
Fuel prices may not be as important to passengers than the demand for fuel. Shanley stated that the power of the consumer is a major factor. Reporting by Rajesh Singh in Chicago, Alessandro Parodi and Joanna Plucinska from London; Additional reporting in Hong Kong by Julie Zhu; Editing by Jamie Freed).
(source: Reuters)