20 Dec 2008;dailypioneer.com:London: The price of New York oil sank under $34 per barrel today for the first time for more than four and a half years, as weak global demand overshadowed a record OPEC output cut, traders said.
The fresh falls prompted OPEC President Chakib Khelil to stress that the cartel would continue cutting output until prices stabilise.
In morning trading, New York’s light sweet crude for delivery in January dived as low as $33.44 a barrel, which was the lowest point since April 2, 2004.
The January contract, which was also driven lower in technical trading owing to its expiry on Friday, later pulled back to $34.18, down $2.04 from the close on Thursday.
New York prices have now plunged by about 77 per cent since striking a record high above $147 in July as the market has been slammed by concerns that a sharp global economic slowdown will slash energy demand.
Meanwhile today, London’s Brent North Sea oil for February delivery edged up 11 cents to $43.47 a barrel, after dipping as low as $43.03.
“Crude fell as concerns over a global economic slowdown weighed on sentiment,” said Sucden analyst Nimit Khamar.
The Organisation of the Petroleum Exporting Countries (OPEC), which produces about 40 per cent of the world’s crude, agreed on Wednesday to cut output by 2.2 million barrels a day in a bid to shore up the market and protect its members’ revenues.
“We will continue this reduction until the price will stabilise,” Khelil told reporters in London on Friday at a key gathering of oil producing and consuming nations.
18 Dec 2008;economictimes.indiatimes.com;Vikram Gour: With hectic work schedules and a busy lifestyle, Toyota's latest service initiative comes as a breath of fresh air for Toyota vehicle owners. Toyota offers 1-hour Express Maintenance service. Toyota Kirloskar Motor (TKM) has introduced its 60 minute global service initiative in India as well. Known as Express Maintenance (EM), this new initiative is available to all Toyota customers existing and new at no additional cost. EM Service is the first of its kind initiative in the Indian market. Toyota has taken the liberty to apply their Toyota Production System (TPS) knowledge and Kaizen methodologies in order to cut idle time between service procedures and refine the system in order to do a complete routine service within 60 minutes. MGF Toyota in Gurgaon is the first dealership in North India to launch the EM Service, available to the customers at the same price as the normal service. The pilot project for EM has been well received at Lakozy Toyota in Mumbai. Toyota plans on extending the EM service to 14 dealerships across the country by the end of 2008. EXPRESS BODY AND PAINT LINE TKM has also introduced first of its kind Express Body and Paint Line. This advanced Kaizen activity, provides speedy servicing and repair for vehicles that require servicing other than the normal servicing such as accidental repair and body work. In the event that the vehicle has three or more panels damaged, then the servicing and repair can now be done in 2 days as compared to 10 days. Utilizing the TPS concept, systematical TPS Line Operations are used to repair light damage conditions. The Pilot project was for Express Body and Paint Line was implemented at Lanson Toyota - Koyambedu, Chennai in 2006. Till date this program has been implemented at three Locations which include, Lanson Toyota-Chennai, Ravindu Toyota-Bangalore, and MGF Toyota - Gurgaon. In 2009 TKM plans to spread this project to four more locations.
Honda defers expansion at second plant, cuts production
18 Dec 2008;dailypioneer.com:New Delhi: Japanese auto major Honda on Wednesday said it has decided to defer capacity expansion at its second Indian plant in Rajasthan besides cutting production at the existing facility at Greater Noida, near Delhi.
The company, which runs its Indian operations through a joint venture with the Siel Group -- Honda Siel Cars India -- said it would postpone capacity enhancement and assembly operations at its second plant in Tapukara, Rajasthan.
Addition of new capacity, initially scheduled for Q4 of 2009, has been deferred in view of the current economic slowdown, which has impacted the automobile industry, resulting in a drop in demand, a senior offical of HSCI said.
“While work on shed is still continuing and structures will be ready, installation of equipment will not be happening,” the official said. The company had announced an initial investment of Rs 1,000 crore at the Rajasthan plant, of which Rs 600 crore had already been used.
HSCI had planned to set up the second plant in Rajasthan with an initial capacity of 60,000 units, while it expanded capacity at it Greater Noida facility to one lakh unit per year. The official said production at the Greater Noida facility would be reduced, without specifying quantum, in view of the negative growth in the Indian automobile industry and in the interest of maintaining lean operations.
“We are closely monitoring the market situation and will adjust monthly production volumes to respond promptly to market demands while ensuring operational efficiencies and low inventory levels,” the official added.
Auto part firms to gain from WTO's ruling against China
18 Dec 2008;business-standard.com:Danny Goodman:New Delhi: The recent ruling by the World Trade Organization’s (WTO) highest appeals court, the Appellate Body, against the imposition of 25 per cent import duty on auto parts by China has come as a boost to Indian auto component manufacturers. These companies’ exports to China have been declining steadily.
Indian automakers stand to benefit from the move as any cut in the duty will make their products cheaper in the Chinese market.
“Auto ancillaries from India, like any other supplier elsewhere in the world, will have relatively freer access to the Chinese market, should the import duty be scaled down. The import duty is a trade barrier,” says Vishnu Mathur, executive director, Automotive Component Manufacturers Association of India (ACMA). Mathur says the benefit will come only if China accepts the ruling and reduces the duty. “China should not bring back the duty under a new name or a new policy. If that happens, other countries can retaliate against China,” he said.
China applies 10 per cent duty on all auto components imported into the country. Indian auto component manufacturers say this could be as high as 25 per cent if vehicles built in China do not have local components to the extent of 40 per cent. India charges 7.5per cent to 10 per cent duty on all auto component imports, including from China.
In the start of the decade, Indian auto ancillaries’ exports to China were more than the imports from that country. But that edge was short-lived. Imports of Chinese auto components surged at a CAGR (Compound Annual Growth Rate) of 113 per cent between 2003 and 2008, while Indian exports to China during the period grew at a CAGR of 17 per cent.
Data with the Department of Commerce and the Export Import Data Bank reveal that imports of Chinese auto components have grown faster than imports from any other country. While Chinese auto parts like wheel rims and spokes constitute about 90 per cent of the overall imports in this segment, China’s share in other imported motorcycle accessories has grown from 10 per cent in 2006 to 29 per cent in 2007.
Similarly, China’s share in the imported ball bearing market increased from 15 per cent to 23 per cent during the period. In the pistons segment for 1000 cc cars, its share zoomed from 0.1 per cent in 2006 to 21 per cent last year.
The story does not end here. Indian tyre companies have, over the past few years, faced the onslaught of cheaper truck and bus radial tyres from China. These products are cheaper than the local products by 25 per cent to 30 per cent and currently command 15 per cent share of the replacement market. “First they dump their products into our country at prices local manufacturers can’t match, thereby ensuring that the domestic industry is crippled. Once this has been achieved, they raise prices steeply, thus making a kill in the international market,” says AS Mehta, marketing director, JK Tyres.
ACMA’s study on Chinese companies’ competitiveness conducted about two years ago revealed 15-20 per cent cost advantage by Chinese auto component manufactures based in China. “But there is another 20 per cent hidden subsidy given to Chinese companies, which are not made available to Indian auto companies based in China,” said an automobile consultant.
18 Dec 2008;business-standard.com:New Delhi: Reliance Industries will supply the second consignment of crude oil from its eastern offshore Krishna Godavari basin D6 block to Chennai Petroleum Corporation in January-end or early February instead of this month.
Reliance had contracted to deliver 450,000 barrels of oil from MA-1 field in the predominantly gas-rich block in the Bay of Bengal to CPCL on December 23-24. But, there was an equipment failure at the field last week forcing an emergency shutdown of the facilities for three to four weeks, sources said. The field had started crude oil production in September.After the shutdown, Reliance offered to sell 300,000-320,000 bpd of oil to CPCL and informed the company that if it wanted the full contracted quantity it would have to wait till February for producing the remainder quantity after the field restarts production. CPCL opted to wait, they said.
Sources said crude oil from the MA-1 field is stored on a floating, production, storage and off-loading vessel (FPSO) at the well-head and once critical volumes are reached it is transferred to a ship for transportation to a refinery.
On December 9, a rupture in a short pipe spool connected to the flare header in the FPSO led to the emergency shutdown of the production system. Reliance had last month sold the first consignment of 59,000 tonnes of oil from the field to Hindustan Petroleum Corp's Vizag refinery in Andhra Pradesh. The oil was sold at $5.34 a barrel discount to Nigerian crude grade Bonny Light.
Oil and Natural Gas Corporation, the country's largest crude oil producer, also benchmarks its prime Bombay High crude at this grade.
Both Vizag and Chennai refineries have evinced interest in taking the entire peak output of 40,000 bpd (2 million tonnes a year) of sweet crude on a long-term basis. The peak output was envisaged in second calendar quarter of 2009 and in all likelihood, Reliance may split the volumes equally between the two, sources said. RIL is the operator with a 90 per cent stake in the 7,645 sq km D6 block, off the Andhra coast.
Niko Resources of Canada holds the remaining 10 per cent interest.
The company, which had budgeted $1.5 billion for developing the oil field, has till now spent $950 million and would invest the remainder in drilling and tying in four additional wells.
