Posted by OTB > 2022-06-11 15:57 |

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Posted by OTB > 2022-06-11 16:02 |

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Posted by MoneyMakers > 2022-06-11 16:14 |

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Posted by botakpang2 > 2022-06-11 16:21 |

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Posted by botakpang2 > 2022-06-11 16:34 | Report Abuse

Pls talj about jaks also

Posted by probability > 2022-06-11 16:34 | Report Abuse

anyone who wish to invest or divest from HY, it would be mandatory you understand the following & why refinery do this before you do so

TQ


www.cmegroup.com/education/articles-and-reports/introduction-to-crack-spreads.html

Example 1 — Fixing Refiner Margins Through a Simple 1:1 Crack Spread

In January, a refiner reviews his crude oil acquisition strategy and his potential gasoline margins for the spring. He sees that gasoline prices are strong, and plans a two-month crude-to-gasoline spread strategy that will allow him to lock in his margins. Similarly, a professional trader can analyze the technical charts and decide to “sell” the crack spread as a directional play, if the trader takes a view that current crack spread levels are relatively high, and will probably decline in the future.

In January, the spread between April crude oil futures ($50.00 per barrel) and May RBOB gasoline futures ($1.60 per gallon or $67.20 per barrel) presents what the refiner believes to be a favorable 1:1 crack spread of $17.20 per barrel. Typically, refiners purchase crude oil for processing in a particular month, and sell the refined products one month later.

The refiner decides to “sell” the crack spread by selling RBOB gasoline futures, and buying crude oil futures, thereby locking in the $17.20 per barrel crack spread value. He executes this by selling May RBOB gasoline futures at $1.60 per gallon (or $67.20 per barrel), and buying April crude oil futures at $50.00 per barrel.

Two months later, in March, the refiner purchases the crude oil at $60.00 per barrel in the cash market for refining into products. At the same time, he also sells gasoline from his existing stock in the cash market for $1.75 per gallon, or $73.50 per barrel. His crack spread value in the cash market has declined since January, and is now $13.50 per barrel ($73.50 per barrel gasoline less $60.00 per barrel for crude oil).

Since the futures market reflects the cash market, April crude oil futures are also selling at $60.00 per barrel in March — $10 more than when he purchased them. May RBOB gasoline futures are also trading higher at $1.75 per gallon ($73.50 per barrel). To complete the crack spread transaction, the refiner buys back the crack spread by first repurchasing the gasoline futures he sold in January, and he also sells back the crude oil futures. The refiner locks in a $3.70 per barrel profit on this crack spread futures trade.

The refiner has successfully locked in a crack spread of $17.20 (the futures gain of $3.70 is added to the cash market cracking margin of $13.50). Had the refiner been un-hedged, his cracking margin would have been limited to the $13.50 gain he had in the cash market. Instead, combined with the futures gain, his final net cracking margin with the hedge is $17.20 — the favorable margin he originally sought in January.

Posted by johnny cash > 2022-06-11 16:53 |

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Posted by johnny cash > 2022-06-11 16:56 |

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Posted by johnny cash > 2022-06-11 16:57 |

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Posted by Raymond Tiruchelvam > 2022-06-11 17:14 | Report Abuse

probability.... thanks for the crack spread future's hedging vs un hedge position.... gives me a good understanding, but iscracknposition itself? there a futures market cor

Posted by Jerichomy > 2022-06-11 17:25 |

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Posted by Johnzhang > 2022-06-11 17:28 | Report Abuse

@probability,
I am absolutely a layman in derivatives. Will come back to you with my layman’s opinion tomorrow. Thanks
————————
Johnzhang, would love to know your comments on this article:

https://klse1.i3investor.com/blogs/2017/2022-06-11-story-h1624320379-H...

Posted by bsinvestor > 2022-06-11 17:35 | Report Abuse

Base on your explanation, rising crack is not good to hedge, but unfortunately hy got no choice.

Posted by probability > 2022-06-11 17:41 | Report Abuse

not sure i got your query..

when you LONG the crude & SHORT the refined oil, you are protecting yourself against margin (i.e the crack spread) contraction

(1) if price of crude rise & refined oil drop when you want to close your position at the futures (take it as stock market), you will make money at the futures

(2) while at the cash market ( the real sales & purchase market), you will lose money due to shrinking margin by the same amount compared to the margin the time of hedging

gains in (1) will neutralize loss in (2), ie your margin at the time of hedging is retained


If on the other hand, margin or crack had expanded

(1) will lose money'
(2) will gain money by the same amount

again (2) will neutralize (1)

hedging basically cause your refining margin to lag by a certain period, often a month (the [lag period is derived by hedging volume divided refining throughput) while ensuring every month you make profit as per market opportunity





Posted by Raymond Tiruchelvam > Jun 11, 2022 5:14 PM | Report Abuse

probability.... thanks for the crack spread future's hedging vs un hedge position.... gives me a good understanding, but iscracknposition itself? there a futures market cor

Posted by probability > 2022-06-11 17:44 | Report Abuse

take your time, we are all learning - the more we brainstorm the more certain we would be on future of HY

Posted by Johnzhang > Jun 11, 2022 5:28 PM | Report Abuse

@probability,
I am absolutely a layman in derivatives. Will come back to you with my layman’s opinion tomorrow. Thanks
————————

Posted by probability > 2022-06-11 17:49 | Report Abuse

if anyone need me to share the native files (excel) of the table i can share it on messenger in i3, just ping me

https://klse1.i3investor.com/blogs/2017/2022-06-11-story-h1624320379-HENGYUAN_derivatives_loss_on_Q1_22_completely_clarification.jsp

Posted by Johnzhang > 2022-06-11 18:00 | Report Abuse

@probability,
Average inventory holding in 2021 and 2022 were 1.72 months and 1.86 months of sales vol. (figures derived from year end BS , inventory value/ avg purchase per month).
Taking into consideration of 1+ months of lead time between contracts and crude arrival, the gap between contracting crude and eventually selling refined products will be 3 months. Hedging is therefore particularly important to cover the risk of price going opposite direction during the 3 months.
Can you simulate another example under scenario described by me in above.

Posted by probability > 2022-06-11 18:14 | Report Abuse

Hi John, not sure on your query and what you are trying to obtain

inventory you see on BS carry little meaning

when you buy crude, you do the sales of refined oil at the same time at the same quantity (either by physical contract or hedging)

If you want to see the effects of changing the lead time, your transaction volume has to be changed as per below formula

the lag period is determined by hedging volume divided refining throughput (3.5 m barrels / month)

i can share the excel file and you can play with volumetric sales throughput and adjust the lag accordingly

example, if you set for 1.5 months lead time, your sales volume will be 3.5m barrels per month x 1.5 = 5.25

in a qtr you will only experience the hedging loss or gain taking place twice then



Posted by Johnzhang > Jun 11, 2022 6:00 PM | Report Abuse

@probability,
Average inventory holding in 2021 and 2022 were 1.72 months and 1.86 months of sales vol. (figures derived from year end BS , inventory value/ avg purchase per month).
Taking into consideration of 1+ months of lead time between contracts and crude arrival, the gap between contracting crude and eventually selling refined products will be 3 months. Hedging is therefore particularly important to cover the risk of price going opposite direction during the 3 months.
Can you simulate another example under scenario described by me in above.

Posted by probability > 2022-06-11 18:37 | Report Abuse

If you hedge at the futures say 10.5 m barrels volume, it will take one quarter for this hedged margin to changed to a new figure

as it take one quarter to sell the same volume at cash market ( margin lag period 1 qtr)

if you hedge only 1 million barrels then it takes only 1 week of cash market to clear this sales volume at the margin you capture (hedge) (margin lag period 1 week)

Posted by MoneyMakers > 2022-06-11 19:16 | Report Abuse

This is what happens when 2 people who barely know anything about hedging/derivatives try figure out HY hedging loss

Too much nonsense until 1 doesnt understand question / 1 doesnt understand answer

Finally still dunno whether HY make another hedging loss or not

Posted by zeroxweng > 2022-06-11 19:19 | Report Abuse

wake up!

Posted by probability > 2022-06-11 20:36 | Report Abuse

@Johnzhang, considering your query i had added some clarification on why the hedging are closed and renewed every month.

https://klse1.i3investor.com/blogs/2017/2022-06-11-story-h1624320379-HENGYUAN_derivatives_loss_on_Q1_22_completely_clarification.jsp

From the size of it Refining Margin Swap reported, USD 280 million in Q4 21' and USD 291 million in Q1 22'. we can expect HY hedging volume to be cleared every month (based on HY sales volume of around RM 1.2 billion every month). As such the hedging gain or loss is realized monthly as refiners typically do.

Posted by probability > 2022-06-11 20:47 | Report Abuse

If we see the Refining margin Swap contract value at end of every quarter in 2021, it reflects the typical sales volume you can expect during the mid of the concern qtr at the market pricing of crude oil.

Posted by Silemak > 2022-06-11 21:20 | Report Abuse

MM please explain how if Russia control Donbas war end /oil collapse?

Posted by Silemak > 2022-06-11 21:21 | Report Abuse

And if oil collapse Heng yuan will down to rm4. Please explain how it affects Heng yuan?

Posted by Johnzhang > 2022-06-11 21:40 | Report Abuse

@probability,
I asked about the lead time between crude purchase to realizing sales of the refined products which is about 3 months is trying to link how advance the hedging is done . For example Jan 2022 to enter refining margin swaps for April 2022 delivery ? ( ie 3 mth forward to match to the lead time mentioned earlier).
If that is true , the realizable crack spread is always at 3-month forward discount to spot rate which can be considerable. For example, the crack for spot month June is 30.6 whereas the rate 3 months later (Sep) is 23.5, giving rise to usd7.1/bbl difference .

Same for commodity hedge on crude . 3 months forward can be as high as usd10/bbl discount.
Let’s talk more tomorrow.

Posted by botakpang2 > 2022-06-11 21:41 | Report Abuse

Posted by MoneyMakers > 2 hours ago | Report Abuse

This is what happens when 2 people who barely know anything about hedging/derivatives try figure out HY hedging loss

Too much nonsense until 1 doesnt understand question / 1 doesnt understand answer

Finally still dunno whether HY make another hedging loss or not

Yup. Talk kok sifu. Wasting time

Posted by botakpang2 > 2022-06-11 21:44 |

Post removed.Why?

Posted by Johnzhang > 2022-06-11 21:44 | Report Abuse

Understood. It’s a rolling hedging.
————————
probability
@Johnzhang, considering your query i had added some clarification on why the hedging are closed and renewed every month.

Posted by botakpang2 > 2022-06-11 21:47 | Report Abuse

Talking day n night, bo eat no sleep no shhitttt can prevent hy sliding down further? Kalakakaa

Posted by VTrade > 2022-06-11 21:54 | Report Abuse

Memang susah and confusing

Posted by Johnzhang > 2022-06-11 21:57 | Report Abuse

@botakpang2,
Still crying for milk ? Already cried so much at Petron forum not enough meh?
At least the 2 people are eager to learn new knowledge .
Carry on sucking your milk bottle and perhaps watch few more horror ghost movies. Ending up seeing ghosts all over .
Hehehe…..

Posted by upshare > 2022-06-11 22:00 | Report Abuse

Overall market is bad..
Not.only HY down..other counter also down

Posted by botakpang2 > 2022-06-11 22:00 |

Post removed.Why?

Posted by botakpang2 > 2022-06-11 22:01 | Report Abuse

Seeing ghost is beter seeing vampire. Bloodbath. Kakaka

Posted by botakpang2 > 2022-06-11 22:01 | Report Abuse

Seeing ghost is beter seeing vampire. Bloodbath. Kakaka

Posted by Johnzhang > 2022-06-11 22:12 | Report Abuse

botakpang2,
Still crying? You must have shitted in your pampers. Hahaha…

Posted by OTB > 2022-06-11 22:25 |

Post removed.Why?

Posted by MoneyMakers > 2022-06-11 23:47 |

Post removed.Why?

Posted by Johnzhang > 2022-06-12 06:32 | Report Abuse

Moneymakers is just a stupd kid . He Keep uttering the same thing over and over again which exhibit his mental problem. He is finished

Posted by Johnzhang > 2022-06-12 08:00 | Report Abuse

botakpang2,
In Petron forum I said you making huge profit in your DREAMS only is with proof one . Mphb capital was not even listed 10 years ago 2012! Mphb capital achieved its peak share price in late 2014 only . How you could sell at peak price 10 years back ????? Sold in your dream!
Your big lies all ‘bocor’ and everyone can see it now ! Hahaha…
————————
Posted by botakpang2 > 8 hours ago | Report Abuse

Wan to talk with me mphbcap ah? Very proud right? Pls check la, i oredi made huge gain 10 years back when it was traded at 2.80. Now only u bought ah? Kakaka

Posted by investor2021trading > 2022-06-12 08:28 | Report Abuse

DALLAS—There is little evidence that gasoline prices, which hit a record $5 a gallon on Saturday, will drop anytime soon. Rising prices at the pump are a key driver in the highest inflation that Americans have seen in 40 years. Is it going to be $5? Is it going to be $6, or $7? That's the million-dollar question that nobody knows.

Posted by Investmalaysiaa > 2022-06-12 09:48 | Report Abuse

Still quarrel in the forum. Just like gloves two years back. You guys know what will happen la kikiki

Posted by 888STOCK888 > 2022-06-12 09:50 | Report Abuse

"Be greedy when others are fearful"

Yes, foreign funds are selling and moving money back to US, HY will rise again!!!

Sapu tomorrow!!! Buy cheap!!!!

Posted by botakpang2 > 2022-06-12 10:06 | Report Abuse

Aiyo, back in 2014 roughly like tat la. How can give u exact date ka? Or give u date month year ah? So ridiculous.

Posted by botakpang2 > 2022-06-12 10:06 |

Post removed.Why?

Posted by Johnzhang > 2022-06-12 10:11 | Report Abuse

botakpang2 telling more lie to cover previous lie. Who will believe your endless lies ?
Go on to suck your milk bottle.
Hehehe….

Posted by botakpang2 > 2022-06-12 10:17 | Report Abuse

No one is teling lies. Just u cant acept.

Posted by botakpang2 > 2022-06-12 10:18 | Report Abuse

I ask u when u study si pin. U oso canot give exact date la. Y u so dumb

Posted by johnny cash > 2022-06-12 10:18 | Report Abuse

https://klse.i3investor.com/web/blog/detail/2017/2022-06-11-story-h1624320379-HENGYUAN_derivatives_loss_on_Q1_22_completely_clarification