The Market Today - 12 April 2017
Refinery capacity utilization surges to 37% in January
According to NNPC Financial and Operations Report for January, Crude oil production dropped to 1.58mbpd in Dec 2016 (Nov 2016: 1.93mbpd) following the shutdown of Trans Niger Pipeline (TNP), Nembe Creek Trunk Line (NCTL) and Agbami Terminal due to pipeline leakages and maintenance. Also, the subsisting force majeure at Forcados and Brass Terminals continued to cap production. Meanwhile, National Gas production for January 2017 rose 5% m/m to 7,460 mmscfd whilst supply to power plants declined 20% m/m to 387 mmscfd. Also, refinery capacity utilization surged to 37% in January (2016 average: 14%), the highest in thirteen months. However, pipeline sabotage increased from 18 to 60 downstream pipelines in January. Overall, the NNPC recorded a trading deficit of ₦14.26 billion in January, an improvement from the ₦17.01 billion recorded in December. We point to ongoing engagement with Niger Delta stakeholders as vital for sustained improvement in the upstream sector.
Market slides further, ASI down 58bps
The Nigerian Bourse dipped further with the NSE ASI shedding 58bps, pressured by a mix of profit taking and losses across select bellwether stocks. We believe the market could be headed further south at mid-week, given the sustained bearish investor posture across select large caps.
Stock Watch: AIICO dipped 12% in a nine-session bearish spree, following investor reaction to its FY’16 results (announced on March 29). However, the stock turned in yesterday’s session, gaining 392bps to bounce off a four-year low.
Tight system liquidity drives yields north
Trading was rather bearish in the fixed income market yesterday as CBN interventions put a strain on system liquidity. Yields advanced in the bond and T-bills segment with short-dated maturities recording the most significant changes. With system liquidity pressured, we expect more cautious trading today amidst the April Bond Auction where the Debt Management Office will offer ₦135 billion across the 5-year, 10-year, and a new 20-year bond.
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