October 31, 2019 / 11:50 AM / 17 days ago

Mitsui CEO: Higher demand for heavy crude boosts its profit

FILE PHOTO: Japanese trading company Mitsui & Co's President and CEO Tatsuo Yasunaga speaks during an interview with Reuters in Tokyo, Japan May 24, 2017. REUTERS/Issei Kato

TOKYO (Reuters) - Higher demand in low-sulphur heavy crude ahead of new rules on shipping fuel is helping to boost the profit of Mitsui & Co as the Greater Enfield project in Australia began production in August as scheduled, the Japanese trading house’s CEO said on Thursday.

“The timely start of production of fine-quality low-sulphur heavy crude at the upstream project had also a ripple effect to our energy trading unit in Singapore,” Mitsui Chief Executive Officer Tatsuo Yasunaga told an analyst meeting.

A Mitsui executive said in March that the company will produce more heavy crude oil this year once projects in Australia and Italy are completed, in part boosting its ability to provide low sulphur marine fuel. The International Maritime Organization will prohibit ships from using fuels with a sulphur content above 0.5 percent from Jan. 1, 2020, compared with 3.5 percent today.

Mitsui may consider selling its stake in the new coal-fired power plant projects in Malaysia and Morocco, under a new 3-year business plan which will start next April, if such deals would bring capital gains, Yasunaga said, citing the company’s plan to increase renewable energy within its global power generation portfolio.

Iron ore prices have stayed at higher-than-expected levels in April-September due to strong demand from China and reduced supply due to a collapse of Vale’s tailings dam in Brazil, but the prices are expected to soften in the October-March half, Yasunaga said.

Mitsui on Wednesday stuck to its forecast for a record high profit of 450 billion yen ($4.16 billion) for the year to March 31, 2020, saying stronger-than-expected iron ore prices and solid profits from trading of heavy oil and liquefied natural gas will likely offset weaker performance in chemical and other non-resource businesses.

Reporting by Yuka Obayashi; Editing by Chizu Nomiyama

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