Daily Brief Energy/Materials: PI Advanced Materials, Miwon Specialty Chemical, Base Oil, Shell PLC, Coal, Kauntam Papers, Alkane Resources, Southern Energy Corp, Alphamin Resources and more

• June rebal results are mostly in line, but Korea District Heating’s add and PI Advanced Materials’s drop surprised; Fadu missed KQ150 likely on KRX’s qual screen.
• As for Value-up Index, KRX avoided bold calls like cutting Samsung Electronics or Hanwha Aerospace, favoring stability over surprises—though this may further blur the Value-up Index’s purpose and spark criticism.
• June’s KRX rebalance flow looks muted amid macro noise and politics; expect punchier post-announcement trading but watch for momentum to fade about a week before June 13.

• The June 2025 index review results for the KOSPI Indices were announced after the close on Tuesday 27th May 2024.
• There will be eight ADDs and eight DELs for KOSPI 200 during the June 2025 index rebal event. Some have high impact but round-trip flow is about US$175mm.
• We were expecting six ADDs and six DELs. All of those turned out to be correct but there were some surprises (more ADDs and DELs than we expected). Explained below.

• Global base oils prices mostly hold firm vs feedstock/gasoil prices.
• Firm margins in Asia and Europe point to still-tight supply-demand fundamentals, incentivizing refiners to maintain high output levels.
• Weaker margins in US point to diverging fundamentals compared with other regions.

• In this edition: • NN Group | to present its new medium-term targets at today’s CMD • Shell / SBM Offshore | FPSO Alexandre de Gusmão produces first oil • Fugro | to perform geotechnical surveys at Morgan and Mona offshore wind sites • PostNL | DHL e-Commerce Netherlands buys De Buren

• In April 2025, global coal markets showed a diverging trend between thermal and metallurgical segments.
• Thermal coal remained under pressure amid softening prices, high stockpiles in China and India, and collapsing power demand in Europe, where electricity generation fell sharply due to warm weather, a major blackout in Spain, and ongoing economic stagnation in Germany.
• As a result, API2 and API4 prices slipped further, with month-ahead API2 contracts trading at $93/ton, API4 at $88/ton, and Newcastle coal easing to $95/ton, despite a brief rebound to $99 mid-month.

• US Group II heavy-grade base oils prices stay unusually weak relative to CFR India prices for the time of year.
• Persistent US price-discount to CFR India prices coincides with steady flow of heavy-grade base oils shipments from US to India and especially to Pakistan.
• Arbitrage shipments highlight persistent surplus of heavy-grade base oils in US market.

• Kauntam Papers (KAUN IN) reported stable Q4 FY25 volumes but lower revenue/profit YoY amidst industry headwinds, while progressing on a significant capacity expansion by 50%.
• The company demonstrated margin resilience despite challenging raw material(wood) and import dynamics with expectation of price surge by 6-7% in next 6 months.
• Ongoing capex project of INR 735 crores is on track for completion by Mar-26 where purchase orders worth INR 540 crores already issued, remaining in final stages. 

Since our last note on the company, Alkane Resources has announced its interim results, its Q325 quarterly activities report and, on 28 April, a merger of equals with Canada’s Mandalay Resources Corporation. The first two of these three have led us to increase our FY25 EPS estimate by over 40%, to 7.25c. The third has caused us to entirely re-evaluate the company as a merged entity from 30 June 2025.

• 1Q25 production of 2,135 boe/d was broadly in line with our expectations.
• The company’s gas production was sold a US$0.49/mcf premium to Henry Hub (+13%).
• Field operations are scheduled to commence on the 13‐13 #2 Lower Selma Chalk horizontal well in the next few weeks, and Southern with production due to commence in June.

Notwithstanding press headlines reading ‘Alphamin Resources profit slumps in first quarter on DRC disruptions’, the company’s Q125 results were universally better than in Q124 and consistent with its operational performance (disclosed on 17 April). Despite a temporary halt in operations at the mine on 13 March due to the regional security situation, Alphamin was cash flow positive during the quarter. It turned US$38.5m in net debt into US$3.9m of net cash (excluding US$5.6m in lease liabilities), even though it sold 407 fewer tonnes than it produced, which we estimate cost c US$13.2m in revenue. We have cut our FY25 dividend forecast from C$0.15/share to C$0.12/share, partly reflecting the board’s decision to pass the FY24 final distribution, but also a wish to return to C$0.06/share semi-annual payments as soon as possible. However, this still leaves Alphamin’s shares on a very generous yield. We have trimmed our FY25 EPS forecast by a very modest 0.4% to US$0.09/share (cf 1.85 US cents in Q1).