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General news

  • Although progress has been made in moving Brexit talks on to the next stage, the agreements shaken on by David Davis and Michel Barnier are not yet legally binding. The EU has highlighted that the guarantees on the Northern Ireland border are not legally binding until a final deal is reached.
  • According to the International Resource Panel, the extraction of material resources such as biomass, fossil fuels and non-metallic minerals could reach 88.6bn tonnes this year.
  • Bitcoin futures have surged more than 20% following their launch yesterday (Monday 11th December 2017). The launch of Bitcoin futures is seen by many investors to be a huge milestone for cryptocurrencies and follows the value of Bitcoin soaring to beyond $16,000 from less than $1,000 at the start of this year.
  • Trump has formally announced that the US will recognise Jerusalem as Israel’s capital. The announcement is welcomed by Israel, but Palestinian and Arab leaders have warned that changes would jeopardise any Middle East peace process.
  • Latest data shows that Chinese demand for commodities last month was up from October levels. Imports of copper, crude oil, soybeans and iron ore by the world’s largest consumer of raw materials were all up in November on the back of stronger than expected demand. Some analysts however believe that the pick-up in demand is predominantly due to October’s week-long public holiday and as such the increase shouldn’t be looked into in too much detail.

Agriculture

  • In a move to improve the safety of its farm produce and tackle its severe soil pollution problems, China has announced it plans to completely stop the use of a further 12 toxic pesticides within the next 5 years.
  • According to Citi Research, 2017/18 will see a large global surplus in sugar which will cap prices. Citi Research has however hinted that a reduction in the amount of cane that Brazil, the world’s top grower, turns into sugar could reduce towards the end of 2018 taking pressure off prices.
  • According to Commerzbank, the global banking and financial services company, soft commodities represent a better bet for 2018 than grains. The company, which is Germany’s second largest listed lender, has cut its forecasts for corn and wheat prices on the back of plentiful supply, and lifted its expectations for coffee and sugar prices.
  • A report from the USDA’s Global Agricultural Information Network (GAIN) indicates that the USDA expects EU-28 grain crops to perform better than initially expected in 2017/18.
  • Malaysian palm oil inventories are forecasted to reach their highest levels in almost 2 years as a result of falling exports outpacing a decline in production. Inventory levels are expected to be at around 2.44m tonnes, the highest since December 2015. This could add further pressure to palm oil prices which are already at around 4-month lows.
  • The US International Trade Commission (ITC) has confirmed that the US will impose duties on Argentinian and Indonesian biofuel. Antidumping and anti-subsidy duties are expected to remain in place for at least 5 years following a final finding by the ITC that imports from Argentina and Indonesia harm US producers.

Metals

  • Cobalt prices are at their highest since October, having more than doubled since January, as a result of falling cobalt supply from the Democratic Republic of Congo, the world’s largest producer, and increasing demand, which is tightening the market.
    • Cobalt prices are currently around $32 a pound.
    • With the price of cobalt now having risen more than 100% so far this year, and the majority of analysts forecasting further price increases as a result of little new supply looking to come online in the near future, miners are looking set to become the key drivers of rare earth metal prices.
    • Car manufacturers developing EVs continue to struggle to secure long-term supply deals as metal producers remain unwilling to guarantee supply at fix prices due to expectations of continued price increases.
  • Chinese customs in the eastern port city of Qingdao have seized 1,762 tonnes of smuggled zinc waste last week. The seizure is part of China’s campaign to stop the import of “foreign garbage” including waste plastic and paper.
  • According to industry-wide research by S&P Global Market Intelligence, Anglo-Swiss Glencore has increased investment in the production of metals for car batteries faster than any of its major mining competitors.

Energy - UK 

  • According to green energy supplier Bulb, over 7m British households could be excluded from the government’s proposed energy price cap as a result of a legislative loophole which means that green tariffs are currently exempt from being limited.
  • The UK government has announced £86m of funding for the UK’s nuclear fusion programme. The investment is to help the building and running of the National Fusion Technology Platform at the Culham Science Centre which will develop technology for the first nuclear fusion power plants.

Energy - International

Oil

  • The latest data from Reuters indicates that OPEC output is at its lowest level since May, dropping by 300,000bpd in November. The drop comes thanks to strong compliance as well as from involuntary declines.
  • A US federal judge has ordered Energy Transfer Partners to create an oil-spill response plan for the Dakota Access pipeline by next April in order to allow oil to keep flowing whilst preventing spills.
  • The UAE have indicated that OPEC and non-OPEC members are working towards an announcement regarding the exit strategy from the global supply cut deal as early as June 2018. The UAE’s Energy Minister Suhail bin Mohammed al-Mazroui has however said that it is too soon to discuss the form or shape the exit strategy would take.
  • Oil prices are slightly lower at the start of this week following an increase in US drilling activity which signals an increase in US production. Brent however remains just above $63 with WTI just above $57.

Other

  • France’s junior environment minister has said that France is to reduce the share of nuclear energy in its energy mix “as soon as possible”, but failed to provide a target date. The statement follows the French government agreeing last month to drop the share of nuclear in its energy mix to 50% from 75% by 2025.
  • In an effort to defend its position as the biggest purchaser of LNG, the chief LNG buyer of Japanese company Jera, has voiced his intentions to transform his company into a global trading power house. Being the largest buyer of LNG Jera has considerable sway over markets, but its position is under threat as Japan’s Minister of Economy has laid out targets that would see LNG imports decline in the coming decade as it boosts output from renewables and starts to bring back nuclear plants which have been closed since the Fukushima disaster.
  • LNG prices are at a 3-year high following Chinese demand which is up following Beijing’s move to curb air pollution. According to Wood Mackenzie, Beijing’s “2+26” pro-gas policy has led to a 30% increase in LNG import volumes in the first 9 months of 2017, with demand 40% up for the winter period.
  • The European Network for Cyber Security (ENCS) has launched a training programme to help the energy sector protect itself against attempts to hack into its systems and damage critical infrastructure.