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- Brazil has joined the International Energy Agency (IEA) as an “association country”. It’s committing itself to a 3-year programme which involves working with the IEA on a range of projects which promote energy efficiency and the international coordination on advancing low carbon fuels.
- The Inter-American Development Bank found that Latin American and Caribbean exports rebounded in the first half of this year, following over 2 years of contraction. Latin American and Caribbean goods and services exports rose 13.2% and 9.7%, respectively, in the first half of 2017. The Inter-American Development Bank, however, warned that despite this growth, Latin America is still getting “left behind” due to its limited number of export commodities and their reduced competitiveness.
- According to researchers at the University of East Anglia, global carbon emissions from burning fossil fuels have begun rising again following a 3-year hiatus. The research found that emissions from all human activities will likely reach 41bn tonnes this year.
- Shortly before midnight last night, the German Free Democrats Party (FDP) announced that they were pulling out of talks with Chancellor Merkel’s Christian Democrats (CDU) and the left-wing Green party, further delaying the agreement of a coalition deal.
- Despite being stripped of his party leadership, Robert Mugabe is defying calls for him to stand down and resign as Zimbabwe’s president.
- Raw sugar prices remain supported by the rise in energy prices which has driven Brazil to switch to using more cane to produce ethanol at the expense of sugar. ICE Sugar 11 for March delivery is currently trading around $0.15/lb.
- According to a 5-year plan issued by the China Sugar Association, China plans to use machinery to plant 70% of its sugarcane and 98% of its sugar beet 2020, equivalent to a 40% and 80% increase from current levels.
- According to the USDA’s latest forecast, global sugar production will reach record production and consumption levels of 185m and 174m tonnes in 2017/18, respectively. The growth comes chiefly due to a record harvest in the world’s largest producer, Brazil, a boost in output from India and Thailand due to favourable weather, the end of production quotas in Europe, and an expansion in planted area in China.
- Cocoa prices have eased on the back of regular sunny spells and above average rainfall last week which farmers say should help bolster the crop from early next year. London cocoa for December delivery is currently trading at around £1,556/tonne.
- Following the raising of edible oil import taxes by the Indian government, Malaysian palm oil futures dropped to their lowest levels in 3 months.
- India is the world’s largest importer of edible oils and has announced its plans to double its import taxes on palm oil to 30%, and increase its import tax on refined palm oil imports from 25% to 40%.
- A more expensive Ringgit means palm oil is more expensive for foreign buyers.
- Malaysian palm oil for December delivery is currently trading at around MYR 2,592 a tonne.
- India has doubled its tariff on wheat imports to 20% and slapped on a 50% tariff on field pea imports, moves which have raised concerns amongst the Australian grain industry and its farmers who fear that their lucrative lentils and chickpeas may be targeted next. According to data from the Australian Bureau of Statistics, India was the second largest importer of Australian wheat for the year to the end of September, buying more than 2.24m tonnes of Australian wheat last season.
- US corn is nearing a 1-year low on the back of weak US export sales and ample global supply. US corn futures look set to post their biggest weekly fall in a month. CBoT corn for December delivery is currently trading at around 342.5 US cents a bushel.
- Human rights group Amnesty International has claimed that almost half of the 28 largest companies, including Microsoft and Renault, that use cobalt are failing to demonstrate even minimal compliance with international due diligence standards.
- More than half of the world’s cobalt supplies come from the Democratic Republic of Congo, where as much as 20% of supplies are mined by hand and sold to local traders.
- Amnesty claim that children as young as 7-years-old are involved in this mining.
- A senior official at Volkswagen has said that the car maker is not at investing in mines in order to try and secure long-term cobalt supplies, instead opting to try and use long-term supplier contracts to secure supplies and hedge against price volatility.
- China Aluminium Corporation, China’s state-run and biggest aluminium firm, has announced plans to start producing bauxite at its project in Guinea later this year or early in 2018.
- Around a third of the world’s high-quality bauxite reserves, a raw material for aluminium, are found in Guinea, but output from the region has been relatively low in the past primarily due to political instability.
- The nickel market is being pulled in two directions – expanding demand from the EV sector and subdued demand from the Chinese steel sector.
- Despite having been favourited by many producers, traders and consumers at last month’s annual LME Week thanks to its prospects as an EV-integral metal, prices have struggled to reflect this long-term positive outlook.
- Around 70% of global nickel supply is used in making steel products, but just 4% is used in batteries.
- Although the use of nickel batteries is growing at an annual rate of almost 6%, the Nickel Institute believe it will still take several years before this demand is substantial enough to be a stand-alone price driver.
- Fintech group Glint have teamed up with Mastercard and the Lloyds Banking Group and launched a new debit card and app which allow people to pay for goods in gold. The app enables people to load credit in a range of currencies enabling them to then buy a portion of a physical gold bar. The customer can the decide whether to pay in currency or gold before executing their transaction using a MasterCard.
Energy - UK
- The UK government has launched a competition for businesses to bid for a share of £7.75m of funding to develop domestic applications of demand side response (DSR) technologies. DSR is expected to play a key role in the future electricity system by reducing demand from the grid during peak periods.
- According to researchers at Imperial College London, Britain’s power supply is now the 7th cleanest in the world, climbing 13 places in a global league table. The researchers compared the carbon content of electricity supplies of various large countries between 2012 and 2016 and found that the UK’s strong carbon price of £23 a tonne of CO2 has driven the shift from coal to gas and increased the uptake of renewables.
- Centrica has announced that it plans to scrap its standard variable tariff (SVT) deals.
Energy - International
- OPEC has raised its forecast for the demand of oil in 2018 to 33.8m barrels a day from October’s forecast of 33.4m barrels a day.
- OPEC is due to meet at the end of the month to decide whether or not to extend production cuts beyond March 2018.
- Work is also being done on determining how best to slowly return barrels to the market when needed in a way which does not deliver the sudden supply shock. A sudden end to the current cuts would deal such a shock.
- Libya is likely to get a “special mention” at the meeting in light of its success in recovering its production following years of violent conflict and protests, which is estimated to have cost the country £126bn in revenues. Output from the North African country, which has until now been exempt from the global supply cut deal, surpassed 1m barrels a day this summer for the first time in 4 years, a 4-fold increase in production compared to last year.
- Following last week’s gains which saw oil hit 2-year highs, oil prices are back under pressure following the IEA’s latest predictions.
- The IEA announced that it expects US oil output growth through to 2025 will be the strongest seen by any country in the history of crude markets.
- The growth comes thanks to technological advances which have enabled the production of shale oil fields.
- Oil markets have however now stabilised as expectations that OPEC would extend production cuts balanced the rising US crude production and inventories.
- Brent is still trading above the $60 benchmark at around $62.
- The chief executive of Saudi Aramco, Saudi Arabia’s state energy giant, has said that investors should view the kingdom’s sweeping anti-corruption purge as a very positive move which supports Saudi Arabia’s commitment to economic reform.
- The US’s largest exploration and production company, ConocoPhillips, has decided to rule out investing in projects which require an oil price greater than $50 a barrel to be profitable. The company have also decided to focus most of its investment for growth in North American shale resources on the basis of those operations being the most responsive to volatile markets.
- According to OPEC, oil output from Venezuela, which has been falling by around 20,000bpd per month since last year, is on track to fall by at least 250,000bpd in 2017.
- The drop-in production has come due to Venezuela’s state-owned oil company struggles to secure the funds to drill wells, maintain oil fields and keep pipelines and ports working.
- The lack of funds has been compounded by the international sanctions.
- Other exporting countries including Canada and Brazil are however “plugging the gap” left by Venezuela’s absent barrels.
- For now, Venezuela’s depleted output is being viewed by many as support for the rebalancing of the market, and in turn oil staying above the $60 benchmark.
- Norway, Western Europe’s largest energy producer, is considering dropping oil and gas stock investments from its trillion-dollar sovereign wealth fund. The Norwegian central bank believes that in getting rid of its oil and gas investments which include stakes in BP, Shell, Total, Chevron and ExxonMobil, Norway’s wealth would be less exposed to a permanent drop in oil and gas prices
- Despite Norway’s proposal to ditch oil and gas investments from its $1 trillion sovereign wealth fund -- a move driven by the country’s strive towards battling climate change -- it is unlikely that in the short-term major investors in the oil and gas sector will be rushing to exit the fund.
- As China enters winter, its smoggiest season, investors will be keeping an eye on whether the government remains serious about curbing its most highly producing industries.
- Capacity cuts at manufacturing plants including steel mills will decrease electricity demand by around 4.5% from the average for the 4-months from November to March.
- If this 4.5% demand reduction is borne by thermal coal power stations exclusively, total coal usage could be a 1/6th lower than normal for winter..
- This pull out support for coal prices in China and globally. China is already driving to increase steel making efficiency further reducing demand for thermal coal.
- China’s Sinopec expects to supply 13% more gas for winter and early spring compared to the same period last year as a result of the government’s push to gasify northern cities. Sinopec anticipates running its LNG terminals at full capacity to provide the 15.1bn cubic meters of gas or so gas that will be needed.
- According to the Hydrogen Council, a global initiative of leading energy, transport and industry firms including Toyota, Honda, Hyundai, Total and Shell, hydrogen could account for almost a fifth of the total energy consumed by 2050 if deployed at scale. If this forecast is realised, annual carbon emissions would be reduced by around 6 gigatons compared to today’s level.
- According to a new report from EY, the value of deals across the global power and utilities sector has hit 2-year highs of $74.3bn.