General news

  • The world’s top 12 investment banks recorded their lowest half-yearly revenues in their commodities business since at least 2016.
  • Last week saw the White House suspend the Jones Act, the law which “prohibits any foreign built or flagged vessel from engaging in coastwise trade within the US”. By allowing foreign vessels to be used, it is hoped that the disruption to delivery of fuel supplies due to Hurricane Irma will be minimised. The suspension is estimated to be in effect for a week.
  • The UK government has invested £3.9m in a total of 30 projects which support the development of low carbon technologies in the vehicle sector. projects include natural tyres for EVs and a carbon motorcycle frame.
  • With the world gearing up for the electric car revolution, the matter of how to deal with the recycling and disposal of spent lithium-ion batteries is one of the major challenges faced by companies in the manufacturing sector.
    • There are already millions of small lithium-ion batteries in use (for example in smartphones and electronic toothbrushes), equating to around $2bn of metals and minerals in 2015. Almost all of these batteries end up either in waste dumps, or remain unused in people’s homes.
    • Car lithium-ion batteries however are much bigger. These batteries last 8-10 years and are expected to account for 90% of the lithium-ion battery market by 2025.
    • Belgian company Umicore is one of the few companies looking into how to recycle these batteries.
    • The main difficulty with recycling car batteries is that it involves several chemical. Since not all battery models are the same, the standardization of recycling processes is difficult to achieve.


  • Latest figures indicate that despite EU and American imposed sanctions, the Russian agriculture and fishing sector is thriving, not suffering.
    • The sanctions imposed resulted in around 60% of Russia’s total meat and fish imports, and 50% of dairy, vegetable and fruit imports, being banned.
      • The ban created an opportunity for domestic producers in the internal Russian market. Russian producers have had so much success that foreign investment in the sector has increased as a result of shares in Russian agriculture companies gaining value.
  • US wheat exports from Texas remain delayed following the passing of Hurricane Harvey due to damaged railroad tracks and closed ports.
  • As Hurricane Irma made its way towards the Floridian coast, farmers and food companies were on high alert.
    • Orange juice futures jumped by more than 6% last Tuesday, with more than six times the usual number of contracts being traded. Florida is the US’s largest orange juice producer. ICE orange juice is now trading at just under 153.75 cents per pound.
    • Florida sugar and citrus producers, rushed to secure rail cars and any equipment that could be at risk, and cattle farmers opened fences to move animals to higher ground and wooded areas. Cotton farmers in the Carolinas were also on high alert over fears that their crops could be subject to the same damage as in Texas, where an estimated $150m of cotton was destroyed. Cotton No.2 is now trading at 73.64 cents per pound.
  • According to the international grains council, world flour trade in 2017/18 is expected to reach a record high of 17m tonnes (grain equivalent). This forecast is almost 200,000 tonnes higher than the council’s original forecast issued in May. Matif wheat is now trading at €149 per tonne.
  • Latest data indicates that stocks of Malaysian palm oil, used in cooking oil and shampoo, rose for a second month in August, close to 2m tonnes. Output from Malaysia, the world’s second largest producer, remains near its strongest in 2 years. Producers are now focusing on whether these increasing stocks could end up dragging on the markets. MYR2803 per tonne.
  • Since the 1960s, the European Commission has dictated how much sugar beet European farmers can grow, and the fixed prices. This regime is however ending in October, leading to fears of a rapid increase in production.


  • LME copper prices fell over 3% at the close of last week’s trading to a low of $6,691, having rallied 27% since May of this year.
    • Copper’s impressive rally was deemed unfounded by many analysts as unlike aluminium and zinc which have been subject to supply restrictions by the Chinese government, the copper industry has yet to face supply cuts.
    • Copper, which is used in wiring, construction and the manufacturing of industrial machinery, has recently been viewed by many as being “increasingly detached from fundamentals” and that a general bullish sentiment in the metals sector is responsible for copper’s rally.
    • The drop follows several analysts expressing their concerns that copper had “gone too far, and too fast” and that markets had overreacted to China’s partial ban on scrap imports.
  • Gold prices are holding steady, supported by political uncertainty in the US, a weak USD, and sustained political tensions with North Korea.
    • Gold has rallied 17% this year, closing in on $1,360/troy ounce, predominantly thanks to the weak USD and declining unlikelihood that US inflation will pick up.
    • Although the political tensions in North Korea over the past few weeks have also contributed to gold’s rally, Goldman Sachs analysts believe that the economic and political uncertainty in the US this summer, and the weak USD, is the main reason that buyers have continued to buy into gold.
    • The decision to raise the US debt ceiling until December in order to provide $15bn relief from hurricanes Harvey and Irma has also helped gold edge higher over the past few weeks.
  • Shares in Acacia mining fell 6% to £1.94 last week following an announcement by that due to disputes with the Tanzanian government they are having to reduce production forecasts. Acacia are one of the largest gold producers in Africa and has said that the decision to stop underground mining in Tanzanian mine Bulyanhulu means that they are now expected to produce 750,000 ounces of gold this year, down from the initial estimate of 850,000 -900,000 ounces.
  • Last week saw nickel reach its highest price since 2015, thanks to better than expected economic data regarding Chinese manufacturing purchase index. Nickel traded as high as RMB97,720/tonne in Shanghai.
  • Chinese steel futures fell for 3 days in a row over concerns that a spree of environmental inspections at industrial sites could end up curbing demand for rebar, the steel product predominantly used in the construction sector. SHFE steel rebar is currently trading at ¥4,300 per tonne.
  • According to the CEO of South Africa’s Chamber Mines, SA’s mining industry is “in crisis” and has lost confidence in its mining minister because of his uncertain policies which have led to a freeze in new investment.



  • The Department for International Trade has helped secure £160m of investment for UK firm Solarplicity. The funding is expected to see solar panels installed on 800,000 low income households in the UK over the next 5 years and generate 1,000 jobs.
  • The London Assembly Conservative group has produced a report which warns that London could see a “charge rage” epidemic if the demand for EV charging points is not met and that the current rate of charging point installation is occurring at an unsatisfactorily slow rate compared to the uptake of EVs.
  • According to RenewablesUK, 48% of the investment, planning, building and running of offshore wind projects has been awarded to British companies. This is a 5% increase from the report published in 2015. These figures indicate that the wind power sector has almost hit its target of sourcing 50% of its work in Britain by 2020.
  • Research indicates that Brexit could not only add EUR€100 (£90.80) to the average annual British households bills, but could also increase energy demand if the UK does not hold on to the EU’s high energy efficiency standards.



  • Hurricane Harvey continues to impact on oil markets, with Irma further compounding disruptions.
    • Petrol prices slid a total of 4% at the opening of last week’s trading as refineries terminals and drilling platforms started coming back online. The NYMEX RBOB gasoline futures contract for October, which reached $2.17 a gallon in the previous week, fell 4.2% to $1.67 last Monday.
    • London-based oil broker PVM has said that although gasoline prices are starting to pull back, the effects of the scale of disruptions caused by a disaster such as Hurricane Harvey could linger for weeks, if not months. This impact is likely to extend further with focus shifting to Hurricane Irma.
  • When asked whether or not oil would peak in the near future, the oil and gas sector remains divided. Some believe that prices will climb, repeating the boom-bust pattern which has dominated the industry for over 100 years. Others believe prices will remain range-bound at the lower prices which have been experience over the past 3 years since the exponential growth in the shale industry.
    • Those who believe “perpetual $50-$60/bbl is as wrong now as endless $100/bbl was four years ago” argue that:
      • The belief that the price of oil will remain lower for longer is founded on the flawed principle that effective oil market stability has been achieved as a result of having achieved a perfectly competitive market.
      • Believing that the shale industry, which is barely a decade old and only accounts for just over 5% of global supplies, is going to be capable of growing fast enough to meet the forecasted increase in demand over the coming years, is unrealistic.
      • The downturn created a glut in investment and that this will eventually result in a supply shortfall.
    • Those who believe that the price of oil will remain range bound argue that:
      • The US shale industry, as well as other unconventional producers, are agile enough to grow and ramp up output as needed to match increasing demand.
        • As technologies develop, costs of producing oil from unconventional resources will continue to be cut.
        • The OPEC supply cut deal won’t last and that the claimed “emerging supply gap” is exaggerated.
  • The latest data from the US Department of Energy quantifies the US refinery utilisation rates for the week in which Harvey wreaked havoc in the US south-east at 14.4m BPD, just over 20% (3.3m barrels a day) less than total capacity. During this time crude stockpiles rose by 4.6m barrel, their first weekly gain in over 2 months, and distillate stockpiles dropped by 1.4m barrels.
  • Shell has announced their belief that by banning petrol and diesel cars to cut carbon emissions, governments risk slowing and limiting the development and investment in other greener, fuel-efficient technologies.
    • Shell’s Head of Strategy Guy Outen expressed the company’s concern that if governments pick a single solution from the range of green technologies which exist (e.g. electric vehicles, EVs), the potential of other energy saving, emission reducing technologies may be hampered.
    • Outen recommended that the best approach by governments would be to “put a price on carbon, stand back and watch the rush of technology to find the cheapest solution”.
  • China is on track to become the world’s largest oil importer, importing approximately 8.6m barrels per day. Overtaking the US who so far this year has imported an average of 8.1m barrels per day. The US however remains the largest refiner with 18m barrels per day of refinery throughput, 3m barrels per day more than China’s capacity.
  • CEO of Russia’s top oil producer Rosneft announced that the company is predicting, and planning for, oil being rangebound between $40/bbl and $50/bbl next year.
  • Having been shut down by an armed group for more than 2 weeks, oil production at Libya’s largest field, the Sharara, resumed last week. Once production reaches normal levels, around 280,000 BPD will be produced from the field.
  • Hurricane Irma forced the closure of oil terminals across the northern Caribbean, worsening the Latin American fuel supply crunch where countries are struggling to meet demand since Harvey disrupted shipments from the US Gulf.



  • The US government is proposing new rules on LNG exports which would make it easier and faster to approve small scale exports of natural gas to the Caribbean and Central and South America. The rules would apply to exports of 140m cubic feet per day or less.
  • According to the US Department of Energy, wind and solar energy are fast becoming the cheapest forms of energy generation. The USDA claim that offshore wind energy costs could be halved by 2030 (from $55/MWh in 2015 to $31/MWh), thanks to decreasing capital costs and increasing capacity factors (i.e. higher megawatts at cheaper rate).
  • Sweden has announced its plans to invest £485m in environmental and climate projects.
  • As South Korea commits to moving away from coal and nuclear, towards LNG and renewables, coal’s “last hope” of Asia being a market for growth is being dealt another blow.
  • The LNG industry is showing further signs of growth, the scale of which could see the reshaping of the oil and gas sector, and the industries which it serves.
    • Shell’s Prelude project, located off the coast of Western Australia, is the latest addition to LNG production capacity. It joins nearby projects from Chevron, ExxonMobil, BP, Total and Eni.
    • With LNG supply expected to increase by 50% between 2014 and 2021, new LNG “trains” (facilities that condense gas into liquid to be transported long distances by ship) are likely to open every 2-3 months.
    • The reason that LNG is able to continue to grow at this rate, whilst other fossil fuels decline, is thanks to its cleaner characteristics. When burned to produce electricity, gas emits half as much CO2 and 75% less NO and health-harming particles as coal.
    • 12 out of 16 of Shell’s new projects involve gas instead of oil. Gas projects outweigh oil by a factor of two-to-one among pre-development resources awaiting investment decisions.
    • The success of LNG depends on the ability of gas to “squeeze” coal and wind/solar out of the market. Although renewables will likely dominate in the long-run, the necessity of a cleaner energy resource for when these intermittent renewable sources are not available means that LNG has the potential to success both during the transition away from oil, and even once renewables dominate the market.
    • The most important geographic location in determining the success of LNG is Asia. The current signs of growth from China, India and South Korea are all positive indicators.
  • The European solar industry has expressed disappointment in the EU’s latest vote to impose further duties on Chinese solar modules and cells. The duties could see the price of these Chinese solar products increase by 30% which could in turn mean that the cost of a household installation could cost up to €500 more.