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- North Korea’s foreign minister has stated that it interprets Trump’s UN speech as a declaration of war on North Korea.
- Japanese prime minister Shinzo Abe has called a snap election a year early in an effort to avoid a national crisis as a result of rising threats from North Korea.
- In Europe, Angela Merkel has secured her fourth term in office, despite heavy losses for her party, and Theresa May remained “non-committal” during her Brexit speech in Florence.
- According to researchers at the University of Oxford, there is a two-out-of-three chance that the 1.5 degrees Celsius global warming limit set out in the Paris Agreement will be achieved.
- South Korea have agreed a deal to send $8m of aid to North Korea in an effort to “not let the situation get out of control” and reduce tensions. China has warned that the crisis on the Korean peninsula was getting increasingly serious.
- Trump has imposed travel restrictions on 3 new countries - North Korea, Venezuela and Chad.
- Latest data indicates that this month’s Japanese manufacturing has expanded at the fastest pace in 4 months thanks to a pick-up in both domestic and export orders.
- Last week saw sustained recovery in Chicago butter prices, extending its recovery to 251 cents a point, 3.6% up from a low 2 weeks ago, following last Tuesday’s GlobalDairyTrade (GDT) auction of physical product which saw further gains in value for dairy fat contracts.
- The Eastern African Grain Council has called upon African countries to invest in agri-business in order to alleviate the risk of food insecurity in the region. Changes to grain trade policy, increased investment and continued innovation have all been highlighted as opportunities to improve the situation.
- There are increasing concerns that the US could struggle to meet its mandated biodiesel blend as a result of duties which have cut off imports from Argentina and Indonesia.
- The EU has confirmed it is to lower import duties on Argentine biodiesel. The implications of this could result in decreased demand for EU vegetable oil feedstocks such as rapeseed.
- Raw sugar prices fell to a 2-week low of $13.72/lb last week with expectations of rain in Brazil, the world’s top producer, following recent dry weather which pressured the market.
- According to Statistics Canada, Canadian wheat production has fallen 14.5% this year compared to 2016. The reduction in yield is predominantly down to very dry conditions in the south central region of the Prairies.
- European rapeseed farmers have hinted that they expect to sow more rapeseed (currently trading at €368/tonne) for the 2018 harvest as low grain prices, especially for wheat (currently trading at €164.25/tonne), entices more farmers to move to the oilseed. France in particular could see wheat lose ground to rapeseed and protein crops as farmers look to boost income.
- The Ivory Coast, the world’s top cocoa grower, is set to tighten requirements for counterparties of export contracts and impose 10-year bans on exporters who violate these agreements. The aim of this is to prevent a repeat of a wave of export contract defaults that contributed to the sector’s crisis earlier this season. ICE cocoa is currently trading at €1,465/tonne.
- After months of concerns that lagging corn and crop development could drag down on yields and put some late-planted crop at risk of early frost, the unseasonably hot US weather is accelerating crop maturity in the US Midwest.
- According to data from the General Administration of Customs, in August, China imported 380,000 tonnes of corn, 14-fold year-on-year increase. This comes as buyers looked overseas to stock up on cheaper imports as domestic prices rose. Dalian corn is currently trading at ¥1666/tonne.
- Lithium prices spiked last week following China’s announcement that it will follow the UK and France in banning new fossil-fuel powered cars. The announcement has sparked more questions regarding how to ensure that the environmental damage caused by mining for battery metals is controlled. These concerns extend to the mining of lithium, cobalt, manganese, graphite and nickel.
- The Australian Central Bank has indicated it believes that as a result of Chinese steel demand peaking, and global supply continuing to grow, iron ore prices are likely to drop in the short-term.
- According to the National Bureau of Statistics of China, the volume of iron ore and steel imported into China has been declining since May and are now at the lowest levels in almost a year.
- Iron ore prices have now dropped for the 5th session in a row to now trade at near $69 a tonne, a 2-month low; analysts expect that prices will remain under pressure for the duration of next quarter
- Volkswagen has moved to secure long-term supplies of cobalt in order to support its aims to make 3m electric vehicles per year by 2025. This number of cars would require 150GWh of battery capacity per year. 3-month LME cobalt is currently priced at $59,000/MT.
- Aluminium prices have surged as a result of smelters powering down ahead of the mandated cuts over the winter heating season. The cuts are in anticipation of China’s “Air Pollution Control Regulation” which requires industrial sectors in the 4 provinces around Beijing to cut output between November and March.
- LME aluminium for 3-month delivery hit a 5-year high of $2,199 last week.
- SHFE’s front month contract hit a 6-year high of Y17,250.
Energy - UK
- According to the UK’s Climate Change Minister, thanks to the decline in coal usage, improved energy efficiency and economic growth, the UK economy’s carbon intensity fell by 7.7% in 2016. This indicates that the UK is decarbonising faster than any other G20 nation.
- A study by the University of Edinburgh claims that only 10% of the UK’s original recoverable oil and gas remains, and that these remaining reserves may only last 10 years.
- The UK and Canada have confirmed they “lead the way” in supporting the global transition away from reliance on coal. Theresa May also added that the UK is aiming to phase out unabated coal by 2025.
Energy - International
- Brent has risen above $58 to its highest level in over 2 years as a result of increasing demand and the threat to Iraqi Kurdistan’s exports as the region holds its independence referendum
- At the start of last week, for the first time since 2014, at 2.4m contracts, the open interest in WTI futures was greater than that for Brent.
- Last week saw most of the remaining worst-hit refineries in southern-Texas come back online. The latest outlook is that the impact of Hurricane Harvey on the region’s oil and gas production and refinery sectors will not be long-term.
- There are increasing concerns that low fuel prices are enticing motorists to larger, gas-guzzling cars, threatening to reverse years of effort to cut oil consumption in industrialised countries. It is estimated that if OECD demand for crude continues to increase at today’s rate, the 62% reduction in OECD consumption since 2008 could be reversed by the end of 2018.
- The US Energy Information Administration (EIA) has projected that coal consumption will plateau at today’s level of approximately 160 quadrillion Btu. The IEA highlighted its belief that:
- China’s coal demand may now have peaked. The IEA believes the industrial demand for coal for steel making and heat will decline from now on and that coal demand for power generation will decline from 2023 as a result of displacement by renewables.
- It has cut assumptions of economic growth and hence energy demand.
- “Signs of life” in the US coal sector will likely be short lived.
- Not only is coal worse for the environment than oil and gas, but the latter are more useful and convenient.
- LNG prices continue to be driven downwards, increasing its competitive threat.
- In the US, although coal production has increased from the lows hit in 2016 as a result of increasing gas prices which have made coal more competitive for power generation, this increase will be short-lived.
- According to COGEN Europe, Combined Heat and Power (CHP) could provide Europe with 120GW more energy with the benefit of massive savings and reduced emissions.
- Heathrow Airport, HP, IKEA Group, Unilever and 6 other multinationals have joined the Climate Group’s EV100 scheme which encourages business commitments on electric transport.
- Australian PM Malcolm Turnbull has warned that unless producers are able to avoid a projected 17% shortfall in local gas demand, LNG exports from eastern Australia will be curbed next year. The forecasted shortfall of 110 petajoules is three times bigger than was forecast 6 months ago.
- Statoil has announced that it has already successfully achieved its 2020 target of reducing carbon dioxide emissions from the Norwegian Continental Shelf by 1.2m tonnes per year, a reduction equivalent to taking around 600,000 cars off the roads.
- According to technology and consultancy firm Capgemini, digitising coal and gas-fired power plants could cut 27% of operating costs as well as reduce global emissions from power generation by 5% before 2025.