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General news

  • The UN's International Maritime Organisation (IMO) has confirmed that an agreement has been reached to cut CO2 emissions by at least 50% by 2050 compared to 2008 levels. The announcements follows the decision made last year to reduce the allowed sulphur emissions from vessels from 3.5% to 0.5% by 2020.

Agriculture

  • Sugar prices have dropped to their lowest levels in over 2.5 years.
    • Last week saw sugar fall to below 12 cents a pound overnight in anticipation of large exports from both India and Thailand. 
    • Although prices have now rebound slightly, trading at 12.08 cents a pound, they continue to struggle as a result of a ramp up in sugar production, which has stemmed from good weather and supportive government policies.
    • The low prices are notably weighing on companies with sugar operations with many commenting on the risk that prolonged low prices could start to notably impact profitability and cash flow generation.
  • According to a study by Purdue University in Indiana, which is renown for its agricultural economic research, Beijing's sanctions on the importation of US soybeans could see exports to China drop by almost two-thirds.
    • This would mean that overall US soyabean exports would fall by 37%, resulting in a $3.1bn economic loss to the US economy.
    • The imposition of these tariffs would however also result in a similar Chinese economic loss.
    • If the sanctions are realised, Latin American countries, including Brazil, would likely be the main winners maximising on their growing soyabean production; soybean prices in Brazil have already surged to a 21 month high of $433/tonne on the back of the sanctions announcement.

Metals

  • The imposition of US sanctions on Russian aluminium producer Rusal has sent the price of the metal upwards to achieve its highest price since 2012
    • The announcement of the sanctions saw the price of aluminium surge 15%, the biggest weekly gain the metal has ever achieved.
    • LME has said that unless Rusal can prove it has not violated the latest sanctions, as of April 17th, it will no longer accept any of the Russian company's aluminium.
    • Rusal was responsible for 7% of global aluminium production last year making it the largest non-Chinese producer.
    • Consumers and traders are now scrambling to secure alternative supplies:
      • Glencore has gone as far as to have to declare force majeure to exempt it from delivering on over 50,000 tonnes of aluminium it had promised its customers.
      • Rio Tinto has also invoked the clause to allow it to walk away from a number of agreements it has with Rusal, including one to supply bauxite to its Aughinish alumina refinery in Limerick.
    • As a result of the sanctions Chinese exports are up 20% this year so far compared to the same period last year as buyers seek non-Rusal supply.
  • China has announced it is going to start allowing overseas investors to trade iron ore on the Dalian Commodity Exchange. The move is another sign that China is looking to exert more influence over the pricing of raw materials on a global scale.

Energy - UK 

  • Forecasted warmer weather, above the seasonal average, is reducing demand and weighing on NBP prices. Day-ahead NBP is currently trading at around 51.20p/therm.

Energy - International

Oil

  • Brent has eased to below $72 having reached a 3.5-year high:
    • As is usually the case when geopolitical tensions are rising, crude prices rose towards the end of last week as the US, UK and France discussed intervening in Syria as a result of the alleged used of chemical weapons by the Assad regime.
    • Investors will now be paying close attention the the fall-out from the weekend's missile strike.

Other

  • European power prices continue to edge upwards on the back of higher oil prices, which are driving the price of carbon and coal upwards.
  • Russian Gazprom has announced it has signed a 5-year gas supply deal with Slovenia. The deal is for the provision of 600 cubic meters of gas per annum.