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- The increasing political tension in Italy is being closely monitored by the markets with US stock indices slumping, triggering investors to gravitate towards safe-haven assets, such as gold and bonds.
- The International Sugar Organization (ISO) has upgraded its sugar surplus forecast for 2017/18. The ISO’s forecast is now at 10.51m tonnes surplus for the period, double its initial forecast of 5.15m tonnes. The upgrade has been driven by better than expected sugar production in India and Thailand.
- Washington is putting pressure on Beijing to end its ban on US poultry imports. China has a circa $600m market for chicken feet as well as other parts, and currently already imports $1bn of poultry a year from other countries.
- Wheat prices have reached a 10-month high ahead of weather concerns across key global producing regions. CBoT’s most active contract for front month delivery is currently trading at $5.49-3/4 a bushel up by xxx $0.20/bshl since last month.
- A new Chinese physical metal trading platform has started, the SHFE’s new platform opened on Monday hosting 123 transactions of a total volume worth over $74m. The majority of which were in aluminium and copper.
- It has been announced by the Canadian International Trade Tribunal that a preliminary inquiry has been launched into steel imported from China, South Korea and Vietnam. The dumping of “cold-reduced flat-rolled sheet products of carbon steel” is being investigated in the context of any damage that may have been caused to Canada’s steel industry.
- Branching out from its traditional business model, De Beers is launching a company to sell synthetically produced diamonds. The company has emphasised that although its focus remains on natural stones, the new venture will enable stones worth hundreds, instead of millions, to be added to their portfolio of products.
- 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
- Theresa May has announced the UK government’s commitment to halving the energy consumed by new buildings by 2030 by employing new technologies and modern construction practices. In her announcement she also emphasised the need for the UK to lead efforts for zero emissions from road transport by 2040.
- UK gas prices remain supported by Norwegian maintenance as well as heavy UKCS maintenance. Coal prices, supported by demand from South Korea and India, are also a bullish factor.
Energy - International
- Crude prices remain capped under the threat of a ramp up in output from Saudi Arabia and Russia. Brent is currently trading at just below the $76 mark with WTI at $67.20.
- According to Goldman Sachs, thanks to lower spending budgets and improved project delivery, European oil companies are likely to see their best cash flow growth in over 20 years. The oil industry’s “Seven Sisters” (BP, Chevron, Total, ENI SpA, Shell, Statoil and Exxon Mobil) are all expected to continue achieving improved project delivery rates.
- At least 5 independent refineries in China’s northern province of Shandong have been instructed to cut their operating rates ahead of the Shanghai Cooperation Organisation summit in the port city of Qingdao which is to take place next weekend. The cuts affect between 30% and 50% of the plants’ capacity, corresponding to around 45,000 bpd of crude refining capacity. The cuts aim to ensure that major political events such as the SCO summit can take place with “clean air”.
- US natural gas futures have eased on the back of forecasted cooler short-term weather which will likely weaken air conditioning demand.
- European spot power prices have been supported this week by tighter supply from both nuclear and renewables. Tighter supply has outweighed the bearish effects imposed by slower demand over the bank holiday weekend.