(Bloomberg) -- The drop in China’s currency has the potential to pile on costs for the nation’s army of commodities importers, but it may be a price worth paying if it heralds more stimulus.
The offshore yuan has marched past the 7 per dollar threshold for the first time this year after another round of disappointing Chinese economic data this week set off calls for more policy easing to revive growth.
A weaker currency is an obvious headwind for commodities markets because it makes China’s massive import requirements for energy, materials, and food, largely priced in dollars, more expensive. Demand for mainstays like crude oil, iron ore and copper has already slumped as the economy’s recovery from the constraints of Covid Zero runs out of steam, pressuring prices.
China’s is the world’s biggest buyer of crude and copper, and it accounts for more than half of global demand for iron ore.
While the immediate impact of a cheaper yuan should be modest because a lot of purchases are secured on long-term deals, it’s likely to send a chill through the spot markets that China uses to top up its needs. And persistent currency weakness will affect future term contracts.
If the central bank were to lower interest rates, that would embolden dollar bulls. But commodities markets are likely to look past the currency impact and focus instead on how stimulus could help jump-start demand and put the economy on a firmer footing.
Markets are divided on whether rate cuts are the answer to China’s stuttering recovery, given that credit is already cheap and plentiful. Moreover, 7 yuan to the dollar may no longer be the hurdle it once was. But the weaker the Chinese currency gets, the more insistent the signal that the authorities will take action. And stimulus comes in many forms.
Story continues
While rate cuts would have a bigger effect on those commodities keyed to consumption such as fuel and food, metals prices would benefit from more direct state intervention like a boost to infrastructure spending.
The Week’s Diary
(All times Beijing unless noted otherwise.)
Thursday, May 18
China’s 2nd batch of April trade data, including agricultural imports; LNG & pipeline gas imports; oil products trade breakdown; alumina, copper and rare-earth product exports; bauxite, steel & aluminum product imports
China’s April output data for base metals and oil products
SMM Intl Zinc & Lead Summit in Changsha, Hunan, day 2
Friday, May 19
China weekly iron ore port stockpiles
Shanghai exchange weekly commodities inventory, ~15:30
Saturday, May 20
China’s 3rd batch of April trade data, including country breakdowns for energy and commodities
On the Wire
California startup Energy Vault Holdings Inc. is nearing completion of its first major power-storage project in China, one of the only systems in the world to generate electricity using gravity.
https://finance.yahoo.com/news/china-commodities-may-weaker-yuan-004641999.html
MGL Comment - Fri 06:30, May 19 2023Back to Top
We've been somewhat sceptical all year about the strength of China's recovery. In the last two weeks, Mr Market has finally agreed with us and taken the commodity complex down a notch.
Now the Yuan is starting to reflect that change in the narrative too. Yesterday, we had an animated discussion internally and with clients on the actual size of China's population, following the publication of our last feature, which we now follow up on. Our partner, James Burdass, took the initiative to compile a comprehensive spreadsheet utilizing data from the United Nations.
The findings shed light on the potential size of China's population, raising interesting questions about the accuracy of official statistics.
According to James' analysis, achieving a population of less than one billion would necessitate a significant overstatement of the official city population by say 25%, and an even larger overstatement in rural areas.
For those who are interested in delving deeper into the data on this topic, I encourage you to reach out to James at james@commodityintelligence.com. He can make the full spreadsheet available, including the official populations of the top cities in China, extending all the way down to the 423rd ranked city, Yangchun.
So, we started with our review of the official city populations, and the exercise revolved around the central idea that China's 'Hoku' registration system has likely been systematically abused for decades. The system has no incentives to prevent Chinese workers from registering in multiple cities; in fact, all the provincial incentives are aligned with over-reporting the population to curry influence in Beijing.
The question becomes, how big is this issue? Is it 10%? 25% or 40%? We took as our benchmark the release of the National Police Database last year, which contained 978m entries, and we could argue that even China's police database is incomplete; so, for example, if the police coverage is 90%, then the likely population would be just shy of 1.1bn.
There are real reasons to doubt the official figures:
~Beijing quietly lowered the official population from 1.44bn to 1.28bn last year; we might muse that this was directional rather than factual.
~ There are some anomalies which raise questions. For example, London births plus deaths last year was 180k total, with a well-reported population of 9m, which might be understated, but is based on the 2020 census. Shanghai births plus deaths totals 250k, which might have your average population statistician thinking Shanghai's population is around 12m. We have demographic differences, but are these differences sufficient to explain Shanghai's claimed 24m population, i.e., twice the expected size? Now either you believe that Shanghai is fibbing, or you have to conclude that Shanghai's ultimate population will settle at 50% of its current size; there are no other plausible, logical explanations.
~Independent academic estimates based on various techniques (salt consumption, bus journey data, light pollution etc.) all cluster around the one bn mark. In fact, all the independent scientific estimates of China's population are lower than the official number, whatever the basis of estimation.
Here's yet another one from Medium:
We have some anecdotal evidence. Various people have reported to me on several occasions that, given China's scale, and purported population, its Cities are curiously quiet. I've been far more struck by crowds in Tokyo, Taipei, London or New York than crowds in Beijing, Shanghai, or Guangzhou.
How profound is this conclusion?
If we are even close to correct, we must ADD some 20% to the total debt burden, which would put China, an emerging economy, on par with Japan! (An ageing OECD economy with an unmistakable demographic death rattle!) The situation for the property market looks even worse; instead of maybe 80m empty apartments or 5.5% of the old population data, a nasty imbalance, we are now looking at 7% plus excess property, i.e. the property problem is 40% worse than feared.
Editor's note from James Burdass:
The feedback we are getting from clients is that we are directionally correct. Most agree with my view that the true number is probably over a billion but there is little pushback conceptually: the official numbers are likely being overstated.
There could be more to this than just the cities. I wanted to share an additional perspective that highlights the potential incentives for over-reporting the rural population in China, adding a further layer to the population discussion beyond my review of official data in cities. It is worth noting provinces in China receive aid and resources based on their population figures. Consequently, there will be vested interest in inflating the rural population numbers to secure a larger share of resources.
Moreover, based on anecdotal evidence from my personal connections in China (some of you may be aware that I have family there), there appears to be some consensus that the quality of record keeping outside of major cities is even lower. This raises further questions about the accuracy and reliability of rural population statistics. What is the true urbanisation rate? 70%? We would encourage you to go on Google Earth and form your own opinion using satellite technology.
By considering these factors and those mentioned above, we begin to understand the potential motivations behind the alleged discrepancies in population reporting and gain a more nuanced perspective on the intricacies of China's data collection practices.
If you are interested in exploring the topic further, obtaining my spreadsheet or if you have additional observations, I welcome you to contact me at james@commodityintelligence.com
HOUSTON (Reuters) - Exxon Mobil Corp has pushed back against investors pressing the largest U.S. oil producer to report on the risks to its business from restrictions on greenhouse gas emissions and potential environmental disasters.
In a reply on Wednesday to proxy advisor Glass Lewis, Exxon said the prospect of the world achieving net-zero carbon dioxide emissions by 2050 is remote and should not be further evaluated in its financial statements.
A shareholder proposal seeking a report on the cost of having to abandon projects faces a shareholder vote on May 31. Glass Lewis backed the initiative, concluding Exxon could face material financial risks from the net-zero scenario.
Glass Lewis did not reply to requests for comment.
Exxon has said the world is not on a path to achieve net-zero emissions in 2050. It says limiting energy production to levels below consumption demand would lead to a spike in energy prices, as observed in Europe following oil sanctions against Russia over Ukraine.
The 2050 net-zero emissions (NZE) scenario of the International Energy Agency (IEA) envisions a path to limit the global temperature rise to 1.5 degrees Celsius.
The World Meteorological Organization on Wednesday said that threshold could be hit for the first time in the next five years.
For the NZE scenario to be met, the IEA had said new oil exploration would have to have stopped in 2021 and nations would have to switch to renewable energy from fossil fuels. Exxon is among the companies heavily investing in new exploration to generate oil and gas for decades to come.
"It is clear that the IEA NZE does not, by the scenario authors’ own assessment, meet the level of likelihood required to be considered in our financial statements," Exxon said in a response filed with the U.S. Securities and Exchange Commission.
"It is highly unlikely that society would accept the degradation in global standard of living required to permanently achieve a scenario like the IEA NZE," Exxon said in dismissing the proposal.
Exxon rebutted the proxy firm's recommendation that it evaluate the impacts of a worst-case oil spill at its offshore Guyanese oil platforms. Exxon leads a consortium responsible for all of Guyana's offshore oil production and its board has recommended against the proposal.
"The requested report clearly would not provide new, decision-useful information," Exxon said, adding the shareholder request "ignore(s) the time, additional cost, and resources every report takes for the company to prepare."
(Reporting by Sabrina Valle; Editing by Howard Goller)
MGL Comment - Fri 08:59, May 19 2023Back to Top
Exxon has said the world is not on a path to achieve net-zero emissions in 2050.
"It is clear that the IEA NZE does not, by the scenario authors’ own assessment, meet the level of likelihood required to be considered in our financial statements,"
Blunt speaking from Exxon, but we agree!
U.S. crude oil production grew 5.6%, or 0.6 million barrels per day (b/d), in 2022 compared with 2021, averaging 11.9 million b/d according to our Monthly Crude Oil and Natural Gas Production report. The two states the Permian Basin spans—Texas and New Mexico—contributed the most growth to U.S. crude oil production in 2022.
The Permian Basin, a productive oil basin located on the border of West Texas and eastern New Mexico, leads in oil production for these two states. In 2022, for the third consecutive year, crude oil production grew more in New Mexico than in any other U.S. state. New Mexico production grew by 0.3 million b/d to 1.6 million b/d, a record for the state.
Crude oil production in the rest of the United States grew by 0.6% (33,000 b/d). Of the eight remaining states with 0.1 million b/d or more of oil production in 2022, production increased from 2021 in five states and decreased in three states. Production in California decreased for the eighth consecutive year, and production in Alaska decreased for the fifth consecutive year. In North Dakota, which had been one of the leading states in oil production growth in the past decade, production declined for the third consecutive year in 2022.
More drilling activity leads to more oil production growth, and we follow the number of active drilling rigs reported by Baker Hughes. Based on this data, the number of land rigs increased by 8 in New Mexico, by 100 in Texas, and by 85 in all other states combined in 2022. In 2023, through the first week of May, the number of land rigs decreased in Texas by 8 and increased in New Mexico by 5.
Data source: Baker Hughes North America Rig Count
U.S. crude oil production continued to grow year over year by an average 1.2 million b/d in January and February 2023. We forecast U.S. crude oil production will continue to increase in 2023 and 2024. In our May Short-Term Energy Outlook, we forecast total U.S. crude oil production will climb to 12.5 million b/d in 2023 and to 12.7 million b/d in 2024.
MGL Comment - Fri 06:37, May 19 2023Back to Top
U.S. crude oil production grew 5.6%, or 0.6 million barrels per day (b/d), in 2022 compared with 2021, averaging 11.9 million b/d
Which was almost entirely Permian Basin crude growth.
Production in California decreased for the eighth consecutive year, and production in Alaska decreased for the fifth consecutive year. In North Dakota, which had been one of the leading states in oil production growth in the past decade, production declined for the third consecutive year in 2022.
Ex Permian, we had small declines in the classic Oil basins.
Here's the various estimates for the Permian basin:
Wildfires threaten Canadian oil sands, prompts evacuations from ConocoPhillips
(Bloomberg) – Resurgent wildfires in Canada’s main energy-producing province prompted what may be the first round of evacuations in the country’s vast oil-sands producing region and are raising the possibility of more shut-ins in the days ahead.
ConocoPhillips is restoring non-essential workers to its Surmont oil-sands site in Alberta after removing them Tuesday because of a wildfire nearby, the company said in an emailed statement. Until now, the blazes were hindering oil and gas production in the western part of the province, far from the oil sands in the northeast.
Almost 2.7 MMbbl of daily oil-sands production in Alberta is now in “very high” or “extreme” wildfire danger zones, consultant Rystad Energy said in a report. The equivalent of at least 240,000 bbl — and possibly more than 300,000 bbl — of daily oil output already is shut, mainly in western Alberta, the firm estimates.
The total number of active wildfires in Alberta climbed to 91 as of Wednesday afternoon from 86 a day earlier. The number of out-of-control blazes rose to 27 from 24, according to provincial data.
While winds weakened and temperatures returned to normal seasonal levels recently, conditions are expected to worsen in the days ahead, Christie Tucker, a spokeswoman for Alberta Wildfire, said during a media briefing Wednesday.
“It will get hotter and drier as we head to the weekend, and as we’ve seen, that can lead to more active wildfire behavior,” she said.
About 38,000 Alberta residents have been evacuated since the fire season began, and almost 12,000 currently remain evacuated, officials said at the briefing.
In 2016, wildfires ripped through Alberta’s oil sands region, cutting more than 1 MMbpd crude production and destroying whole sections of Fort McMurray, the biggest city in the area.
Operational updates
Below is a summary of operational updates from companies working in the area:
Whitecap Resources Inc. said Wednesday that it has about 26,000 bbl of daily production shut in. That figure has fluctuated from 12,000 to 40,000 barrels over the past two weeks, the company said in a statement.
Athabasca shut two facilities in its light-oil division at Kaybob, with the equivalent of about 2,300 bbl of daily output curtailed.
Obsidian Energy Ltd. shut down production from fields at Seal, Walrus and Nampa in the Peace River area on May 12 and the Peace River Harmon Valley South field on May 14. The company restored 2,500 bbl of daily production in Pembina, while 8,500 bbl remains offline. A total of 9,700 bbl of output is currently curtailed.
Chevron’s production at the Duvernay formation near Fox Creek, Alberta, has been shut in. Last year, the major’s net oil equivalent production was 40,000 bpd, and net crude oil production was 11,000 bpd.
MGL Comment - Fri 09:05, May 19 2023Back to Top
Almost 2.7 MMbbl of daily oil-sands production in Alberta is now in “very high” or “extreme” wildfire danger zones, consultant Rystad Energy said in a report. The equivalent of at least 240,000 bbl — and possibly more than 300,000 bbl — of daily oil output already is shut, mainly in western Alberta, the firm estimates.
We have to raise the estimate again, and this is becoming material.
By Nidhi Verma
NEW DELHI (Reuters) - Indian gas utility GAIL (India) Ltd sees local gas demand growing by 6%-7% in the fiscal year to March, driven by lower prices and the resumption of supply under a deal with the former unit of Russia's Gazprom, its chairman said on Thursday.
Gas consumption in India fell by about 6% in 2022-23 as higher prices pushed consumers to cheaper liquid fuels and as Russia's invasion of Ukraine disrupted supply, forcing GAIL to ration supplies.
"We definitely see this year to be very promising as far as the natural gas consumption is concerned," said Sandeep Kumar Gupta at an earnings conference.
Gupta does not expect a spike in global liquefied natural gas (LNG) prices in the near future as stocks in Europe are at "sufficiently" high levels compared to last year, when Germany's Sefe stopped supplies to GAIL to meet its own demand.
The Indian company will get four LNG cargoes from Sefe in June, equivalent to the volumes it was getting under a deal with a former unit of Russia's Gazprom, he said.
"Hopefully we will get similar volumes in future also."
Sefe resumed supplies to GAIL from March this year.
In 2012, GAIL agreed to a 20-year LNG purchase deal with Gazprom Marketing and Singapore (GMTS) for annual purchases of an average of 2.5 million tonnes of LNG.
At the time, GMTS was a unit of Gazprom Germania, now called Sefe, but the Russian parent gave up ownership of Sefe after Western sanctions were imposed on Moscow over the Ukraine war last year.
India's gas demand is expected to rise substantially as it wants to raise the share of gas in its energy mix to 15% by 2030 from 6.2% now.
Gupta said his company has received offers from more than six companies in response to its tender seeking to buy a 26% stake in an LNG plan in the U.S. and a long-term supply of gas.
Bids are being evaluated, he said, adding GAIL is also looking for long-term gas deals with Qatar and UAE.
(Reporting by Nidhi Verma; Editing by Sharon Singleton)
https://uk.sports.yahoo.com/news/lower-gas-prices-push-indias-150728457.html
MGL Comment - Fri 08:40, May 19 2023Back to Top
Indian gas utility GAIL (India) Ltd sees local gas demand growing by 6%-7% in the fiscal year to March,
There's considerable displaced demand from India and its neighbours, who were priced out of the market last year.
(Montel) Russian gas giant Gazprom expects domestic gas storage facilities to achieve record highs this winter, the state-run firm said on Thursday, which analysts cited as positive spin amid its sharp decline in exports to Europe.
Russian underground gas storage facilities would be filled with nearly 73bcm by the coming winter, Gazprom said via its Telegram account.
But while the firm said this was to ensure “reliable, uninterrupted gas supply to Russian consumers”, some market participants viewed the announcement as an attempt to put a positive spin on a dire export situation.
“They did lose 100-150bcm/year of gas exports to Europe, so I think it’s about having stranded domestic production,” said an analyst with a gas exporting company.
“Last resort”
“It makes sense to fill your own domestic storages to max as your last resort before having to shut your production and risk irreversible damage to fields,” she added.
“Gazprom’s decision to lift their storage capacity just demonstrates that they have excess supply they can’t ship anywhere – either domestically or for export,” said Yuriy Onyshkiv, Kyiv-based gas market analyst at the London Stock Exchange Group.
“After they removed over 100bcm of their gas from Europe, they don’t have much alternative to ship it to,” he said, noting pipeline capacity to China was “too small to handle anything close to that” while Russia’s LNG export capacity was also limited.
“Now, by expanding their storage capacity, they might want to avoid the need to mothball their non-flexible fields which would mean shutting them down for good,” he added.
Europe has reduced its dependence on Russian gas considerably since the country’s invasion of Ukraine in March last year, instead hiking imports of LNG – notably from the US – as well as taking steps to cut overall gas demand and boost renewable energy’s contribution to the power mix.
Russia, for its part, has cut gas flows to Europe on heightened tensions with the West.
As such, Europe’s own gas storage facilities remain well stocked for the time of year, with levels seen last at 64% of capacity, compared with 42% a year ago, Gas Infrastructure Europe data showed.
Amid ample supply and diminishing seasonal demand, the benchmark front-month Dutch TTF gas contract on Thursday hit its lowest level since June 2021 of EUR 30.07/MWh.
https://www.montelnews.com/news/1500129/gazprom-puts-positive-spin-on-eu-export-plunge--analysts-
MGL Comment - Fri 08:30, May 19 2023Back to Top
Russian underground gas storage facilities would be filled with nearly 73bcm by the coming winter, Gazprom said via its Telegram account
Gazprom fills storage with unwanted European gas, and they are expanding pipe to China apace, but it's not until 2025 or 2030 that they can switch large volumes.
Moldova no longer recieves natural gas supplies from Gazprom. Credit: rarrarorro via Shutterstock.
Moldovan Prime Minister Dorin Recean has announced that the country no longer dependent on natural gas or electricity from Russia.
“Moldova no longer consumes Russian gas, it is integrated in the European energy network both technically and commercially,” Reacean stated during a state visit this week to neighbouring Romania.
Recean continued: “If at the start of the war 100% of energy consumed in Moldova originated in… Russia, today Moldova can exist with absolutely no natural gas or electricity from Russia”.
The statement supports comments made by Moldovan energy minister Victor Parlicov in March. Parlicov, the first person ever to hold the recently created position, stated that only the Russian-allied breakaway region of Transnistria was still receiving gas from Gazprom, Russia’s state-owned natural gas company.
The independence from Russia is possible, Parlicov added, thanks to the European Bank for Reconstruction and Development giving the country $318 million of credits. These credits allowed Moldova to pivot its supply source to western Europe.
In November, Moldova received natural gas from Slovakia for the first time. Moldova also started buying natural gas from the Trans-Balkan pipeline for the first time, showing the potential diversity of the country’s natural gas import options.
Fraught relations with Gazprom
Relations with Gazprom have been fraught for someyears. In 2021, Gazprom offered Moldova a cheaper gas deal if, in exchange, the country was to weaken ties with the EU.
During the initial stages of the conflict in Ukraine, Gazprom heightened the cost of natural gas for Moldova greatly and cut the supply by more than half. With the supply down to just 5.7 million cubic metres a day, 51% of the original agreed amount, Moldova suffered power shortages and blackouts.
Although Moldova no longer sources natural gas from Russia, Parlicov believes Transnistria will continue to receive Gazprom supply, free of charge.
“They understand that if they abandon this contract, they will practically be allowing the region to collapse,” Parlicov stated.
Despite this, Gazprom is still a major figure in Moldova’s energy sector. Most electricity in Moldova is provided by the Cuciurgan Power Plant (CPP). The plant, located in Transnistria, is powered by Gazprom natural gas. The Gazprom gas that Moldova no longer accepts is redirected to Transnistria, then sent back to Moldova at $70 per MW. Therefore, despite diversifying its natural gas imports, the country will require more time before the influence of Gazprom is completely removed from their energy mix.
https://www.power-technology.com/news/recean-moldova-natural-gas-reliance/
MGL Comment - Fri 08:06, May 19 2023Back to Top
Moldova no longer recieves natural gas supplies from Gazprom
With the Nordstream 2 pipeline connection to Germany being converted to a regas facility, I think we have to conclude this a permanent switch in the energy map.
Russian Gas goes to China.
LNG goes to Europe.
MOSCOW, May 17 (Reuters) - Russian President Vladimir Putin said on Wednesday that oil production cuts were required to maintain a certain price level, contradicting assurances from other leaders of the OPEC+ group of producers that it was not seeking to manage the market in that way.
The United States and Europe have accused Russia of weaponising energy to contain the West in its drive to weaken Moscow's military campaign in Ukraine.
Moscow, in its turn, accuses the West of weaponising the dollar and financial systems such as the international payments mechanism SWIFT in retaliation for Russia sending troops into Ukraine in February 2022.
Speaking at a televised government meeting, Putin said that the situation on the global oil market was, on the whole, "absolutely stable" as Russia maintains output cuts to support prices.
He also said that Russia had been cutting production, which was at the "required level".
Putin added: "But all our actions, including those related to voluntary production cuts, are connected precisely with the need to maintain a certain price environment on world markets, in dialogue and contact with our partners in OPEC+."
Saudi Arabia, the kingpin of the Organization of the Petroleum Exporting Countries (OPEC), and other OPEC members have repeatedly said that they are not targeting a specific price for oil, which large fuel consumers such as the United States have accused the group of unlawfully trying to do.
At the same time, some OPEC observers said that the organisation needed higher oil prices due to rising inflation.
Russia said on April 2 it would extend an oil production cut of 500,000 barrels per day (bpd) - about 5% of its crude output - until the end of the year, compared with February levels. Leading OPEC members announced cuts on the same day.
"We are reducing production, but nevertheless it is at the required level," Putin said.
Russian Deputy Prime Minister Alexander Novak, during a visit to Iran, said later on Wednesday that Russia has reached its oil output cuts of 500,000 bpd this month.
Last week, oil pricing benchmarks fell for a fourth consecutive week, the longest streak of weekly declines since September 2022, over fears of a U.S. recession and risks of a historic default on government debt in early June.
The price of Russian Urals flagship oil blend, denominated in roubles, fell in early May 14% below the breakeven level assumed for this year's federal budget, Reuters calculations showed, exacerbating already huge shortfall in the state coffers.
Reporting by Darya Korsunskaya; writing by Vladimir Soldatkin; Editing by Kevin Liffey
Our Standards: The Thomson Reuters Trust Principles.
MGL Comment - Fri 06:56, May 19 2023Back to Top
He also said that Russia had been cutting production, which was at the "required level".
Be sceptical.
We have Russia's shipborne crude exports this month running at 4.7mbpd, which roughly equates to total exports of 8.7mbpd. To this we must add refined product exports, which are a bit of a mystery. We know that even Saudi refineries have been running cheap Russian partially refined products at the rate of some 100kbpd, and we also see oil products moving into northern Iran.
Having said all of the above, it appears to us that Russia cannot increase exports from here.
* Ukraine Black Sea grain deal extended for two months
* Crop tour sees southwestern Kansas wheat yield lowest since 2003
* Corn, soybean prices face pressure on favourable U.S. weather
LONDON, May 18 (Reuters) - Chicago wheat futures fell to a two-week low on Thursday as an extension of a deal to allow war-ravaged Ukraine to continue exporting grains through Black Sea ports eased concerns over world supplies.
Corn and soybean prices were also lower as favourable weather helped newly planted crops in the Midwest.
The Ukraine Black Sea grain deal was extended on Wednesday for two more months, a day before Russia could have quit the pact over obstacles to its grain and fertilizer exports.
ING said in a note that the extension would "help ease some supply concerns in the market" while adding there would continue to be uncertainty about what would happen next.
Ukraine had sought a longer extension while Russia continues to demand more should be done to boost its own exports of grains and fertilizers.
The most-active wheat contract of the Chicago Board of Trade (CBOT) was down 1.4% to $6.17 a bushel at 0852 GMT, after setting a two-week low of $6.15-1/4.
However, losses in the wheat market were limited by expectations of lower winter output in the United States.
Crop scouts on the second day of an annual three-day tour of Kansas projected an average yield for hard red winter wheat in the southwestern portion of the state at 27.5 bushels per acre, the worst since at least 2003 and down from 37 bushels per acre last year.
The Wheat Quality Council tour's five-year average for the same area from 2017-2022 was 44.68 bushels per acre. No tour was held in 2020 due to the COVID-19 pandemic.
Corn futures faced pressure after the U.S. Department of Agriculture said private exporters cancelled purchases of 272,000 tonnes of old-crop U.S. corn earmarked for China, the fourth such cancellation in the last month.
CBOT corn futures fell 0.8% to $5.57-1/4 a bushel, slipping back towards the prior session's 18-month low of $5.54-1/4.
Meanwhile, the 2023 U.S. corn and soybean crops are off to a solid start, with a faster-than-average planting pace and mostly crop-friendly weather pointing towards rising supplies.
CBOT soybeans fell 0.2% to $13.33-3/4 a bushel. (Additional reporting by Naveen Thukral in Singapore; Editing by Sohini Goswami and Mark Potter)
MGL Comment - Fri 06:10, May 19 2023Back to Top
The Ukraine Black Sea grain deal was extended on Wednesday for two more months, a day before Russia could have quit the pact
This goes to our argument that Russia is selling anything and everything for cash to pay for the war.
The satellites are tracking a record amount of crude moving out of Russia this month, 4.7mbpd.
BENGALURU, May 18 (Reuters) - India's Vedanta Group, promoter of metals-to-oil conglomerate Vedanta Ltd (VDAN.NS), is in talks with banks to raise at least $500 million, Bloomberg reported on Thursday.
The move by billionaire Anil Agarwal-led Vedanta comes as its $500 million junk-rated bond matures at the end of this month, Bloomberg reported, citing sources familiar with the matter.
"We routinely meet investors, bankers, and financiers in the course of our business," Vedanta Group spokesperson Mukul Chhatwal said in an emailed response to Reuters.
The group has been depending on money from its units to tackle its debt load, especially after it failed to sell some zinc assets to Hindustan Zinc Ltd (HZNC.NS) for $3 billion.
Proceeds from the loan, with a maturity of as much as 5 years, would be used to for a bond repayment, sources told Bloomberg, adding that more lenders may take the deal size to $900 million rupees.
MGL Comment - Fri 05:52, May 19 2023Back to Top
Let's walk you from the bottom to the top of the group because this loan seems to me to guarantee the various dividends flowing up the group virtually:
Hindustan Zinc: 24% yield, after tripling its dividend following the rejection by the Gov't of Vedanta's scheme to sell zinc assets into the subsidiary for $3bn.
Vedanta Group: 23% yield, after increasing the dividend 46%post the failed transaction.
Vedanta Finance (London), owes $1bn in two tranches, $500 this end month and another $500 by the end of January—the net recipient of all that dividend flow.
Anil Agarwal has publicly raged at the gov't for interfering with his pet scheme to sell Zinc assets deemed to be worth $3bn from Vedanta Group to Hindustan Zinc.
Now if I were a banker lending the top company this money, I would want some assurances on the continued flow of those dividends.
The government-backed China Iron and Steel Association (CISA) on Tuesday debated how to speed up the revision of standards for steel scrap to boost imports, the industry association said on its WeChat account on Wednesday.
China has said it will increase steel scrap use in steelmaking to try to reduce reliance on iron ore imports and also cut carbon dioxide emissions.
The world’s largest steel producer, with more than 70% of iron ore supply from abroad, has a target to reach peak carbon emissions by 2030 and carbon neutrality by 2060.
To help achieve those goals, Beijing aims to increase the share of steel from electric-arc furnace (EAF) that produce metal from scrap to over 15% of the country’s total by 2025, according to a plan issued by state planners in 2022 when the EAF share was 9.7%.
Every tonne of scrap used for steel production prevents the emission of 1.5 tonnes of carbon dioxide, as well as the consumption of 1.4 tonnes of iron ore, 740 kg of coal and 120 kg of limestone, a Worldsteel Association report said.
Expanding EAF-based steelmaking, however, has been constrained by a shortage of domestic steel scrap.
China lifted a ban on steel scrap imports in 2021, but it can still only enter the country under five customs codes.
Representatives from Dalian Commodity Exchange, China Association of Metal Scrap Utilization (CAMU) and some of China’s top steelmakers including China Baowu Steel Group, Ansteel, Shagang Group and HBIS Group attended Tuesday’s meeting, the CISA said in the statement.
Steel enterprises present ascribed the low import levels to stringent standards.
“Neighboring Vietnam and India imported much higher volumes of steel scrap than China. And we need to promptly revise the standards of steel scrap if we were to enlarge imports,” Luo Tiejun, the vice chairman of the CISA, said.
China imported around 550,000 tonnes of steel scrap in 2022, less than before the ban was introduced in 2019, customs data showed.
The meeting also discussed a draft steel scrap futures contract, the CISA said.
https://www.hellenicshippingnews.com/china-steel-body-seeks-speedy-change-to-scrap-standards/
MGL Comment - Fri 06:14, May 19 2023Back to Top
“Neighboring Vietnam and India imported much higher volumes of steel scrap than China. And we need to promptly revise the standards of steel scrap if we were to enlarge imports,” Luo Tiejun, the vice chairman of the CISA, said.
It does look as if China is about to resume large-scale steel scrap imports.
This will negatively impact the likes of Hoa Phat in Vietnam. Even Turkey may feel the impact, though EU scrap to China is a long haul.It will also impact China's iron ore consumption.
Will it be large enough to impact scrap prices in the OECD?
