Mark Latham Commodity Equity Intelligence Service

Tuesday 11 June 2024
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Second hand renewables half price?

About half a dozen investors, including Abu Dhabi Future Energy Company PJSC - Masdar of the UAE, Singapore's Sembcorp Industries Ltd. (SGX:U96), JSW Energy Limited (BSE:533148), Torrent Power Limited (NSEI:TORNTPOWER), Sekura Energy Limited and Oil and Natural Gas Corporation Limited (NSEI:ONGC), have submitted non-binding bids to acquire 760 MW of operational assets in India that have been put on the block by Italy's Enel Group, said people aware of the development. HSBC is advising Enel on the sale. The proposed deal may have an enterprise value of $500 million (INR 41.00 billion), the sources said.

The portfolio of Enel Green Power India Private Limited comprises 760 megawatts (MW) of operational wind and solar power assets and a development pipeline of 2 gigawatts (GW). Of the operational capacity, solar power projects comprise 420 MW, with the balance 340 MW coming from wind power. Last year, Norwegian Climate Investment Fund, managed by Norfund, and KLP, Norway's largest pension company, had together committed $100 million of equity and guarantees for a 168 MW wind power plant developed by Enel Green Power in India.

In 2020, Norfund and Enel Green Power (EGP) entered into a joint investment agreement for renewable energy projects in India. Their first project together, the 420 MW Thar solar plant, was announced in 2022. Enel Green Power, founded in 2008 within the Enel Group to develop and manage renewable power projects globally, operates over 63 GW of installed renewable capacity at 1,300 plants in Asia, Europe, Africa and America.

EGP had strengthened its position in India through an acquisition of a majority stake in renewable energy company BLP Energy for INR 30 million (INR 2.20 billion) in 2015.Enel, ONGC, Masdar and Sekura Energy spokespersons declined to comment. JSW, Sembcorp and Torrent didn't respond to queries. Energy producers such as Sekura Energy, Sembcorp and Masdar Energy are already in the race for several Indian renewable assets that are on the block.

These three were among the contenders for the 2 GW renewable portfolio of Brookfield in India that's up for sale at an estimated enterprise value of $800 million - 1 billion (INR 66.00 billion - INR 83.00 billion). JSW Neo Energy and Sekura Energy are among the bidders that have made non-binding offers to acquire a controlling stake in Ayana Renewable Power, majority owned by National Investment and Infrastructure Fund (NIIF), at a valuation of about $2 billion, ET had reported. ONGC is another contender for several assets in the clean energy space as part of decarbonising its operations.

ONGC plans to have a renewable energy capacity of 10 GW by 2030 at an investment of INR 1 lakh crore. The outlook for the renewable energy (RE) sector remains stable, led by strong policy support from the government, superior tariff competitiveness and sustainability initiatives by large commercial and industrial (C&I) customers.

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Upper circuit alert: Heavy buying witnessed in this multibagger infrastructure stock; hits fresh 52-week high!

Upper circuit alert: Heavy buying witnessed in this multibagger infrastructure stock; hits fresh 52-week high!

Shares of the company gained more than 40 per cent in the last six months.

Shares of Likhitha Infrastructure Limited gained about 20 per cent on Monday. The stock also made a new 52-week high today. The stock has witnessed heavy buying activity from investors from the last few days. Likhitha Infrastructure Limited has posted robust Quarterly Results in Q4FY24. The revenue of the company stood at Rs 122.29 crore which grew by 4.3 per cent YoY. The operating profit of the company stood at Rs 28.30 crore which grew by 14.98 per cent on a YoY basis, while the PAT of the company stood at Rs 17.68 crore, which increased by 5.67 per cent on a YoY basis.

Likhitha Infrastructure is an oil and gas pipeline infrastructure service provider in India, focused on laying pipeline networks along with the construction of associated facilities and providing operations and maintenance services to the City Gas Distribution (CGD) companies in India. Shares of Likhitha Infrastructure Limited have also delivered multibagger returns of about 500 per cent in a five-year holding period. FIIs increased their stake in the company in March 2024.

A few months back, Likhitha Infrastructure secured a domestic order worth Rs. 106.12 crore from Hindustan Petroleum Corporation Limited. This project involves laying and constructing a steel pipeline along with associated works for the Haldia Panagarh Pipeline Project. Essentially, Likhitha will be building a cross-country pipeline with supporting facilities. The project needs to be completed within 15 months. The stock has shown impressive growth, and investors should keep a close eye on this stock.

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Russia puts former Ukrainian Prime Minister Yulia Tymoshenko on its wanted list

 Russia has put former Ukrainian Prime Minister Yulia Tymoshenko on its wanted list, Russian state media reported, citing the Interior Ministry’s database.

Russian state news agency Tass said Tymoshenko was listed as wanted on unspecified criminal charges.

She reportedly joins Ukrainian President Volodymyr Zelenskyy and his predecessor, Petro Poroshenko, on the same list, which also includes scores of officials and lawmakers from Ukraine and NATO countries.

Tymoshenko and her Batkivshchyna (the Fatherland) party did not immediately comment Saturday.

Mediazona, an independent Russian news outlet, reported that both Zelenskyy and Poroshenko had been listed since at least late February.

Amog others on the list is Kaja Kallas, the prime minister of NATO and EU member Estonia, who has fiercely advocated for increased military aid to Kyiv and stronger sanctions against Moscow.

Russian officials in February said that Kallas is wanted because of Tallinn’s efforts to remove Soviet-era monuments to Red Army soldiers in the Baltic nation, in a belated purge of what many consider symbols of past oppression.

Russia has laws criminalizing the “rehabilitation of Nazism” that include punishing the “desecration” of war memorials.

Also on Russia’s list are cabinet ministers from Estonia and Lithuania, as well as the International Criminal Court prosecutor who last year prepared a warrant for President Vladimir Putin on war crimes charges. Moscow has also charged the head of Ukraine’s military intelligence, Kyrylo Budanov, with what it deems “terrorist” activities, including Ukrainian drone strikes on Russian infrastructure.

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Two ships catch fire after missile strikes off Yemen’s coast

According to Reuters, two ships caught fire after being struck by projectiles off the coast of Yemen near Aden, as reported by UK maritime agencies on 9th June.

In particular, the British security firm Ambrey disclosed that an Antigua- and Barbuda-flagged general cargo ship was hit by a missile 83 nautical miles southeast of Aden, resulting in a fire which was later brought under control.

Earlier, the United Kingdom Maritime Trade Operations (UKMTO) reported receiving information from a vessel captain about an incident 80 nautical miles southeast of Aden.

The ship was traveling southwest along the Gulf of Aden at 8.2 knots when it was hit by a missile at the forward station, igniting a fire that was subsequently extinguished.

…Ambrey noted in an advisory.

In a separate incident, UKMTO received a report from another vessel’s master about an incident 70 nautical miles southwest of Aden.

The master reported that an unknown projectile struck the vessel’s aft section, causing a fire. Damage control efforts are ongoing.

…UKMTO said in an advisory note.

There were no reported casualties, and the vessel continued towards its next port of call.

The Houthi militia, controlling the most populous regions of Yemen and aligned with Iran, has been attacking ships off its coast for several months. They claim these actions are in solidarity with Palestinians fighting Israel in Gaza.

Houthi fighters have targeted the Bab al-Mandab Strait and Gulf of Aden with drone and missile strikes, compelling shippers since November to take longer, more expensive routes around southern Africa.

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Oil and Gas

Brazil’s Petrobras tightens ties with Chinese banks

Brazil’s state-run oil company Petrobras is tightening its financial ties with China.

The federal oil giant's actions in this area have gathered momentum since the beginning of 2023, when President Luiz Inácio Lula da Silva assumed the country's presidency.

Last year, Petrobras signed MOUs with China Development Bank (CDB) and Bank of China to assess investment opportunities and cooperation in low carbon initiatives and green finance.

The deals also call for financing Petrobras' supply chain and increasing and facilitating trade and financial exchanges between Petrobras and Chinese companies.

Last week, the company announced it had signed an MOU with China’s export credit agency Sinosure, with the same goals.

The deal with Sinosure followed a series of agreements inked with Chinese companies such as China Petrochemical Corporation (Sinopec), China National Offshore Oil Corporation (CNOOC), China Energy International Group and Citic Construction Co. (CITIC).

Energy sector relations between Brazil and China were expected to improve under Lula, after diplomatic relations deteriorated during the administration of former president Jair Bolsonaro.

During Lula's trip to China in April 2023, several government and business-level energy agreements were formalized, including in the electric power sector, with Chinese companies like State-Grid and SPIC.

Partners of key Petrobras projects in the pre-salt, such as the Mero and Búzios fields, the Chinese increased their local exploration and production (E&P) footprint by acquiring assets in the Pelotas basin in December 2023.

The Asian nation is also a major builder of FPSOs for Petrobras through its Cosco and CIMC Raffles shipyards, for example.

The new deals with Chinese banks could help Petrobras improve financing conditions for the construction of FPSOs, while the state-run firm also seeks domestic solutions, such as the merchant marine fund (FMM).

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Oil and gas CEOs testify before House of Commons environment committee

CEOs and executives of some of Canada's largest oil and gas companies defended their industry Thursday, the same day a group of Canadians personally affected by climate change called on the federal government to implement its proposed cap on emissions from the oil and gas sector.

CEOs and senior executives from Cenovus Energy Inc., Enbridge Inc., Imperial Oil Ltd., Shell Canada Ltd. and Suncor Energy Inc. appeared by videoconference Thursday afternoon before the House of Commons standing committee on environment and sustainable development.

Their appearance was the result of an April motion by NDP environment critic Laurel Collins, who called on the executives to explain what their companies are doing to address climate change.

One after another Thursday, the executives spoke of their goal to reduce emissions while also increasing Canada's oil output in the years to come.

"Every credible study shows that we will continue to need all forms of energy, including oil, to help meet the world's growing energy demand," said Cenovus CEO Jon McKenzie.

"That oil will be produced somewhere, and it should be produced in Canada, where we have some of the strongest regulations and industry-leading ESG performance."

"The world will not consume one less barrel of oil, simply because Canada chooses not to provide it," said Suncor CEO Rich Kruger, adding he believes the oil and gas sector can help tackle climate change but that investing in emissions-reducing technology requires supportive government policy and regulations.

Just hours before, a small group of individuals spoke to reporters at a press conference on Parliament Hill organized by Climate Action Network.

The group included a woman who lost her Kelowna, B.C. home in last year's wildfires, a woman from Merritt, B.C. who lived through severe flooding in 2021, and a man from Tuktoyaktuk, N.W.T., who is concerned about the threat posed by rising sea levels to his Arctic community.

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Starting with Turkmenistan on the 10th, President Yoon Suk Yeol will tour three Central Asian countr..

Starting with Turkmenistan on the 10th, President Yoon Suk Yeol will tour three Central Asian countries, Kazakhstan and Uzbekistan, until the 16th. It is significant that Central Asia is the first presidential destination this year after the postponement of his visit to Germany and Denmark in February. With the recent need to secure a supply chain of resources to replace China, Central Asia is one of the best partners for this. Following the launch of the "Core Mineral Dialogue" at the Korea-Africa Summit last week, the government should continue to focus on securing resources through tours to three countries.

Turkmenistan is the world's fourth-largest country in terms of natural gas reserves. In addition to Caspian oil, many minerals, including lithium, a battery material for electric vehicles, are buried in Kazakhstan. In addition to oil and gas, Uzbekistan is also rich in gold, molybdenum, and uranium. Uzbekistan and Kazakhstan, in particular, are speeding up their opening to the outside world and economic development as long-term officials step down in 2016 and 2019, respectively, and a new president takes power. There are many industrial fields that will cooperate with us as well as resource development. The government has announced its intention to hold the "Korea-Central Asia Five-State Summit" in Seoul next year, which should be used as an opportunity to expand cooperation.

However, resource cooperation is not something that is rushed. The development of Kazakhstan's 'Zhambyl mine', which was a representative achievement during the Lee Myung Bak government, ended in failure. In 2008, Korea National Oil Corporation formed a consortium with local companies to jointly explore with Kazakhstan, but withdrew in 2016 due to smaller-than-expected crude oil reserves. On the other hand, crude oil is being produced in other mining areas such as Aristan and Kulzan, where KNOC participated. In particular, Uzbekistan's Surgil Project is considered a success story as a project by Korea Gas Corporation and Lotte Chemical in 2007 to develop gas fields and build gas and chemical complexes with local state-owned companies. With the completion of the factory in 2016, it is in commercial production.

It is difficult to expect the results of resource diplomacy with just one presidential tour. The government should continue to build trust with the other party even after the tour. Through this, Central Asia should be used as a clear ally of the resource supply chain to prepare for the threat of China's suspension of resource exports.

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China's self-developed cylindrical floating oil production facility installed at sea

BEIJING, June 10 -- The first cylindrical floating oil-gas production, storage and offloading (FPSO) facility in Asia, named "Haikui No. 1", has been successfully installed at sea, its owner China National Offshore Oil Corporation (CNOOC) announced on Monday.

This achievement marks a significant breakthrough for China in installing floating facilities in deepwater oil and gas fields, according to CNOOC, the largest offshore oil and gas producer in China.

"Haikui No. 1" is a self-developed cylindrical FPSO facility from China. It is installed in the sea area of the Liuhua Oilfield in the Pearl River Mouth Basin, located more than 320 meters deep and about 240 kilometers southeast of Shenzhen.

Weighing a total of 37,000 tonnes and towering at a height of approximately 30 floors, "Haikui No. 1" integrates functions of crude oil production, storage, and offloading. It consists of nearly 600,000 components and the size of its main deck is equivalent to that of 13 standard basketball courts. It has a maximum oil storage capacity of 60,000 tonnes, according to CNOOC.

Wang Huoping, deputy general manager of the Liuhua Oilfield development project at the CNOOC Shenzhen branch, said this is the first time that China has conducted offshore installation of cylindrical marine equipment.

With a design life of 30 years, "Haikui No. 1" is capable of continuous sea operation for 15 years without the need for docking.

Compared to the conventional ship-shaped structure of the FPSO unit, the cylindrical structure design offers advantages such as reduced steel usage, higher oil storage efficiency, and it is better equipped to withstand harsh sea conditions. This effectively improves the economic viability and reduces the cost of oilfield development and operations, said Wang.

However, due to its high center of gravity and large windward area, the cylindrical structure is prone to rotation, making offshore installation extremely challenging, he added.

To ensure the stability of "Haikui No. 1" in the turbulent sea, 12 sets of deepwater suction anchors, independently designed and built by China, were installed on the seabed. These anchors are connected by 12 mooring legs. Each leg is 2,570 meters long, with a breaking load of 2,300 tonnes.

This mooring system acts as underwater mooring piles, firmly securing "Haikui No. 1" at the sea, said Wang.

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Cedigaz: global LNG imports increased 1.7 percent in January-May

Global LNG imports rose by 1.7 percent to 169.3 million tonnes in January-May 2024, up from 168 million tonnes during the same period in 2023, according to preliminary data released by Cedigaz.

Confirming the trend seen this year, the growth was driven by Asian gas demand, with LNG imports increasing by 10.37 million tonnes year-on year, up 15.3 percent, to 115.31 million tonnes, the France-based association said in a report.

Meanwhile, European LNG imports fell by 11.4 million tonnes, down 20 percent year-on-year, to 45.37 million tonnes in the first five months of 2024, it said.

Asia was followed by Central and South America (+1.25 million tonnes, or up around 30 percent to 5.34 million tonnes) and the Middle East (+0.82 million tonnes, or up 45 percent to 2.62 million tonnes), Cedigaz said.

In Europe, reduced gas demand and high inventories were primarily behind the drop in LNG imports, it said.

Cedigaz said the sharpest drop in terms of volume was recorded by the UK, where imports fell by 6.21 million tonnes, down around 59 percent, to 4.21 million tonnes, amid low gas-to-power and residential demand in the UK and increased LNG import capacity in Europe.

China’s LNG imports jump

In Asia, China led the pack with a total of 31.97 million tonnes, representing around 28 percent of imports in Asia, imported in January-May 2024, up from 27.10 million tonnes during the equivalent period in 2023, Cedigaz said.

This was also the highest level reached since the same period in 2021, when China LNG imports hit 32.96 million tonnes, the association noted.

For the whole of 2024, China is projected to hit a new record in LNG imports of around 78-80 million tonnes, with demand driven by the industrial and commercial sectors, according to reports citing a PetroChina official in May, Cedigaz said.

China imported a total of 70.4 million tonnes in 2023, according to Cedigaz database, though the highest annual level was reached in 2021 with 78.79 million tonnes.

China was followed by Japan, which imported 27.81 million tonnes in January-May 2024, and South Korea with 20.41 million tonnes, it said.

India boosts LNG imports

India’s LNG imports posted the second biggest year-on-year increase in terms of absolute changes (+2.52 milion tonnes, up almost 30 percent year-on-year) to 10.99 million tonnes, Cedigaz said.

This marked an increase from 8.47 milion tonnes during the same period last year, making India the fourth-largest importer so far this year after overtaking the UK, which slipped to the 12th position, it said.

India boosted its LNG imports this year and past winter as softer prices fueled buying interest to meet soaring demand – the country remains a price-sensitive market.

India’s LNG imports were already expected to increase this year due to demand fundamentals, Cedigaz said.

With the country currently going through an unusually severe heatwave, this trend is only expected to strengthen, Cedigaz added.

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Oil prices rise more than 2% as Goldman sees supply deficit on summer fuel demand

Oil prices rose Monday after posting a loss last week following the OPEC+ decision to increase production later this year.

Goldman Sachs analysts said Brent should rise to $86 in the third quarter as summer fuel demand results in a "sizeable" deficit.

The investment bank sees a $75 floor and a $90 ceiling for Brent this year.

Crude oil futures rose more than 2% on Monday as analysts see summer fuel demand pushing the market into a supply deficit in the coming weeks.

Goldman Sachs analysts said Brent should rise to $86 in the third quarter as summer transportation and cooling demand pushes the market into a "sizeable" deficit of 1.3 million barrels per day, or bpd.

Here are today's energy prices:

West Texas Intermediate July contract: $77.50 a barrel, up $1.97 or 2.61%. Year to date, U.S. has gained 8.19%.

Brent August contract: $81.48 a barrel, up $1.86, or 2.34%. Year to date, the global benchmark is ahead 5.79%.

RBOB Gasoline July contract: $2.40 per gallon, up 1.07%. Year to date, gasoline futures are up 14.5%.

Natural Gas July contract: $2.98 per thousand cubic feet, up 2.43%. Year to date, gas is up 18.8%.

Oil prices posted a loss last week after OPEC+ agreed to increase production from October through September 2025.

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OPEC+ can delay, pause or reverse its decision to raise production if needed to stabilize the oil market, Goldman analyst Daan Struyven told clients in a Sunday note.

Goldman sees a $75 floor for Brent as lower prices promote demand and a $90 ceiling due to higher-than-expected global inventories and the OPEC+ production decision.

Long positions, or bets that futures prices will rise, are at the lowest level since 2011, while short positions are close to record highs, according to an analysis by UBS.

"We think this is overly pessimistic," said UBS analyst Giovanni Staunovo. Inventories should start falling in the coming weeks and demand should increase by 2 million bpd to 2.5 million bpd through August.

Traders are looking ahead to the Federal Reserve meeting and inflation data on Wednesday, as well as to oil market reports from OPEC and the International Energy Agency on Tuesday and Wednesday.

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Oil price news: Oil steadies after weekly loss as traders eye Fed rate decision

Oil steadied after last week’s drop as traders look ahead to several industry reports and a U.S. Federal Reserve decision on interest rates.

Brent traded below US$80 a barrel after losing 2.5 per cent last week. Algorithmic trading amplified declines following OPEC+’s decision to restore supply from the third quarter. Speculators last week posted the biggest pullback in net-bullish bets for the global benchmark on record.

Traders will be watching for monthly reports from OPEC and the International Energy Agency, due Tuesday and Wednesday, that will shed light on the outlook for the rest of the year after the producer group’s most recent moves. The Fed also releases its decision on interest rates mid-week.

Strong economic data and stubbornly high inflation have seen the market pare bets that it is nearing its much-anticipated pivot to lower borrowing costs.

Crude has dropped since early April on a weakening physical market and fading geopolitical risk premium. After OPEC+’s announcement of a rollback in output cuts caused prices to slump, officials emphasized that the supply increase had always been provisional and could be paused.

“We expect that healthy consumers and solid summer demand for transportation and cooling will push the market in a sizable Q3 deficit,” Goldman Sachs Group Inc. analysts including Daan Struyven wrote in a note. “We stick to our $75-$90 range for Brent oil prices.”

Elsewhere, Iraq said it expects to soon reach a final agreement with the semi-autonomous region of Kurdistan and international oil companies there to restart oil exports that have been disrupted for more than a year.

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Schools out, summer road trip ahead. Here are the latest Florida gas prices

MIAMI - With school out for the summer, there's good news for those planning a road trip. Gas prices in Florida have dropped to the lowest since February.

Over the last 17 consecutive days, the state average has dropped a total of 25 cents. At first, gas prices gradually declined about one cent per day for about a week. Then discounts accelerated, dropping 19 cents in the past nine days, according to AAA.

"Floridians and summer visitors will be pleasantly surprised when they go to fill up the gas tank this week," said AAA spokesman Mark Jenkins.

Sunday's state average was $3.30 per gallon. That's the lowest daily average price since February 28th.

Gas prices in Miami-Dade and Broward

On Monday, the average in Miami-Dade was $3.38 a gallon, down from $3.49 a week ago. Broward's average was $3.36 a gallon, down from $3.50 a week ago.

The most expensive cities in the state for gas are Miami, West Palm Beach, and Naples. The cheapest places for gas are all in the panhandle.

Why the dip at the pump?

"Gas prices are the lowest in several months because of weakness in the oil and gasoline futures markets," said Jenkins.

During most of March and April, U.S. oil prices ranged from $80-85 per barrel. However, during the past three weeks, crude prices dropped a total of 6%. Friday's closing price was $75.53 per barrel - down almost $5 per barrel from three weeks ago.

"Oil analysts at OPIS attribute the weakness in the petroleum markets to a stronger dollar and better-than-expected U.S. employment data, which raised concerns that the Federal Reserve could delay an interest rate cut. The market believes this would stall fuel demand growth. Additionally, analysts attribute oil price losses to the recent agreement between OPEC and its allies to gradually relax some voluntary output cuts later this year. Doing so could strengthen global fuel supplies," according to AAA.

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China’s May crude oil imports fall 8.7% on weak refining margins

China’s crude oil imports fell 8.7% in May from a year earlier, official data showed, as refiners scaled back purchases amid heavy plant overhauls, subdued profit margins, and weak demand for refined oil products.

Imports last month by the world’s largest crude oil buyer amounted to 46.97 million metric tons, or about 11.06 million barrels a day (bpd), data from the General Administration of Customs showed.

That is up from April’s figure of 10.88 million bpd and off a strong base a year earlier at 12.11 million bpd.

The lower imports came as large state-run refineries such as Sinopec’s Zhenhai and Zhanjiang, PetroChina’s Dushanzi and Dalian plants undergo regular maintenance, Chinese commodities consultancy Oilchem said.

“Apart from heavy refinery maintenance activities in April and May, weak gasoline and diesel demand was also the key reason for the pressured runs. Domestic diesel demand this year is especially weaker than expected with the fast penetration of LNG trucks owing to relatively cheaper gas prices,” said Lin Ye, an analyst with Rystad Energy.

Ye added that declining crude throughputs contributed to rising crude oil inventories which had started building up since mid-April, despite the slowdown in imports in May.

Smaller independent plants in the eastern refining hub of Shandong also cut production as higher crude costs pinched refining margins, with some pushed to process more lower-priced fuel oil.

Shandong-based independents processed at an average of 55.5% of capacity in May, down from 62.2% in May 2023, Oilchem said.

China’s onshore above-ground crude oil inventories rose to the highest since the end of last year, at 946 million barrels, according to Vortexa Analytics, reflecting weaker refinery demand.

However, ANZ analysts said in a note that improving refinery margins should send crude oil imports rising again in June and into the third quarter.

Imports for the January-May period totalled 229.03 million metric tons, or about 11 million bpd, down 1.2% from the corresponding period of 2023.

Customs data also showed China’s natural gas imports for May rose 6.5% from a year earlier to 11.33 million tons, bringing year-to-date volumes to 54.28 million tons, or 17.4% higher than the year-earlier levels.

Exports of refined oil products, which include diesel, gasoline, aviation fuel and marine fuel, grew 9.49% from a year earlier to 5.35 million, and also up from 4.55 million tons in April. The increased product exports were driven by higher refined oil product inventories, the ANZ analysts said.

The higher exports were also aided by new government export quotas released in early May as refiners cashed in on stronger bunkering demand for aviation fuel, although margins for diesel exports slumped due to excess regional supplies.

Source: Reuters (Reporting by Colleen Howe in Beijing; Additional reporting by Emily Chow in Singapore; Editing by Clarence Fernandez and Sriraj Kalluvila)

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Alternative Energy

Green hydrogen hub greenlit for New South Wales in A$207m deal

The hub is expected to initially deliver around 55 MW of electrolyser capacity by 2026

AUSTRALIA is powering on with its commitment for regional green hydrogen, with the New South Wales (NSW) government granting planning approval for a A$207.6m (US$137m) hydrogen hub in the city of Newcastle.

The Hunter Valley hydrogen hub is a joint venture between Sydney-based Origin Energy and explosives manufacturer Orica.

Located in the industrial area of Kooragang Island in the city of Newcastle, the energy produced in phase one of the hub will be used as feedstock for Orica’s nearby ammonium nitrate manufacturing facility. The remainder will be available to transport customers looking to switch from diesel.

The hub is part of the Australian government’s wider A$500m plan to establish regional hydrogen hubs. Hubs have been earmarked for Queensland and South Australia, with the NSW government recently putting up A$70m for a facility in Pilbara, Western Australia.

Prime location for green hydrogen

Orica plan to use green hydrogen to replace natural gas for its production of low-carbon ammonia and ammonium nitrate, used extensively in NSW in the food, health, and mining industries. The company expects to save more than 52,000 t/y of greenhouse gas emissions.

Origin said that the hydrogen will be produced via electrolysis using wastewater and energy developers holding large-scale renewable generation certificates (LGCs) – a financial incentive for the generation of renewable energy from power stations.

The proposal for the hub states that wastewater will be sourced from Kooragang Water, and that the hydrogen will be transported using Australia’s established transport method of non-pipeline tube trailers, with a capacity to hold 400 kg of hydrogen.

NSW government said the hub will initially deliver approximately 55 MW of electrolyser capacity by 2026, with an aim of scaling production to more than 1 GW of capacity over the next decade.

Funding for the facility has been secured from the NSW Department of Climate Change, Energy, Environment and Water, and the Commonwealth Department of Climate Change, Energy, Environment and Water.

Sharon Claydon, federal member for Newcastle, said: “Green hydrogen will play a critical role in Australia’s transformation to net zero. I am pleased to see this important project progressing, following the A$70m investment from the Commonwealth Government.”

Origin will begin construction of the hub in mid-2025 and expects to create 160 construction jobs in the process.

Correction: this article incorrectly stated that the hydrogen hub would be based in Western Australia. It has been corrected to state that the hub will be in the city of Newcastle in New South Wales.

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TotalEnergies (TTE) Signs Green Hydrogen Deal With Air Products

TotalEnergies SE (TTE) and Air Products and Chemicals (APD) have signed a 15-year agreement for the annual supply of 70,000 tons of green hydrogen in Europe, expected to begin in 2030.

TotalEnergies provides long-term contracts with its six refineries and two biorefineries in Europe, demonstrating its ability to aid in the development of a green hydrogen sector and lead the energy transition.

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A 72 MW wind farm will be built on the territory of ArcelorMittal Bremen

All generated electricity will be transferred to the needs of the plant

ArcelorMittal Bremen has signed an agreement with wind energy technology provider WPD to build a wind farm with a total rated capacity of 72 MW at the plant. This is stated in a press release from ArcelorMittal.

Recently, the companies signed a declaration according to which up to 10 wind turbines will be built at the plant in Bremen (Germany) in the coming years. The entire volume of electricity generated will be transferred to the plant for steel production.

This step marks another important milestone on the company’s path to climate-neutral steel production at ArcelorMittal Bremen.

«Renewable energy is an important strategic element of our transformation. The cooperation with WPD is a great opportunity to generate and use sustainable electricity locally. With the new wind farm, we are taking another step forward. In order to achieve our goal of producing clean steel in Bremen by 2030, we need to have sufficient green electricity at internationally competitive prices – this requires ongoing support from the government,» explains Thomas Bünger, CEO of ArcelorMittal Bremen.

The project has two phases. In the first phase, two existing wind turbines will be replaced with more modern and powerful models. Three new units will also be installed. In the second stage, five more turbines will be designed and built.

As GMK Center reported earlier, Germany has recently approved financing for ArcelorMittal’s green transition. The steel mills in Bremen and Eisenhüttenstadt will receive large-scale financial assistance to transition to climate-neutral steel production. State funding for the projects is estimated at €1.3 billion, which covers about half of the planned investment.

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European wind turbine stocks fall after EU shift to the right

BRUSSELS/GDANSK, June 10 (Reuters) -Shares in wind turbine makers Vestas VWS.CO and Nordex NDXG.DE fell on Monday a day after European Parliament election results showed a shift to the right with analysts also citing rising interest rates as a potential future concern.

The political shift could make the EU's ambitious climate policies harder to pass, though Europe is likely to stick with its green policies, according to lawmakers, officials and analysts.

The elections may lead to a less supportive policy environment for energy transition, with potential funding cuts post-2028 and a shift in focus to national policies, CITI analysts said in a research note.

Nordnet analyst Per Hansen said investors were responding to factors including the EU elections, particularly the unexpected result in France.

"A more populist Europe may, investors think, have an effect on the desire to think green," Hansen said.

Sydbank analyst Jacob Pedersen pointed to higher interest rates, which traditionally affect Vestas' customers, as a key contributor to the drop.

"Energy policy is security policy, and as wind energy is a key technology for Europe to reach its energy transition targets, we expect that the build out of wind energy remains a priority in the EU," Vestas said in an emailed statement.

Meanwhile, a spokesperson from Siemens Energy, Vestas' main competitor, warned that reverting to nation-state thinking could be fatal to the industry.

Shares in Germany's Nordex were down 3.6% at 1211 GMT, while Vestas' shares dropped 2.3% and shares in Siemens Energy, which is more diversified, were up 0.6%.

Industry body Eurogas remained optimistic about investment. Eurelectric, another industry group, asserted it was premature to draw conclusions about investment over the next five years.

"Our expectation is the Green Deal will continue, but with an increased focus on industrial competitiveness," said Kristian Ruby, secretary general at Eurelectric.

Investing in local industries was a campaign pledge across the political spectrum, as competition sharpens with the U.S. and China to produce green tech such as low-carbon steel and electric cars.

The EU said in March it would investigate subsidies received by Chinese suppliers of wind turbines destined for Europe in a move to shield European firms from cheap clean tech products.

Reporting by Kate Abnett in Brussels and Jesus Calero and Paolo Laudani in Gdansk, writing by Stine Jacobsen; editing by Jason Neely

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Global solar photovoltaic energy will reach 7 TW in 2035

Asia-Pacific installed 253.98 GW of solar photovoltaics (PV) in 2023, more than double the amount installed by all other regions combined.

In a recent report titled Solar Photovoltaic (PV) Market Update 2024, Power Technology’s parent company GlobalData revealed that the global solar PV market is on track to surpass 7TW of installed capacity by 2035.

The market grew from a cumulative installed capacity of 227.4GW in 2015 to 1.48TW in 2023 at a compound annual growth rate (CAGR) of 21.9%, with an addition of 371.7GW in 2023 alone.

Global solar PV market by annual addition and cumulative installed capacity, 2015–35. Credit: GlobalData.

By 2035, the cumulative installed capacity is expected to reach 7.51 TW with a CAGR of 16.2% between 2023 and 2035.

The Asia-Pacific region emerged as the largest market for solar PV in 2023, boasting a cumulative installed capacity of 893.67GW.

Although a distant second and third place, Europe and North America also revealed substantial capacities, with 304.85GW and 189.27GW, respectively.

The success of the Asia-Pacific region can be largely attributed to China’s continued dominance in solar PV. China set itself apart by adding 216.5GW in the past year, while runner-up the US followed with only a 24.1GW addition.

China also topped the cumulative capacity charts, with 609.5GW installed as of 2023. The US was the second-largest market with 172.5GW, followed by Japan, India and Germany with cumulative capacities of 91.6GW, 84.8GW and 81.7 GW, respectively.

Jackie Park

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Base Metals

IN BRIEF: Tertiary Minerals starts exploration at Zambian project

Tertiary Minerals PLC - mineral development company focused on deposits in the US, Zambia and Northern Europe - Announces the start of exploration operations at its Mupala copper project in the Kabompo Dome in Zambia. Notes the project is located adjacent to the Anglo American/Arc Minerals joint venture project, where Anglo American has a right to earn a 70% interest through expenditure of $88.5 million, and 12 km west of the company’s Mukai project. Expects work to start this week with reporting of provisional results upon completion. Executive Chair Patrick Cheetham says: ‘Momentum is now building for our current exploration season. Drilling is in progress at Konkola West with KoBold Metals and Mwashia Resources and we announced last week the consolidation of three additional projects into our new subsidiary, Copernicus Minerals, where drilling plans are also being advanced.’

Current stock price: 0.14 pence

12-month change: up 32%

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Buenaventura resumes ore treatment at El Brocal plant

The El Brocal facilities are used to treat ores from the company’s Marcapunta underground and Tajo Norte open pit mines located in the district of Colquijirca, Pasco province. It has a total capacity of 20,000 tonnes per day.

In 2024, El Brocal is forecast to produce 17,000-20,000 oz. of gold, 1.4-1.7 million oz. of silver, 13,000-15,000 tonnes of lead, 3,100-3,500 tonnes of zinc and 55,000-60,000 tonnes of zinc.

Following discussions between Huaraucaca community leaders and Buenaventura representatives, an agreement has now been reached to end the blockade and lift the suspension. Ore processing is expected to ramp up to a rate of 15,000 tonnes per day to recover the lost production.

The formal dialogue was also facilitated by officials from Peru’s Ministry of Energy and Mines (MINEM), which have reviewed and addressed overall compliance with commitments between both parties, Buenaventura said.

Despite the suspension, the company said it still expects to achieve its budgeted production in the third quarter and its full year production guidance.

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Bill Gates’ KoBold may spend $2.3bn building Zambia copper mine

A MINING exploration company in which Bill Gates has a stake could spend $2.3bn building a new major copper mine in Zambia, said Bloomberg News.

KoBold Metals aims to produce more than 300,000 tons per year at Mingomba making the operation the country’s biggest copper producer. Shaft sinking will begin in the first half of 2026, said the newswire.

Zambia is seeking to become one of the world’s largest producers of copper, which is crucial for green technologies like electric vehicles and wind turbines, said Bloomberg News.

The world faces predicted shortages of the metal in the coming decades amid the shift away from fossil fuels. Hichilema has previously said the Mingomba project could ultimately become one of the three-biggest copper mines globally.

A meeting between Zambia president Hakainde Hichilema and KoBold officials was broadcast over state television last week.

Officials from KoBold, based in the San Francisco Bay area, met with Hichilema and a group of heavyweight investors visiting Zambia this week to tour the firm’s activities in the country.

They included senior representatives from Bill Gates’ Breakthrough Energy Ventures, Standard Industries, Equinor Ventures, Bond Capital and T. Rowe Price, said Bloomberg News.

Hichilema, a former economist, has brought the feel-good factor back to Zambian mining. In December, the country agreed to sell its Mopani Copper to International Resources Holdings, a United Arab Emirates company which has promised to invest in Mopani. The government bought the mine from Glencore for $1.5bn.

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Near Record Copper Prices Can’t Stop One Miner From Going Bust

(Bloomberg) -- Nevada Copper Corp., a miner backed by Pala Investments and Mercuria Energy Group Ltd., has filed for bankruptcy protection, even as prices of the metal sit near the highest on record.

Nevada Copper had been in the process of restarting mining at its Pumpkin Hollow project, but a series of operational setbacks, including a build up of water underground, saw costs spiral. Its key backers balked at putting up more funds.

The collapse comes at a time when the mining industry has never been more bullish about the outlook for copper. The metal hit a record above $11,100 a ton last month and — while some of those gains have been portrayed as frothy speculation — many investors and mining executives see a deepening shortage of copper, which is essential for the decarbonization of the global economy.

Despite this year’s 15% gain in metal prices, Nevada Copper has demonstrated the challenges of developing new mines on a thin balance sheet. The company — worth more than $500 million at its peak — said Monday that it filed for Chapter 11 bankruptcy in Nevada.

The company has been in talks with its shareholders in recent months to raise more funds and had also been looking to sell itself. Still, it said those efforts had been futile.

“Those discussions have failed to result in obtaining such funding or other transaction, and the company has been unable to secure additional interim funding from its key stakeholders,” Nevada Copper said in a statement. “As a result, the company is unable to continue carrying on business.”

Pala, a commodities investment fund, holds a 57% stake in Nevada Copper, while commodity trader Mercuria owns 17%, according to data compiled by Bloomberg.

©2024 Bloomberg L.P.

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Copper hits lowest in more than five weeks on firm dollar

Most non-ferrous metals prices fell on Monday, with London copper hitting its lowest in more than five weeks, amid a firm dollar and constraints in physical demand.

Three-month copper on the London Metal Exchange fell 0.2% to $9,747 per metric ton by 0417 GMT, aluminium shed 1% to $2,552.50, zinc dropped 0.9% to $2,741 and lead eased 0.4% to $2,190.50.

LME tin edged down 0.1% at $31,410 a ton, and nickel was nearly unchanged at $18,035.

The dollar index rose on Monday, making greenback-priced metals more expensive to holders of other currencies, after US data showed the world’s largest economy created a lot more jobs than expected in May.

The jobs data led traders to once again shift their expectations of when the Fed will cut rates and by how much. Earlier in the session copper prices fell 0.2% to $9,741 a ton, their lowest since May 2.

The LME three-month contract has lost about 12% since it hit a record high of $11,104.50 on May 20 as speculative investors reviewed copper’s red hot rally.

Speculative net positioning on COMEX copper declined to its lowest since April 16 on Tuesday, the latest exchange data showed.

Meanwhile, the usual premium to import copper into China remained at a discount, reflecting weak demand from the world’s biggest copper consumer amid high and volatile prices.

Copper hits more than 2-year high despite weaker-than-expected China demand

Copper inventories in warehouses tracked by the Shanghai Futures Exchange continued to climb and were at 336,964 tons on Friday, the highest since March 2020.

Trading volume was thin due to a public holiday in China.

The SHFE is closed on Monday.

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LME base metals prices mixed; China on holiday

Three-month futures prices at 5pm on Monday June 10, compared with the 5pm close of trading on Friday:

• Copper: $9,828 per tonne, up by 0.67%

• Aluminium: $2,572 per tonne, down by 0.23%

• Nickel: $18,040 per tonne, up by 0.05%

• Zinc: $2,805.50 per tonne, up by 1.39%

• Lead: $2,198.50 per tonne, down by 0.05%

• Tin: $31,500 per tonne, up by 0.15%

“Local holidays in Australia and China will keep trade volumes light on Monday June 10,” Fastmarkets analyst James Moore said.

Some 1,900 tonnes of copper were delivered into LME warehouses, with 1,200 tonnes delivered to Singapore and 700 tonnes delivered to Kaohsiung.

Taken alone, a 700-tonne delivery into Kaohsiung is insignificant, but the move continues a trend of copper deliveries into LME warehouses in East Asia. East Asian copper stocks now stand at 60,475 tonnes, up 145% from 24,675 since the start or May.

Global copper stocks, however, are up 8% to 125,325 tonnes.

The deliveries in East Asian warehouses had been expected by a number of market sources, due to the wide arbitrage between Shanghai Futures Exchange prices and LME prices. Chinese market participants had been expected to deliver material onto the LME to take advantage of the arbitrage.

Zinc recorded the biggest price gain in morning trading, gaining 1.4% compared with Friday’s close.

The uptick in zinc prices may be due to physical tightness in the market, according to Marex analyst Ed Meir.

“In the physical market, the market remains deeply short of concentrates, as reflected in [treatment charges] for imported concentrate into China now reaching lows not seen since June 2018,” Meir said.

“Although the supply situation is expected to remain tight, especially on the mining side, June traditionally represents a weak seasonal period for prices as well,” Meir added.

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India's scrap imports rebound in May, UAE preferred

After four months of sequential decline, India's scrap imports rose by 15% on-month in May, reaching 0.61 million tonnes, according to CYBEX data accessed by Kallanish.

This increase is due to restocking by Indian buyers between mid-April and early May, in anticipation of higher steel demand following the general election which concluded on 4 June.

India typically imports most ferrous scrap from the US, UK, and Europe. However, in May, the highest volume of imports came from the United Arab Emirates, despite a $109/tonne export duty imposed by the UAE government.

In recent months, India has preferred imports from the UAE over the US and Europe due to shorter voyage times and a significant spike in freight rates from distant countries.

This surge in freight rates has been driven by a recent container supply crunch, caused by peak shipping season, longer transit times due to Red Sea diversions, and bad weather in Asia. Ocean carriers are skipping or shortening port stops to stay on schedule, which is exacerbating container shortages.

“The UAE is currently our best option for securing scrap due to shorter lead times and the ability to make need-based purchases. Port congestion and high freight rates following US tariffs on China in early May have made sourcing even from Far Eastern countries like Hong Kong, Malaysia, or Singapore quite difficult for us," states a Mumbai-based scrap trader.

Following the US tariff announcement, Chinese manufacturers have brought forward their shipments to the world’s largest economy in a bid to deliver product before tariffs are imposed.

On the supply side, sluggish domestic steel demand in the UAE and other Middle East and North Africa countries has prompted UAE’s scrap sellers to seek alternate markets like India and Pakistan.

Scrap exporters are reportedly avoiding the export duty through false declarations, exploiting poor enforcement, according to industry participants.

Stainless steel scrap accounted for about 15% of India’s total May scrap imports, at 0.10mt.

From January to May, India’s combined ferrous scrap imports totalled 3.95mt, reflecting a 16% decrease compared to the same period last year.

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Assofermet: EU safeguard revision means significant HRC shortage

The EU’s residual safeguard quota revision will trigger an annual shortage of 1.63 million tonnes of steel in the bloc, warns Italian steel trade association Assofermet.

The European Commission announced in May its intention to extend safeguards by a further two years to 30 June 2026. It will also introduce a 15% cap per origin over the “other country” tariff-rate quota (TRQ) for hot rolled coil, to ensure market stability and avoid crowding out traditional suppliers.

The future shortage would have “catastrophic repercussions” on several steel-consuming sectors, including automotive, construction, mechanical engineering and the entire manufacturing industry, which will see companies lose competitiveness, Assofermet warns. In 2023, Vietnam, Japan, Taiwan and Egypt, the origins in the “other country” TRQ, sold 3.9mt of HRC to Europe. The annual flow from the four countries to Europe would decrease to 2.26mt, “effectively wiping out 1.63 million tonnes of steel”, Assofermet says.

“These are steel grades that are not available in sufficient quantities in the European Union. For this reason, imports are necessary in order to guarantee the sector the supply it needs … Maintaining the safeguard for another 24 months implies an overlap with the Carbon Border Adjustment Mechanism (CBAM), which will generate de facto double taxation,” comments Assofermet president Acciai Paolo Sangoi.

The association notes that the safeguard revision is based on the comparison with figures gathered over the three-year period of 2015-2016-2017. Such a comparison is no longer up to date, as several countries that were listed as EU suppliers are now under embargoes or sanctions, or are shipping material to other geographical areas. The consequences of the amendment could be uncontrolled increases in raw material costs due to duties, long waits for customs clearance at the beginning of the each quarter, financial strains for all importers and port terminal congestion.

According to EUROMETAL data elaborated by Assofermet, in 2023 Vietnam exported to Europe 1,113,000t of HRC. The association’s projection for Vietnam’s annual shipments following the amendment is 567,399t, with an annual shortage of 545,601t. Last year, Japan exported to the EU 1,058,000t, but it will be allowed to export half of this next year, about 567,399t, with an annual shortage of 490,601t.

In 2023, Taiwan supplied 1,016,000t. After the safeguard renewal, it will be allowed to sell no more that 567,399t, representing a future annual shortage of 448,601t. Last year, Egypt sold 720,000t to Europe, which will decrease in 2024 to 567,399t, with an annual shortage of 152,601t, Assofermet concludes.

Natalia Capra France

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Vietnamese HRC market drags on sluggishly

Vietnam's hot rolled coil import market continues to drag on with very thin trading activity, Kallanish notes. The lack of demand in Vietnam and steel price instability in China are the main factors behind market sluggishness.

Chinese rerolling HRC offers for early-August shipments are stable but continue to struggle amid weak demand. Offers for 2mm upwards thickness HRC are holding ground at $555-560/tonne cfr Vietnam. Cargoes of 50% 2mm and the remaining 2.3mm, 2.5mm and 2.7mm thickness HRC are being offered at $555/t cfr, a trader says.

An offer for a 5,000-tonne cargo for July shipment of position 100% 2mm thickness HRC from China at $560/t cfr is struggling to find takers, a Vietnamese trader says. Buyers much prefer to book HRC domestically from Hoa Phat, priced at about similar levels, he adds. New production 2mm thickness HRC from China incurs an extra of $15/t from 2mm and up thickness HRC and would be pegged at $570/t cfr Vietnam.

Offers for Chinese 3-12mm thickness Q235 grade HRC for early-August shipment were prevailing at $535-537/t cfr Vietnam last Friday. Early last week, prices had slipped to as low as $530/t cfr. Chinese 3mm base Q195 HRC offers are also higher, at $537/t cfr Vietnam.

While a Hanoi trader reports hearing of a booking last Thursday for Q235 at $532-533/t cfr, others say they have not heard of any deals. A southern Vietnamese trader notes there could be some bookings taking place, but “not much”. Buyers are reluctant to book because they are bearish and expect prices to come down. “The domestic market is still not good,” a Hanoi trader notes.

HRC buying is muted in Vietnam, a regional trader said on Friday. It will be interesting to see at what level new domestic prices from Vietnam's other HRC producer, Formosa Ha Tinh, will be set this week, he adds.

Kallanish assessed SAE grade 2-2.7mm thickness HRC at $550/t cfr Vietnam, unchanged on-week.


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