Sucden ‘intently optimistic’ about base metals prices in second quarter

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Positive forecasts for Q2 of 2017 could be dependent on whether US fiscal stimulus delivers.

Sucden’s head of client liaison, Steve Hardcastle, said that fresh announcements will be a driver behind a pick-up in prices.

http://www.sucden.com/

Firstly, at the company’s press briefing Today, he noted: “We are currently at the lower end of the range. Across all base metals, and want to strengthen later in the quarter. Short term, the markets are not brilliant at the moment. But fresh announcements from the US in particular will probably inspire further strength. This is April after all, traditionally a time when things should pick up.”

 

Optimistic about the market

Secondly, intently
optimistic about the market, he reflected on the first quarter of the year. And explained that the global economy started the year “on the front food”. As president Trump was sworn in to office and promised increased fiscal stimulus, looser regulation and taxation, which caused global equity indices to continue impressive rallies.

“Nothing is yet to materialise in terms of Trump’s infrastructure spending. Right now the market is buying the rumour.”  “We’re cautiously optimistic about the market. Let’s see how we perform for the remainder of the quarter. And by the end of the year we should see some real numbers as the Trump administration gets its agenda sorted.” (Kash Kamal, senior analyst.)

 

Aluminium production cuts in China

The announcement of Chinese capacity cuts will help support prices towards the end of 2017. Company expects some volatility in the aluminium market. As any restarts of idled capacity could see prices reverse sharply.

Funds remain bullish as calendar spreads are suggesting a tighter outlook. The cash-to-three-month spread widened to $10.25 per ton contango at the end of March from $4.25 contango at the end of February.

“The LME stocks are down to seven-year lows. This is a far cry from the four million tons a few years ago. A lot of the reason behind this is the [production] cut backs in China for environmental reasons and cost.”  (Steve Hardcastle)

Predictions about aluminium prices will range $1,850-2,000 per ton for the second quarter. The company predicts a lower than anticipated 2017 forecast of $1,765 per ton. Easing slightly to $1,740 per ton in 2018.

 

Tighter outlook for copper 


The broker forecasts tightness in concentrates, which will see an increasing appetite for higher prices towards the end of the second quarter.
“Supply disruptions and labour disputes will have the potential to squeeze prices higher still and, with macro tailwinds we expect prices to trade on the floor at around $5,550 per ton.”

It noted that Comex and the LME net speculative positions are showing a bullish outlook for copper, with Comex net spec longs at 60,773 contracts and LME net spec longs at 60,395.

Copper forecast for second-quarter prices is predominately at $5,550-6,200 per ton, with the broker predicting spikes towards $6,400 per ton.

 

Tight concentrates market supports zinc prices 

Meanwhile, a tight concentrates market will continue to support a refined zinc metal deficit and bolster the bullish outlook for zinc in the second quarter of the year.

Fundamentals will continue to support prices, targeting recent highs of close to $3,000 per ton, according to the report. Sucden noted that momentum is starting to build for higher zinc prices as calendar spreads remain tight. Both near dated and long dated. Alongside this, LME and SHFE warehouse stocks continue to decline, adding further support to price hikes.

“As a bullish outlook seems to be dominating 2017 so far and looks set to persist for some time.. In part aided by Glencore’s shuttering of some 500,000 tpy, one key question remains: when will they restart this idled capacity.”

“On the demand side, consumption is expected to grow a steady 2% this year and with a tight outlook for both refined metal and concentrates, the world largest zinc mine could be tempted to bring some of its tonnage back online.”

Predictions about second-quarter price range of $2,500/2,550-3,000 per ton for zinc, with the 2017 price forecast at $3,211 per ton and rising further to $3,875 in 2018.

Supply deficit underpins support for lead prices 

A continuation of a supply deficit underpins support for lead prices, but the current jittery macroeconomic backdrop could pose obstacles to sustaining higher prices for lead.

“There is a shortage of scrap around at the moment which helps. The market is starting to look tight and the outlook from traders is fairly bullish. Looking forward, the source of lead concentrate is declining so we’re reasonably happy about market prices rising,” Hardcastle added.

Sucden’s prediction for lead was $2,200-2,540 per ton in the second quarter, with short-term spikes either side. The 2017 forecast was at $2,292 per ton growing to $2,400 in 2018.

 

Nickel volatile due to Indonesia/Philippines 

Nickel prices were swinging either side of $10,000 per ton since the start of the second quarter. With investor settlement heavily influenced by continuing developments in the Philippines and Indonesia.

“While the market is expected to record a substantial deficit this year, to the tune of 93,000 tons according to Wood Mackenzie data, at the current market price it seems investors remain unconvinced that nickel prices can regain territory back above $11,000 per ton.”

Long-dated calendar spreads are trading with increased volatility and price spikes are anticipated. Sucden also noted that LME warehouse stocks are relatively stable for nickel and there is no indication of immediate tightness.

For the second quarter, SF is predicting a range of $9,000-11,000 per ton for nickel. A potential for spikes on either side on any speculation of supply disruptions in Indonesia and the Philippines. The 2017 forecast is $10,289 per ton, while the 2018 forecast is $9,902 per ton.

 

Tin prices well supported 

In 2Q17 Tin prices are expected to be well supported at $19,000 with a preferred upside outlook for nearer the $21,000 per ton mark, Sucden said.

Warehouse stocks are continuing to fall down, currently staying at 3,095 tons. Cancelled warrants currently only represent 10% of the total and therefore there is no immediate concern of tightness.

In conclusion, The 2017 forecast for tin prices is currently $20,570 per ton, and Sucden’s forecast for 2018 is not much different at $21,700 per ton

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Texas Oil will be used as North Dakota’s alternative ?

U.S. East Coast refiners are interested in buying increasing volumes of domestic crude oil from the Gulf Coast. This is the latest upheaval in the wake of the opening of the Dakota Access pipeline.

Major U.S. East Coast refiners profited from railing hundreds of thousands of barrels of discounted Bakken crude to their plants daily from 2013 to 2015. But after North Dakota authorities have built  more and more pipelines, the shrinkage began to disappear.

Today, at least two East Coast refiners, Phillips 66 and Monroe Energy, are looking to move more crude. By ship, from Texas sending it to the Philadelphia area.

The Dakota Access pipeline starts up in May, giving the Gulf approach to the Bakken shale play. It will likely exhaust any long-term economic incentive for Bakken-by-rail, which is more expensive.

This option is way more expensive than oil imported to the East Coast, typically from Nigeria. Analysts and traders expected that once the Dakota line came into service, East Coast and West Coast refiners would rely on foreign barrels.

 

Flagged Vessel Transportation

Shipping sources say that costs could range between $2.60 to $3.50 a barrel. Speaking for the two-week round trip on a U.S. flagged vessel. That is lower than the peak, brokers said, because a number of spare vessels are available. Taking a cargo of Nigerian Bonny Light to Philadelphia costs about $1.40 a barrel, brokers said.

They also said that bringing U.S. oil via tanker to the East Coast gives refiners access to a variety of crude stages available in Texas. And most of U.S. oil now finishes in Texas.

“It’s about optimizing assets. From Texas, you could bring up Eagle Ford, Permian or even Bakken crude.” (Reuters)

That journey could guarantee a steady supply of domestic crude, as both Phillips 66 and Monroe Energy already have U.S.-flagged Jones Act tankers contracted.
So, bringing that crude would not be difficult. Refiners use their tankers to mix products to higher margin regions or to bring crude to their refineries.

“Even with added Gulf shipments to the East Coast, refiners there should still receive the bulk of their supply from foreign sources due to economics”, said Sandy Fielden for Morningstar. (Reuters)

East Coast refiners

West Africa produces crude that is “gasoline rich,” he said, important for East Coast refiners. He said he doubts sending Jones Act tankers makes a lot of sense financially because the spread between global benchmark Brent LCOc1 and U.S. West Texas crude CLc1 futures is not enough to justify the shift.

Tim Taylor, Phillips 66 President said last year that the combination of the Dakota pipeline and water could potentially supply the 285,000 barrel per day Bayway refinery in Linden, New Jersey.

Transporting crude by water from the Gulf up the Eastern Seaboard is not a new ”project”. Since October, NARL Refining LP has booked at least seven cargoes from Texas ports to its 130,000 bpd Come-By-Chance refinery in eastern Canada (Newfoundland).  NARL booked just four Texas cargoes, in the previous ten months.

 

 

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Market NEWS Today (25.04) Copper price rises; base metals consolidate

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Top 5 things you need to know in the financial Markets on Tuesday:

  • Global stocks, euro extend French election rally
  • Dozens of U.S. earnings ahead
  • Oil attempts to break 6-day losing streak (later in text)
  • North Korea conducts live fire drill as tensions rise
  • U.S. slaps tariffs on Canadian lumber

For further info about these subjects, visit https://www.investing.com/

 

LME :

Base metal prices on the London Metal Exchange were generally up this morning, with copper seeing the biggest increase.

Lead and tin were the only base metals to see a decline, but aluminium is trading only at $1 per ton higher than Tuesday’s kerb.

Nickel prices set fresh lows for the year at $9,245 per ton yesterday but is the metal is currently trading at $9,265 as it continues to suffer from free-falling prices earlier this month.

French Elections Results:

There may be some slight growing confidence in the market due to the results of the French elections over the weekend. Presidential candidates Emmanuel Macron and Marine Le Pen won the first round of voting in the French election on Sunday and will head into a run-off second round on May 7.

Alastair Munro of Marex Spectron noted: “While our latest speculative positioning estimates broadly highlights the recent theme of long liquidation, with nickel and zinc now seeing shorts established, traders in the base metals complex focus on broad trading ranges.”

Copper prices also found support in the news that US president Donald Trump will unveil more details of his tax reform plans on Wednesday.

Copper price rises

The three-month copper price saw a $40.50 increase to $5,695.50 per ton. Copper stocks fell by 2,600 tons to 262,250 tons. LME on-warrant stocks have fallen four days in a row. Anglo American has reported a 3% year-on-year drop in copper production during the first quarter of 2017.

Munro said: “Also Freeport has indicated plans to increase open pit production at Grasberg to 145kt/day and deep zone ore output to 40kt/day. It appears that union workers are still planning to strike in May.” Workers at Freeport-McMoRan’s Grasberg copper mine are said to be planning a month-long protest around the same time that exports are expected to resume.

 

Other base metals up

The three-month aluminium price rose by $1 to $1,947 per ton as it aims to bounce back above $1,950 per ton. Aluminium stocks fell by 9,325 tons to 1,668,325 tons, with 105,425 tons of freshly cancelled stock.

Nickel is trading at $9,265 per ton, a $5 increase on yesterday’s kerb. Stocks fell by 324 tons to 386,172.

The three-month zinc price has seen a $13.50 per ton increase to start trading at $2,617.50 per ton. Zinc inventories fell by 1,525 tons to 351,675 per ton.

 

Tin and lead decline

Lead was one of only two metals to fall, seeing a $2.50 decline to $2,160.50 per ton. Stocks were down 600 tons to 166,325.

The three-month tin price fell by $30 per ton and is currently trading at $19,620 per ton. Inventories fell by 75 tons to 3,095 tons.

 

Currency moves and data releases

  • The dollar index was recently down 0.06% to 98.99.
  • In other commodities, the Brent crude oil spot price was up 0.12% to $51.66 per barrel.
  • In equities, the FTSE 100 was up 10.56 to 7,275.24.
  • On the economic agenda, data on US CB consumer confidence, house price index, new homes sales and UK public sector borrowing is due today.

 

 

 

 

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Russia’s Attitude about the (non)extension of OPEC supply Cuts

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If OPEC and non-OPEC countries decide not to extend a supply cut deal beyond June the 30th, Russia has an option. It could climb Russian oil output To the highest pace in 30 years.

For now, OPEC and non-OPEC countries made a deal Along with Russia. It was to cut 1.8 million bpd in output in the 1H17.

Among producer countries there are many who agree that OPEC should prolong the output cuts even in the 2H17. Kuwait and Saudi Arabia last week gave a signal that they are also ready to prolong the cuts.

 

Position of Russia

Firstly, Russia is now left to define its attitude about whether it wants cuts to last after June. Russian contribution to the cuts was 300000 bpd. Moscow was monitoring the discussion panel on Friday. Where they were discussing the matter.

Secondly, Russian officials implied that local oil producers are really ready to push the output higher. After once the pact runs out.

– “According to investment programs of (Russian) companies, it is possible Russian oil production will increase once the deal expires,” Deputy Prime Minister Arkady Dvorkovich said, adding firms had been held back while the deal was in place.

“If there are no restrictions, they will decide not to hold back.” He stated some news at the weekend on an economic conference in the East Siberian city of Krasnoyarsk.

He was not stating the exact numbers, but a few months ago he told that the output could come to 548-551 million tons in 2H17. Equivalent to 11.01 million-11.07 million bpd, the highest average since 1987. (Reuters)

Russia produced about 547.5 million tons in 2016, or an average of 10.96 million bpd. [O/RUS1]

Russia was to cut production to 10.947 million bpd from 11.247 million bpd, under the deal with OPEC. The level Russia has achieved in October 2016, was the highest oil output in the post-Soviet era.

 

New Oilfields

“Russia has the new oilfields,” said Minister Aleksandar Novak.

Novak will meet Russian oil companies this month to discuss the subject. He also reminded they would discuss an extension formally with OPEC on May 24. Without the extension, Raiffeisen bank analyst said forecast for Russian output are: rising about 2 percent in the second half of 2017 to a peak of about 11 million bpd.

Russian Oil producers have lots of projects going on in the country, so it is not strange at all that they are ready to boost outputs after the deal with OPEC is done.

 

The biggest Oil Companies in the Country

Rosneft, the county’s biggest oil producer, has said it plans to boost output this year referring to newly acquired oil fields. Including Kondaneft group of fields in Western Siberia, which are crucial for Russian production.

The company had targeted 2 percent annual output growth in 2015-2017. Without any acquisitions, that would push 2017 production to more than 214 million tons, or 4.3 million bpd.

The Russia’s second-largest producer, LUKOIL  sees its oil output rising slightly if the global deal is not extended
and could restore production to its pre – deal level in three to four months.

Finally, mid-sized producer Tatneft expects to increase 2017 output by 0.5 million tons a year, or about 10,000 bpd, if the global production pact runs-out.

 

 

Important news Today:

  • United States CB Consumer Confidence exceeded the forecasts. It is on actual 125.6 (forecast:114)
  • US New Home Sales on actual 592K (forecast: 565K)

 

 

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Nickel deficit of 100,000t expected for 2H17; Norilsk Nickel forecasts

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MMC Norilsk Nickel

MMC Norilsk Nickel is a Russian nickel and palladium mining and smelting company. Its largest operations are located in the area near the Yenisei River in northern Russia. It also has holdings near the Kola Peninsula, area of Norilsk-Talnakh and in western Finland at Harjavalta. It operates in Southern Africa in Botswana, South Africa, and western Australia.

 

Firstly, company’s headquarters are in Moscow. Also it is the world’s leading producer of nickel and palladium. International ranking agencies ranked it among the top ten copper producers.

Secondly, the nickel deposits of Norilsk-Talnakh are without doubt the largest nickel-copper-palladium deposits in the world.

 

Production divisions

Following, the company currently has five main operational divisions. Beginning with The Polar Division of MMC Norilsk Nickel and ancillary activities, located in the Taimyr Peninsula. After comes Kola MMC, and ancillary activities, located in the Kola Peninsula. In Finland there is Norilsk Nickel Harjavalta, Finland’s only nickel refining plant, purchased from OM Group in 2007. Later N.N. in Africa, which includes stakes in mines in Botswana (85% of Tati Nickel) and in South Africa (50% of Nkomati), both formerly owned by Lion Ore. Finally there is Norilsk Nickel Australia, which owns several mines and facilities in the western part of the country.

 

Nickel forecasts

MMC Norilsk Nickel, as one of the world’s largest Nickel producers, expects the market deficit to widen to 100,000 tons by the end of 2017. These news were carried out at the International Nickel Conference in Lisbon. The company’s head of market research explained to delegates their possible expectations.

“We are cautiously positive for 2017. We expect the deficit to widen to 100,000 tons in a base case scenario, but this situation remains unstable due to a number of material uncertainties.” Denis Sharypin said. (Fast Markets)

According to data from the International Nickel Study Group (INSG), the nickel market moved into a deficit of 49,700 tons in 2016 from a surplus of 91,400 tons in 2015.

“Indonesia could change this drastically, however,” he said.

 

Indonesian Nickel Ore

 

The Indonesian government surprised markets in January when it relaxed the country’s three-year ban on unprocessed ore.

In terms of demand, there are a few factors that might affect that forecast. For example stainless steel production growth in China and Indonesia and the high off take by alloys and strong increase in batteries.

In terms of supply, the political situation in the Philippines with its potential to shut down 20 or more mines is just one variable that could affect forecasts.

In Indonesia, around 5 to 6 million tons of low grade ore are available and ready for export. It has also the potential to impact the forecast.

“The worst case scenario is that a substantial surplus is also possible,” said Denis Sharypin.

Indonesia produces 17 million tons of nickel ore per year. 10 million tons of this quantity is low-grade ore. The country’s nickel smelting capacity is currently 16 million tons and may reach 18 million this year.

Low-grade ore is harder to process and smelters have been unwilling to take it at first. But in order for miners to get high-grade ore, they have to dig through low-grade ore first, which then gets thrown out.

 

These predictions about Nickel Ore deficit will likely come true in 2H17.

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Oil market Pressure remains Inevitable, but prices Went UP a bit this morning

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A short revision & Today’s prices

Followed by last week’s huge losses, Oil prices recovered today. Inspired by OPEC’s ideas to extend a supply cuts in next 6 months, it made a market prices rise.

While the relentless rise in U.S. oil outputs is making a fuss on supply’s side.

“U.S. West Texas Intermediate (WTI) crude oil futures CLc1 added 26 cents, or 0.5 percent, by 0401 GMT (12:01 a.m. ET), but were still below the $50 mark pierced on Friday at $49.88 a barrel.
Brent crude futures LCOc1 rose 30 cents, or 0.6 percent, to $52.26 per barrel. “ (Reuters)

Last week’s oil prices seemingly fell, backed up by ornery high crude supplies coming from the U.S. Despite OPEC’s possible production cuts extensions by 1.8 million bpd in next 6 months, the end of last week represented markets impossibility to handle artificially caused production surplus from U.S.

There are also some non-OPEC countries who accept the decision about cutting the production in following 2H17.

U.S. drillers

U.S. drillers are constantly adding some new oil rigs. It is now 14th week in a row, and the production has extended to 688 rigs. Extending also the 11- month recovery that will boost U.S. shale production in May.

It will be the largest monthly supply increase in more than last 2 years. It will have a huge impact on OPEC’s decision.

“Since its trough on May 27, 2016, producers have added 372 oil rigs (+118 percent) in the U.S.,” Goldman Sach said

U.S. crude production is at 9.25 million barrels per day (bpd) C-OUT-T-EIA, up almost 10 percent since mid-2016 and approaching that of OPEC’s top exporter Saudi Arabia.

– “WTI oil slipped back below the $50 per barrel level, amid concerns that the lack of inventory draw down since the OPEC production cuts is a sign that the cuts are not enough to rebalance supply and demand and put a floor under prices,” said William O’Loughlin, investment analyst at Rivkin Securities in a note on Monday. (Reuters)

WTI and both the Brent Crude Oil benchmarks are now down for more than 7.5 % since the end of the last year. Rather it makes a serious difference compared to 2016 period.

OPEC is planning to extend the output cuts. But there comes a very tricky question itself. If a Panel really decides to cut the outputs, will anything change?

 

 

Persistence in Goals as a key to success ?

U.S. drillers and U.S. policy Is persistent, although they are aware that market imbalance comes straight out their extra engaged oil rigs. Oil market is suffering.
Steel market is suffering too. Is U.S. market really that liberal? And ready to accept some natural changes, and prices coming from other sources even if lower than theirs (China’s steel for example). Competitive prices which have all the rights in this world to stay and fight the markets without being questioned as dumping prices?

Not every economy in this world has the power to affect trade and prices when they feel to. Speaking about Oil, OPEC’s agreements are destroyed and will again be if they do not find a solution for bordering their Oil from U.S. Oil. Which Will not easily happen.

OPEC’s possible extensions and an expected fall in Iranian production lent markets some support on Monday, traders said.

“Iran’s crude oil exports are set to hit a 14-month low in May, suggesting the country is struggling to raise exports after clearing out stocks stored on tankers.
Iranian oil exports, especially to its core markets in Asia, had soared since the ending of most sanctions against it in January 2016. (R.)”

This will again be an Agitated week on world’s OIL MARKET.

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Established Saudi state perks may prevent a recession and help their economy

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Public Sector Wage Cuts

Last September, the government roughly diminished financial perks for employees in the public sector. It is the main source of incomes for Saudi people, because most of them work there. The goal was to curb a huge budget deficit caused by low oil prices.

Low Oil prices caused country to gain large budget deficit. Big supply all over the world caused low prices, which cropped Saudi Budget.

King Salman’s decided to retrieve cuts to financial allowances for civil servants and military workers. It is seen as his way to help country. As a way to avoid recession this year, and lead economy towards reforming paths.

On Saturday (22.04.), Riyadh has reversed a major severity policy since its budget crisis erupted two years ago. This followed widespread grumbling about musty living standards among ordinary Saudis.

Country budget is supposed to grow with this perks, and gain positive trends in following years. Such perks include housing, vacation, and sickness allowances plus monthly bonuses for some state and military workers.

 

Analyses of the step

 

  • Analysts say the decision does not necessarily signal change in Riyadh’s determination to eliminate its deficit. Instead, it may be a tactical move designed to help authorities implement a controversial economic reform program announced last year by Deputy Crown Prince Mohammed bin Salman. (Reuters)

Program includes moves such as new taxes, domestic fuel price hikes. It implies transfer of big country’s projects to the private sector. And the smart sale of a stake in Saudi Aramco, which represents the Crown Jewel of Saudis economy.

“By showing it is sensitive to the public welfare and is looking for ways to share the financial benefits of reforms with society, the government may now be able to push ahead with its program.” (Reuters)

“The government was forced to take extreme measures last year. Now they are more at ease with the fiscal situation so they are able to give something back to society.”(R)

“They aim to continue the reforms, and they want to do it with society’s support.”(R)

 

Eliminating the Gap Caused by Low Oil Prices

 

Riyadh had made fast progress in cutting the deficit. It was much faster than expected. So, deputy Economy Minister Mohammed al-Tuwaijri said it would be possible to restore the allowances.

“The gap was 26 billion riyals in the first quarter of 2017, well below the government’s projection of 54 billion riyals.” Riyadh has forecast a deficit of 198 billion riyals in 2017 and aims to eliminate the gap by 2020. (Reuters)

Officials also have a goal to raise domestic fuel. Also the water prices in coming months, raising an additional 29 billion riyals. They plan a 5% tax on some products by the end of 2018.

That could be adequate for Saudi Arabia to avoid recession.

“A 1.4 percent rise in the Saudi stock index on Sunday, led by retailing companies, showed investors expect a boost to consumer spending.“ (Reuters)

Authorities said on Saturday that they intended to move forward with a part of the reform program that is popular among many ordinary Saudis: reducing corruption and making the government more transparent.

The officials said they also plan to conduct projects among ordinary Saudis. Which include reducing corruption, and making the government businesses more plainly to the ordinary people.

 

Changing Oil Prices

Oil sector represents a main income-area of the Saudi Arabia economy. Descending oil prices made a fiasco in their finances. There is a way to get over the county’s budget deficit, but the projects must be very precisely done. Transforming the government projects into private businesses and selling them is a good idea only if smartly led to an end. By the end of 2020 Riyadh is expected to get over the existing deficit, which means the oil market prices and the oil supply will have a serious issue in this matter. May the 25th will define most important following movements for Saudis. As well as for all the OPEC countries, and the worlds Oil Supply-Demand Issues.

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Oil market re-balance happening? OPEC planning next six-month extension of oil output CUTS ?

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Chronology of decisions:

 

Firstly, On February 7, 2017, Iran’s oil minister announced that major oil producers should prolong the oil production cut deal in second half of 2017. The production cut would restrain oversupply in the oil market and support crude oil prices. Higher crude oil prices have a positive impact on oil and gas producers. It affects their earnings: like Marathon Oil (MRO), Warren Resources (WRES), Hess (HES), and PDC Energy (PDCE).

 

Saudi Arabia and major oil producers output cut plans

In January 2017, Saudi Arabia’s energy minister said that OPEC might not extend the production cut deal beyond six months. He thinks that the oil market’s re-balance will end by first half of 2017.

If there’s a delay in the re-balance, we might see production cuts continue for another six months. Changes in supply and demand impact crude oil prices.

 

The U.S.: Bank of America Merrill Lynch thinks that President Trump’s energy policies would increase supplies in the US. Following, the supply would increase in the global oil market too, which would lead to oversupply in 2018. Resulting with pressured crude oil prices in 2018.

NEW Info on extended oil output cuts

 

An OPEC and non-OPEC technical committee recommended that producers extend a global deal to cut oil supplies for another six months from June in an effort to clear a glut of crude that has weighed on prices.

For example, OPEC, Russia, and other producers primarily agreed to cut oil production by 1.8 million barrels per day (bpd) for six months from Jan. 1 to back up the market.

Accordance on this matter also came at the meeting in Vienna, on Friday. Officials from important monitoring countries showed devotion to agree on output levels. Those were Kuwait, Algeria, Venezuela. And non-OPEC countries like Oman and Russia.

 

Reuters sources said the rate in March represented an increase from February’s level. Overall compliance with pledged cutbacks stood at 98 percent in March.

Oil prices still declined on Friday, with Brent crude trading below $52 a barrel. (Reuters)

The problem here is increasing U.S. production. It is causing big supplies, which seriously are affecting the efforts by OPEC and other non-OPEC allies to curb outputs.

Kuwait and Saudi Arabia Oil ministers, gave a clear signal on Thursday (March the 20th) that their producers plan to prolong the accord. Being aware of this, board’s recommendation that the supply cuts be prolonged, didn’t come as a surprise.

OPEC ministers plus their non-OPEC counterparts are scheduled to meet on May 25.

 

Meeting in Vienna

Russian Energy Minister Alexander Novak said after Friday’s meeting in Vienna: “The decision on extending the pact has not yet been taken, but it would be discussed with OPEC on MAY 24.th”

The panel, which met at OPEC’s Vienna headquarters, is the Joint Technical Committee (JTC) established in January to monitor adherence to supply cuts. Top OPEC producer Saudi Arabia is also a member of the JTC in its capacity as 2017 OPEC president. (Reuters)

As we announced many times before, OPEC ministers and their non-OPEC allies are to meet on May 25th, to discuss all the important opinions and ideas on this matter.

The Friday’s meeting also discussed OPEC’s own permissiveness, which it put at 103 percent. Much in line with ratings published in OPEC’s most recent monthly report.

In conclusion, there is about one month left till the May 25th. It will be a very important meeting, when some of the speculations about cutting oil outputs will come true. Whether glut would recover itself or it would be gone, we will witness it really soon. And the global oil market will certainly take a bit different dimensions after this date.

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Rising Tensions in Grasberg; Mine workers planning one-month strike in May

 

Grasberg Mine, Indonesia

Tensions are increasing around Grasberg, the world’s second-biggest copper mine. It is happening because operator Freeport laid off thousands of workers. In order to retain losses from an underway argument with the Indonesian government, over mining rights.

Firstly, copper miner Freeport-McMoRan Inc. warned it will punish workers for absenteeism at its Indonesian unit. Secondly, yesterday, one of its main unions announced plans to go on a one-month strike. Following, they are not satisfied with the employment conditions.

A strike could impact Freeport efforts to ramp up production. Company is expecting to soon affix agreements with Jakarta to allow it to temporarily resume copper concentrate exports.

“Workers were very absent over the last several days.” “We are tracking absenteeism, and disciplinary actions will be enforced. Under the terms of the Collective Labor Agreement.”

Cutting the workforce

 

Last week Freeport has discharged over 10 percent of its workforce of 32,000. This number will grow until its dispute with the government comes fully resolved.

Further adding to tensions around Grasberg, clash injured several Freeport workers and police officers in Papua on Thursday, when officers fired rubber bullets at demonstrators.

“Company is giving efforts to reduce its workforce. It has extensive impacts on workers and their families”. The workers union spoke about this, stating it is not a solution.

Workers are worrying about the discharges. “Because there are no limits or specific criteria on workers who will be furloughed.” They requested an end to the furlough policy. And informed Freeport of their plans to strike for 30 days. Beginning from May the 1st.

 

‘Shaken & Confused Workers’

 

“Efforts by the company to cut costs and reduce numbers of workers, made a fiasco among them.” It led to agitated tensions and their determination to protest.

One worker added that in his view Freeport was only doing what it needed to survive. And that cutting costs is one of the strategies to turn around company’s conditions. He said there are many workers who would not join the strike.

Thursday some workers “were carrying out acts of anarchy … so police took action and fired rubber bullets on them.” Solossa said the clash injured four workers and seven police officers. But that the controvert was not related to the planned strike.

 

The incident

Timika Police Chief confirmed the details of the incident. He added that incident included roughly 1,000 demonstrators. Also when the tear gas was fired there were many of them present.

New rules demanded the Arizona-based company to adopt a special license. Affected by that Indonesia blocked Freeport’s copper concentrate exports in January. It payed new taxes and royalties. Divested a 51 percent stake in its operations, and relinquished arbitration rights. This stoppage made hundreds of millions of dollars cost. As for the company, also for Indonesia. But negotiations over sticking points will continue for the next six months at least.

“We have the right to commence arbitration in 120 days if no agreement is reached.” (Freeport saying to Jakarta)

In the end, it is all up to workers now. They will decide their own destiny. But the fact that many of them are discharged from their workplaces is scary. There are families behind who depend on these wages. And there is also cruel fact of a cold economy. The costs must be cut, if the company plans to get over the wounds and bloom. Grasberg is going to be very agitated in the next few months. We will see the outcome.

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LME: copper price up; all other base metals slightly lower this morning

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Friday April the 21st LME:

 

Copper was the only base metal which went slightly up in this mornings trade. All other base metals prices fell.

 

With the three-month aluminium price falling $2 per t and zinc dropping $10.50 per t.

“The market is looking volatile at the moment; we have had a few quiet days but have recovered from earlier week weakness.” (FastMarkets)

LME copper prices hit three-month lows at the start of the week but have rallied in the past few days. Instantly, it is trading at 0.5% higher than Thursday’s kerb price.

“Dip-buying appears to have emerged into the recent weakness in base metals prices, this fits in with our overall view to remain mildly bullish for the complex,” Metal Bulletin analyst William Adams noted. (FM)

 

Copper prices edging up

 

The three-month copper price rose by $28.50 to $5,651.50 per ton. While copper stocks fell by 50 ton to 268,400ton, with 11,025 of freshly re-warranted copper. Global refined copper market posted a surplus of 51,000t in January, the International Copper Study Group (ICSG) said in a monthly report on April 20.

 

Chile’s Codelco suspended operations at a concentrator plant at its Salvador copper mine after a supervisor died in an accident. The facility produced 60,000 tons of copper in 2016. (Reuters)

 

All other base metals see decline

Aluminium price in three-month report fell by $2 to $1,941 per ton as it restored above $1,900. Inventories were down 14,925t to 1,687,875t. Nickel’s three-month price fell by $35 to $9,445 per ton – nevertheless bouncing back from dips over the last few days.

Stocks for nickel increased by 5,208 t to 380, 946 t. Zinc price (3months) started trading at $2,621.50 per ton, down $10.50 on yesterday’s kerb. Inventories fell 1,300 tons to 355,150 tons.

“Data released by China’s NBS showed its domestic zinc production fell to 504,000 tons in March, the lowest level in a year as smelters conducted maintenance during the recent ore shortage,” ANZ Research said on Friday.

Lead was trading $6 lower this morning at $2,153.50 per ton. Stocks were down 500 tons to 167,175 tons.

Tin price in three-months fell $15 to $19,860 per ton as it failed to rally back above the $20,000 per ton mark. Inventories for tin were unchanged at 3,195 tons for the second day in a row.

 

Currency moves and data releases

  • Dollar index was down to 99.76, a 0.08% decrease.
  • The Brent crude oil spot price fell by 0.02% to $52.97 per barrel.
  • The UK FSTE 100 was up 2.58 to 7121.12.
  • In data, EU consumer confidence was -4 for April after being forecast at -5, while the CB leading index was 0.4% for March.
  • EU and US flash manufacturing and services PMI, EU current account, US existing home sales and UK retail sales are due.

 

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