Oil immerses, on U.S. stock decline

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Oil prices tumbled lower today, May 3. Right after the U.S. government data showed a smaller-than-expected decline in domestic crude inventories. There was also shown a weak demand for gasoline. And it is feeding bothers about a supply glut.

 

Oil Numbers & Data

Benchmark Brent crude LCOc1 was down 8 cents at $50.38 a barrel.

U.S. West Texas Intermediate (WTI) crude CLc1 was down 18 cents at $47.48 a barrel at 11:33 EST.

Weekly crude stocks fell by 930,000 barrels to 527.8 million. Which makes it less than half the 2.3 million-barrel draw that had been in forecast. (EIA)

“U.S. domestic production increased again, and continues its steady climb.” said John Kilduff. (Again Capital hedge fund partner in New York.)

Noteworthy, sharp drop in imports turned what would have been an increase in stocks into a small drawdown.

EIA data also showed gasoline stocks rose by 191,000 barrels, which was much less than the 1.3 million-barrel gain that had been forecast. However, gasoline demand slipped 2.7 percent over the last four weeks from the same period a year ago.

  • “This is continuing a trend since the beginning of the year in which sales have been lower and that is casting a shadow on the market and pressuring crude oil prices.” Andrew Lipow, president of Lipow Oil Associates in Houston. (Reuters)

While the market remains anchored on U.S. production, oil investors continue to watch.. And think whether producing countries have been complying with their 2016 deal to cut output around 1.8 million bpd by the middle of the year.

 

Russia’s position

 

Russia’s oil cut exceeds level demanded in OPEC-led pact. Under the deal, Russia promised to cut its average daily production gradually by 300,000 barrels to 10.947 million bpd. From the October level of 11.247 million bpd.

With global crude inventories still bulging, investors are now focused on whether OPEC and others will agree to extend the cuts to the second half of the year. This will most probably become true on May 25th.

Russia, contributing the largest production cut outside OPEC, said that as of May 1, it had curbed output by more than 300,000 bpd. Since hitting peak production in October.

Russia has achieved its reduction target a month ahead of schedule. OPEC production showed the group’s compliance had fallen slightly.

Alexander Novak, Russian Energy Minister has said he would meet managers of key Russian oil producer before the OPEC event. He wants them to discuss extending the cuts. That meeting has yet to take place.

Russia’s Deputy Prime Minister Arkady Dvorkovich refused to comment about this subject when asked today.

 

More Oil from East

 

  • “Although OPEC is expected to extend a self-imposed output cap by another six months, it would be a challenge convincing several non-OPEC members to join the endeavor.” Said Abhishek Kumar, senior energy analyst at Interfax Energy’s Global Gas Analytics in London. (Reuters)

According to some news by Reuters it is clear that there was more oil from Angola and higher UAE output than originally. Thought meant OPEC compliance with its production-cutting deal slipped to 90 percent in April. From a revised 92 percent in March. Certainly, there are a lot of manipulations happening in the Oil market. Will it come out stronger after the May 25… We will see.

 

 

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Copper price falls below $5,700/t; all base metals down

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Financial Markets on Wednesday:

 

  • Fed expected to stand pat on rates
  • Jobs data and service sector activity to serve as prelude to Fed
  • Apple sales disappoint, shares off 1.5%
  • Oil bounces back from 1-month low
  • Global stocks show caution ahead of Fed decision

 

 

LME on Wednesday:

“Prices have dropped this morning but are consolidating. The rally yesterday failed to inspire a push beyond resistance.” 

All base metals on the London Metal Exchange saw prices decline. Nickel fell by 2.15% while copper fell by 1.88%. Tin and aluminium dropped by smaller margins to hold on to some of Tuesday’s price rally.

3-month copper price plunged by more than $100 per tonne during premarket trading on the London Metal Exchange on May 3. After hitting a three-week high at kerb trading yesterday.

“Underlying sentiment does not seem unified at the moment and the mixed bag of manufacturing PMI data out on Tuesday has raised some doubt over how strong the underlying global economy is.” (Metal Bulletin)

It seems unlikely that consumers will feel the need to chase prices higher. So market would look for more consolidation, although bouts of tightness in the some of the metals could lead to short-covering.

Today is May option declarations day.

 

Copper falls below $5,700 per tonne

 

Copper inventories rose 16,225 tonnes to 284,925 tonnes.  After suffering a mild downturn in April, copper is facing more headwinds going into May, according to INTL FCStone.
“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said.

“Tightened credit in China during April will continue to put pressure on copper prices,” China’s Galaxy Futures said. (Fast Markets)

 

 

Currencies and Indexes 

 

The dollar index was up 0.15% to 99.07. Following, the Brent crude oil spot price fell 0.45% to 50.87.
Speaking about indexes, The FSTE 100 was down 21.31 (0.29%) to 7,228.73. The final Euro zone manufacturing PMI for April rose to a cycle high of 56.7, while the UK measure hit a three-year high of 57.3. The new orders and export orders indices for both rose strongly. Both of which point to a pick-up in second-quarter growth prospects. (ANZ)

 

“However, the March unemployment rate for Europe was unchanged at 9.5%, where it has been stuck for three months. Germany may be at a historic low of 3.9%, but France (10.1%), Italy (11.7%) and Spain (18.2%) are not,” the bank added.

 US total vehicles sales data showed sales were running at an annualised rate of 16.9 million units (mu) in April, which was below an expected 17.1 mu, but above March’s 16.6 mu.
Data on Spanish and German unemployment change, UK construction PMI and EU preliminary flash GDP are due later today.  Also due is a series of important US data including ADP non-farm employment change, ISM non-manufacturing PMI, crude oil inventories, a Federal Open Market Committee Statement and the Federal Funds Rate.

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BP’s profit tripled in the first quarter of 2017

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British Oil and Gas Company

The British oil and gas company joined oil major rivals including Exxon Mobil, Chevron and Total. They joined in posting stronger than expected quarterly profits,  mostly thanks to oil and gas prices.

BP’s profit nearly tripled in the first quarter of 2017 from a year earlier. Inspired by rising oil prices and production that hit a five-year high. While debt stacked up in order to pay for acquisitions and costs for the 2010 Gulf of Mexico spill.

Oil prices rose by 50 percent in the past year to around $54 a barrel in the first quarter.

 

BP’s expectations

 

BP expects prices to average between $50 and $55 a barrel in 2017, heading to the higher end of the range. If OPEC and major producing countries extend production cuts into the second half of the year.

The results could calm some concerns among investors. Who were shaked up when BP in February raised the oil price. They rose it to a level at which it could balance its books this year. To $60 a barrel after a string of investments that pushed up borrowing.

BP’s shares were trading 2.4 percent higher at 0721 GMT, the biggest winner on London’s bluechip FTSE 100 index.

  • “The results are positive,” but “gearing is creeping up towards the max of the 20-30 percent target range. Although divestments, including the recent $1.7 billion SECCO sale in China, should help.” (Reuters)

Net debt rose 9 percent in the quarter to $38.6 billion. Rising BP’s grab of net debt to shareholders’ equity from 26 percent to 28 percent. Which is obviously closer to its ceiling : 30 percent.

“The debt was always going to rise in the first half of the year and the 28 percent gearing, frankly, that doesn’t cause any problems at all.” (Reuters)

To keep oil prices buoyant, oil companies want the OPEC, Russia and other producers to extend their global pact to cut  for 2H17 from June 30.

”If they don’t get rolled into the second half of the year, there will certainly be more price volatility.”

 

London-based BP

 

London-based BP is set to start up seven projects this year. Including Oman and Azerbaijan, the largest number in a single year in company’s history. It hopes to add 800,000 bpd of new production by the end of the decade.

The renewal of BP’s ADCO onshore oil concession in Abu Dhabi in December was a main contributor to BP’s first quarter rise in output. Total upstream production, excluding BP’s share of Rosneft output, reached a five-year high of 2.39 million bProjects under construction are ahead of schedule and on average 15 percent below budget, BP said.

BP’s operating cash flow in the quarter rose to $2.1 billion from $1.9 billion a year earlier, hit by payments made toward settling fines related to the 2010 deadly Deepwater Horizon rig explosion and oil spill in the Gulf of Mexico.

BP took a pre-tax $161 million charge in the first quarter related to the spill. Total payments are expected to reach $4.5 billion to $5.5 billion this year.

BP reported first-quarter underlying replacement cost profit, the company’s definition of net income, of $1.51 billion, exceeding analysts’ average forecast of $1.26 billion.

 

 

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LME base metals broadly higher this morning; Copper benefiting from Strike News (Indonesia)

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Resume:

Tuesday, May 2: Base metals on the LME were loosely higher this morning. Copper went up over $50 per tonne while a small fall for aluminium was the only decline.

The lead market is tense considerably over the last few days. The cash/threes rate is now at $34/35 backwardation, having widened from $10 last week. This is the widest since May 2011, when it was at $38 backwardation.

 

Workers strike in McMoRan Inc.

 

Copper price is benefiting from the news that workers from Freeport McMoRan’s Indonesian unit plan to strike through until the end of the month. This will disrupt production expansion plans at the world’s second largest copper mine Grasberg.

Thousands of workers from the Indonesian unit of Freeport McMoRan Inc staged a rally near its Papua mine. Protesting against layoffs by the miner due to a contract dispute with the government.

  • “Freeport is trying to ramp up output and exports at Grasberg after reaching a temporary deal with the government following a 15-week stoppage linked to new mining rules. But customers are concerned that labor unrest could now hit supply.” (Reuters)

 

Copper edging closer to $5,800/t 

 

Three-month copper price rose $57.50 per tonne this morning, currently trading at $5,792.50.  Copper’s three-month price saw steady increases in the last week of April amid reports of workers strikes and distribution issues.

Edward Meir, INTL FCStone, said copper could be vulnerable in May with increased downward bias.

“The market finds itself in somewhat of a soft spot going into [the second quarter] given that the big events driving values higher last quarter, namely the Escondida and Grasberg outages, are now behind us and the next wave of labour negotiations will not take place until later this year,” Meir said.

Copper stocks on the LME fell 6,050 tonnes to 253,675 tonnes.

“Workers at PT Freeport Indonesia had started a month-long strike at Grasberg. Now the market is focusing on the risk of tight supply again, pushing up copper prices.”

 

Global Market

Donald Trump will announce his infrastructure spending plan within the next few weeks. This is expected to provide the industry with renewed confidence.

“It is said that Trump’s infrastructure plan could create four million skilled trades jobs – Trump’s border wall alone is expected to create 21,000 jobs. While the plan will also drive demand for the metals.”

Aluminium saw a slight decline of $1.50 per tonne this morning. Marex Spectron noted:

  • “Aluminium remains the largest spec long of the complex at 28% of OI, but we expect to find some consumer and gamma support with first support between $1800/1900. The price won’t benefit however from any unwind with longs established against shorts across other base metals.”(Metal Bulletin)

Aluminium goes down

 

 

The three-month aluminium price was the only metal to see a decline this morning, it fell a small $1.50 per tonne and is currently trading at $1,909.50.
• Aluminium stocks fell 12,050 tonnes to 1,633,325 tonnes.

  • The three-month tin price rose $5 to $19,905 per tonne as it gets closer to the $20,000 per tonne ceiling. Stocks fell 150 tonnes to 2,865 tonnes.
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SHFE : Trump’s infrastructure spending plan rises expectations on base metals market

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SHFE 

Base metals prices on the Shanghai Futures Exchange were all UP during Asian morning trading today. Inspired by news that US president Donald Trump will announce his plans for infrastructure spending very recently.
“Base metals prices were higher amid reports that President Trump will announce his infrastructure spending plan within the next two to three weeks.” An analyst based in Shenzhen, China, said.

If Trump’s $1 trillion spending plan to upgrade US infrastructure becomes a reality –  the demand for skilled workers to improve roads, highways, bridges, air traffic infrastructure, waterways and the electrical grid will skyrocket in the coming years. Potentially creating four million jobs in the process.

“It is said that Trump’s infrastructure plan could create four million skilled trades jobs. Trump’s border wall alone is expected to create 21,000 jobs. While the plan will also drive demand for the metals.”
The expectations of increased demand for the metals have seen prices well support this morning.

Copper prices rise on tightness fears, strike in Indonesia

 “Workers at PT Freeport Indonesia had started a month-long strike at Grasberg. Now the market is focusing on the risk of tight supply again, pushing up copper prices.”

The SHFE June copper contract stood at 46,820 yuan per ton. As of 04:00 London time, up 490 yuan compared with last trading session’s close.

Meanwhile, Galaxy Futures also warned that the Chinese government will strictly limit credit flowing into speculative buying in the country’s property market, which will put some pressure on copper prices. SHFE copper stocks fell 10,830 tons or 4.5% to 229,361 tons last week.

 

Other metals higher

 

June lead price on the SHFE was 240 yuan higher at 16,595 yuan per ton. Lead stocks dipped 218 to 72,070 tons as of Friday.

September tin contract climbed 2,230 yuan to 144,750 yuan per ton. SHFE tin stocks fell 19 tons to 2206 tons last week.

The September nickel contract rose 1,010 yuan to 80,310 yuan per ton. Nickel stocks at SHFE-bonded warehouses rose 439 tons to 84,334 tons as of Friday.

The SHFE June aluminium contract inched 60 yuan higher to 14,075 yuan per ton. Aluminium stocks rose 12,544 ton to 391,578 tons in the week ended April 28. The SHFE June zinc contract rose 385 yuan to 22,285 yuan per ton. Zinc inventories at Shanghai Futures Exchange-approved warehouses fell 40,312 tons – or 25.9% – last week to 115,040 tons as of Friday April 28.


Currency moves and data releases 

  • The dollar index was recently 0.12% lower at 99.025.


• In other commodities, the Brent crude oil spot price was down 0.72% to $51.45 per barrel.
• In data, China’s official NBS Manufacturing PMI fell to 51.2 in April from 51.8 in March and below market expectations of 51.6. It was the ninth straight month of expansion but the weakest since October 2016.
• The official Non-Manufacturing PMI also dropped to 54.0 in April of 2017 from 55.1 in March. It was the lowest reading since October 2016.
• Earlier this morning, China’s Caixin Manufacturing PMI fell to 50.3 in April from 51.2 in March and below market consensus of 51.2. It was the lowest reading since September 2016.

• Later today, UK and EU manufacturing PMI, EU unemployment rate and US total vehicle sales are expected.

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High alert in France: Protesters march against Le Pen; Euro fuss

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Finals

France’s most crucial election in decades entered its final week.

Emmanuel Macron and his far-right rival Marine Le Pen traded campaign blows across Paris on May Day.

The vote in the world’s fifth largest economy, a key member of the NATO defense alliance, will be the first to elect a president who is from neither of the main political groupings. The candidates of the Socialists and conservative party The Republicans were knocked out in the first round on April 23.

Between them Le Pen and Macron gathered only 45 percent of votes in that round, which eliminated nine other candidates.

Second round of the elections is taking place in the middle of a weekend extended by a public holiday. That has fed speculation that a high abstention rate could favor Le Pen, whose supporters typically tell pollsters they are staunchly committed to their candidate.

 

May Day speeches

Firstly, Macron looked for a third successive day to picture National Front candidate Le Pen as an extremist. While she portrayed him as a clone of unpopular outgoing Socialist President Francois Hollande, under whom he served as economy minister from 2014 to 2016.

Secondly, the latest opinion poll showed Macron leading Le Pen by 61 percent to 39 ahead of Sunday’s election. Which offers France a choice between his vision of closer integration with a modernized European Union, and her calls to cut immigration and take the country out of the euro.

“I will fight up until the very last second. Not only against her program, but also her idea of what constitutes democracy and the French Republic.”

Thirdly, He was speaking after paying tribute to a young Moroccan man who drowned in the River Seine in Paris 22 years ago after he was pushed into the water by skinheads on a May Day rally by the FN. (Then led by Le Pen’s father Jean-Marie.)

Since beginning of candidature, she has worked hard to cleanse xenophobic and anti-semitic associations related to her. She said at the weekend she had no more contact with her father. And is not responsible for his ‘unacceptable comments’.

Campaigning in Villepinte, Marine Le Pen told a rally:

“Emmanuel Macron is just Francois Hollande who wants to stay and who is hanging on to power like a barnacle.”

 

Divided France

Following, Le Pen’s father gave his own traditional May Day speech at a statue of French medieval heroine Joan of Arc. Just a few hundred meters from where Macron commemorated the death of young Moroccan Brahim Bouarram.

“Emmanuel Macron is doing a tour of graveyards. It’s a bad sign for him,” he said.

The bitterly contested election has polarized France. Exposing some of the same sense of anger with globalization and political elites that brought Donald Trump to presidential power in the United States, and caused Britons to vote for a divorce from the EU.

 

Euro fuss

In recent days,  Le Pen has sought to play down the importance of an exit from the euro – the part of her campaign platform that is the least popular with voters.

In conclusion, in her speech lasting nearly an hour Today, she made no reference to the single currency. While devoting most of it to slamming her centrist rival and billing him as the candidate of the establishment.

“I want France to get its independence back by negotiating with Brussels the return of our sovereignty.”

Also, referring to her plan to hold a referendum on whether France should remain in the EU, she said: “The French people will decide.”

 

 

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Protesters Masks:

Protesters wearing masks of French presidential candidates. Emmanuel Macron (L) and Marine Le Pen depicted as the Grim Reaper lead a march marking the annual May Day workers’ rally in Marseille, southern France, on May 1, 2017. (Photo Source: CNBC)

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Trump says he’ll shut down NAFTA if he’s not able to clinch better deals

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Important News To Know about Today’s  Market:

 

  • ISM Manufacturing PMI (U.S.) rose to actual 57.2, while forcast was 57.0
  • Congress averts U.S. government shutdown
  • Global stocks edge up; key European, Asian markets closed
  • Oil starts the week lower
  • S. data, Mnuchin ahead
  • China factory activity slows in April

For more info on these subjects, visit: https://www.investing.com/

 

Trump about NAFTA

“The United States is preparing to shut down the North American Free Trade Agreement (NAFTA) if renegotiation efforts prove fruitless.”

In an interview with CBS’s “Face the Nation”, Trump was insisting that he was going to terminate the agreement which links the U.S. to Canada and Mexico. Before having a change of heart when the leaders of both countries reached out to him. (CNBC)

“I got a very nice call from Justin Trudeau, the prime minister of Canada,” Trump told CBS. “I was all set to do it. In fact, I was going to do it today. I was going to do it as we’re sitting here.”

Firstly, after conversing with Trudeau and Mexican President Enrique Pena Nieto, Trump said he would negotiate. However, the president added that “if I’m not able to renegotiate NAFTA, I will terminate NAFTA.”

Secondly, Trump signed an executive order Saturday directing the Commerce Department and the U.S. trade representative to conduct a study of U.S. trade agreements. The goal is to determine whether America is being treated fairly by its trading partners and the 164-nation World Trade Organization.

 

U.S. and Canada

Following, last week Trump lashed out at Canada. Suggesting the country was unfairly disadvantaging U.S. dairy and lumber products. Yet in practice, some economists say, Trump has been less stridently anti-trade as his campaign rhetoric suggested he would be.

“In general, the Trump administration has, up to now at least, taken a much less protectionist line than we feared after the very dark and foreboding inaugural speech, which talked of putting America first and that protection would lead to prosperity,” Capital Economics said in a report.

“However, there is no guarantee that we won’t see a renewed protectionist lurch,” particularly as warring factions close to the president jockey for advantage, the firm added.

 

February’s Press Conference

 

Let’s remind ourselves about what happened february the 13th. In a press conference where Mr Donald Trump and Canada’s PM Trudeau were discussing their NAFTA partnership:

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“We have a very outstanding trade relationship with Canada. We’ll be tweaking it. Also, we’ll be doing certain things that are going to benefit both of our countries. It’s a much less severe situation than what’s taken place on the southern border.” Trump said at a joint White House press conference with Trudeau.

Trump has called for a renegotiation of NAFTA, the deal implemented in 1994 that helped to make Canada and Mexico two of America’s crucial trading partners, saying it has harmed American workers. After his meeting with Trump, Trudeau stressed the magnitude of the U.S. and Canada economic relationship. Saying the countries “ventured into groundbreaking economic partnerships that have created good jobs for both of their people.” (source: CNBC)

…

In conclusion, the idea of U.S. administration is clear. They would like it better if Mexico’s out. But there are certain factors that show good and bad parts of every possible outcome. Certainly, Mr Trump’s announcement that he would shut down NAFTA should be considered wisely…

 

 

 

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Asia fractionally higher; Nikkei up by 0.2% and ASX up 0.13%

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Markets in Asia open fractionally higher today, with several major exchanges closed for a Labor Day public holiday.

Australia’s ASX 200 trades up 0.13 percent in early trade, with most sectors higher. The energy sector, however, was down 0.41 percent as oil plays struggled for gains.

 

Oil

 

Oil Search shares were down 0.28 percent, Santos was down 0.14 percent, Woodside Petroleum was down 0.16 percent, Beach Energy lower by 1.36 percent and Origin Energy fell 1.25 percent. (CNBC)

In Japan, the Nikkei 225 gained 0.15 percent, with energy names also struggling.. shares of Inpex fell 0.98 percent.

U.S. oil prices fell in morning trade during Asian hours, down 0.24 percent at $49.21 a barrel.

The weeks sets up for several key events. Including central bank decisions in Australia and the United States. Following, it comes a second round of presidential election in France and corporate earnings.

“We have the Fed funds futures pricing at 64 percent chance of a June hike (from the Federal Reserve). But the pricing mechanism could also easily change while we will have pretty much every key piece of U.S. economic data release.”  (Chris Weston, chief market strategist at spread-bettor IG.)

 

Currency moves

 

In the currency market, the dollar index, which measures the greenback against a basket of currencies, last traded at 98.97, dropping from levels above 99.00 reached in the previous week.

Among other currency majors, the yen traded at 111.35 to the dollar. Major exporters were mixed, with Toyota shares down 0.2 percent, Nissan down 0.19 percent, Honda up 0.19 percent and Sony gaining 2.58 percent.

Meanwhile, the Australian dollar fetched $0.7484 and the euro traded at $1.0902.

 

Global Politics

 

U.S. President Donald Trump said on Sunday that nor U.S. neither China would be satisfied if North Korea tested more missiles. Adding that “we’ll see” if military action would be needed to curb the country’s nuclear ambitions.

Amid rising tensions between the U.S. and North Korean leader Kim Jong-Un, Trump told CBS’s “Face the Nation” that Kim is “going to have to do what he has to do. But he understands we’re not going to be very happy.” Trump added that Chinese President Xi Jinping would feel the same.

  • “If he does a nuclear test, I will not be happy.” Trump said in the interview, and also suggested he was finessing his critiques of China’s trade policy in part to get their support on pressuring Pyongyang.

When asked why the country’s missiles keep exploding, Trump stated “I’d rather not discuss it. But perhaps they’re just not very good missiles. Eventually, he’ll have good missiles.” (CNBC)

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How North Korea gets its oil from China

CNPC

 

UN Security Council decides whether to tighten the sanctions screws on North Korea. The country’s increasingly isolated government could lose a lifeline provided by state-owned China National Petroleum Corp (CNPC).

For decades, the Chinese oil giant has sent small cargoes of jet fuel, diesel and gasoline from two large refineries in the northeastern city of Dalian. And also some other nearby plants across the Yellow Sea. All to North Korea’s western port of Nampo. Nampo serves North Korea’s capital, Pyongyang.

Firstly, CNPC controls the export of crude oil to North Korea, an aid program that began about 40 years ago. Crude goes through an ageing pipeline that runs from the border town of Dandong to feed North Korea’s oil refinery. The Ponghwa Chemical factory in Sinuiju on the other side of the Yalu river. It splits the two nations. The plant makes low-grade gasoline and diesel.

There are some unreported details about CNPC’s deals with Pyongyang. About how it came to dominate that business. Explaining the two countries’ relationship. What’s at stake, as decades of close ties sour badly because of growing concerns about North Korea’s missile and nuclear programs.

 

 

Donald Trump’s administration

 

U.S. President Donald Trump’s administration is focusing its North Korea strategy on tougher economic sanctions. Possibly including an oil embargo. Also a global ban on its airline, intercepting cargo ships. Finally punishing Chinese banks doing business with Pyongyang.

Secondly, North Korea imports all its oil needs, mostly from China and a way smaller amount from Russia.

It bought about 270,000 tonnes of fuel last year, according to China’s customs data.

 

 

Oil Embargo & North Korea trade

 

In North Korea, diesel is critical for farming, especially at this time of year. Ahead of the planting season and also around October for harvesting. Gasoline is mainly used by the transport industry and the military.

The Global Times, a Chinese magazine whose stance does not necessarily reflect official policy, earlier this month raised the possibility of cutting oil shipments to North Korea if it were to conduct another nuclear test.

  • “China could potentially be convinced to cap volumes like they did with coal. At the United Nations Security Council as part of a new sanctions resolution following another nuclear test.” (Reuters)

“CNPC has all along been really politically minded among state energy firms, aiming for that role of North Korea’s dominant supplier even if the business makes little money.”

Any loss of the North Korea trade will have only a tiny effect on Dalian. Dalian’s two refineries having a combined capacity to process over 600,000 barrels of crude oil per day. Which is about 40 times North Korea’s requirements.

Pyongyang’s increasing nuclear and ballistic missile tests have already put the brakes on the trade. Beijing quietly suspended a decades-long aid program of 50,000 tonnes annually of aviation fuel in 2013. The government officially announced a ban on jet fuel only, last June.

Russia appears to have replaced China as the top supplier of jet fuel.

 

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Last week summary

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Sunday news:

  • China Manufacturing PMI fell to actual 51.6 (while forecast was 51.6)
  • Tomorrow is the International Holiday. Labor Day, May the 1st.

 

Last Week’s Trade

Base metal prices on the London Metal Exchange were highly up at the end of trading in Friday April 28, with aluminium the only one to see a decline in price.
After steady increases across the board during premarket trading in Friday, base metals on the LME saw little change as it heads in to a three-day weekend.
One trader said: “Things have been fairly quiet today and for the last few days, but it is starting to pick up as we head into May.”

Friday: Copper hit highs of 5,750 per ton and finished trading up $43 on Thursday’s close. Nickel bounced back from a decline earlier in the week with a price hike of $120 per ton, while tin sits just $100 shy of the $20,000 per ton mark.

“Over the past month, copper inventories [on the LME] have fallen over 16%, while zinc is down 9%, lead 8% and aluminium 6%. All have had recent supply disruptions which may have impacted this.” (ANZ)

“Base metals bounced overnight with volumes improving compared with earlier this week, although lead and nickel are the only metals to register above average turnover.” (Marex Spectron)

The exchange will resume trading on Tuesday May 2 because of the May Day holiday on May 1.

Copper price – upwards trend 

The three-month copper price rose $43 to $5,735 per ton at the close of trading.

“Copper is starting to look up. Much of the overhang of speculative longs has been sharply reduced; this means it can react to news as it comes in.” (Ole Hansen)

Copper inventories fell a net 2,775 tons to 259,728 tons. Major copper producers BHP Billiton, Freeport-McMoRan and Antofagasta lowered their production forecasts for 2017 amid operation disruptions.(Metal Bulletin)

BHP Billiton has cut its copper production guidance for the 2017 financial year again because of the 44-day long strike at its Escondida mine in the first quarter, following a 2% reduction on its guidance in the fourth quarter of last year.

 

Aluminium price falls

 

The three-month aluminium price fell $12.50 but remained above the $1,900 per ton mark. It finished trading at $1,911 per ton. Aluminium stocks fell again by 7,325 tons to 1,945,357 tons. Nickel is starting to recover from sharp declines earlier in the week. It rose $105 per ton at Thursday’s finishing and saw an increase of $125 per ton in Friday. Nickel’s three-month price finished trading $120 per ton higher than Thursday’s end at $9,450. Inventories for nickel slipped 30 tons to 379,644 tons.

Zinc saw an increase of $26 to $2,623 per ton. Stocks rose 875 ton to 349,050 tons. The three-month lead price rose $44 to $2,249 per ton. Stocks fell 125 tons to 165,275 tons.

 

The three-month tin price increased by $75 to $19,900 per ton – it has been fluctuating between $19,800 and $19,900 per ton over the past month. Inventories rose 65 tons to 3,015 tons.

 

 

 

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