Sunday 22.04. weekly report: All base metals prices closed lower in Friday

LME base metals prices closed lower after disappointing week

 

All base metals trading on the London Metal Exchange fell at the end of trading on Friday April 21 after a week in which some metals prices hit three-month lows.

 

Regardless of being the only base metal to see a price upsurge at Friday’s morning, up $28.50 per ton, copper prices dropped at the LME kerb.

 

Firstly, nickel and tin fell by over $100 per ton, while zinc dropped back below the $2,600 per ton barrier.

LME announced Matthew Chamberlain as its new CEO.

 

Secondly, steel prices could be in for a boost after positive macroeconomic news came from the USA.

“Yesterday (ref. to Thursday) President Trump ordered a trade probe against China and other exporters of cheap steel into the US. Trump also indicated plans to spend $200bn on an infrastructure development although the timing of this is still unclear,” Alastair Munro of Marex Spectron said.

Copper falls nevertheless earlier increase

Following, the three-month copper price rose by $1 from Thursday’s close to finish trading at $5,622 per ton in Friday. Copper stocks fell by 50 tons to 268,400 tons, with 11,025 tons freshly re-warranted. Indonesian workers at Freeport-McMoRan are said to be planning a month-long protest starting on May 1. The global refined copper market posted a surplus of 51,000 tons 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, according to Reuters.

 

Declines across the board

The nickel price was starting to recover over the last days but fell $135 per ton at the kerb to $9,345 per ton. The three-month aluminium price fell by $10.50 to finish trading at $1,932.50 per ton. Inventories were down 14,925 tons to 1,687,875 tons. Nickel stocks increased by 5,208 tons to 380,946 tons.

The three-month zinc fell by $48, after a $10.50 decline during morning trading, to close trading for the week on $2,584 per ton. Zinc 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 prices were down $17 to $2,142 per ton. Stocks were down 500 tons to 167,175 tons. The three month tin price was indicated at $19,750/$19,795 per ton – an approximate $125 per ton decline on Thursday’s close price. Inventories for tin were unchanged at 3,195 ton for the second day in a row.

 

Currency moves and data releases

  • The dollar index was down 9.14 to 99.98.
  • The Brent crude oil spot price was down 1.85% to $52.02 per barrel.
  • The UK FTSE 100 was down 3.99 to 7114.55.
  • EU consumer confidence was -4 for April after being forecast at -5, while the CB leading index was 0.4% for March.
  • Meanwhile in the USA, existing home sales in March hit 5.71 million, topping the forecast of 5.61 million. But the flash manufacturing PMI and flash services PMI for April both disappointed at 52.8 and 52.5, respectively.
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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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Chinese steel exports to U.S. causing national security issues?

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Steel

 

U.S. President is launching an investigation about whether the steel imports from foreign countries affects U.S. national interests.

“Steel is critical to both our economy and our military. This is not an area where we can afford to become dependent on foreign countries.”

Firstly, China is the largest national producer. It makes far more steel than it consumes. Secondly, it is exporting the excess output overseas. ” This often leads undercutting domestic producers.”

Trump is pressuring China to do more to rein in an increasingly belligerent North Korea. Which is the unusual step of setting to steel investigation. Two presidents discussed this subjects earlier in Florida. Trump said that he would consider possibility of using trade as a lever to coax China to do more.

 

Opinions on matter

 

“Everything they export is dumping.” (Derek Scissors, Asian economist.)

 

Following, Chinese exports have risen. “Despite repeated Chinese claims that they were going to reduce their steel capacity.” said Ross. Ross was labeled “Mr. Protectionism” for his history of owning businesses protected from foreign competition. “If the Commerce inquiry finds the U.S. steel industry is suffering from too much steel imports, I will recommend retaliatory steps.” That could also include tariffs.

 

Trump ordered a probe under Section 232 of the Trade Expansion Act of 1962. This lets the president impose restrictions on imports for reasons of national security.

 

In October 2001, a Commerce Department investigation found “non probative evidence.” Saying that imports of iron ore and semi-finished steel threaten to impair U.S. national security.

The amounts of steel imported, even though big, cannot represent

the national security problem. It is simply called trading” said an analyst.

Steel shares had raised after Trump won the November election amid promises for increased infrastructure spending.

On Thursday shares of steel makers closed between 4 and 8.5 % higher. Steel Dynamics Inc (STLD.O), AK Steel Holding Corp (AKS.N), Cliffs Natural Resources Inc (CLF.N), Allegheny Technologies Inc (ATI.N) and other.

 

Steel Profits in US

 

The United States has nearly 100 plants that make millions of tons of steel annually. Government tried to protect them with WTO regulations. Then came Trump and said this has to be put on another level.

“The artificially low prices caused by excess capacity and unfairly traded imports suppress profits in the American steel industry.”

Also, Nucor Chairman John Ferriola said that the steelmakers welcomed the president’s move.

“We look forward to continuing to work with the president and Secretary Ross. To ensure our trade laws are enforced so that U.S. manufacturers can compete on a level-playing field.”

“There is no doubt that steel plays a role in our national security and the manufacturing of U.S. weapons systems.” (Jeff Bialos, who has worked on steel trade cases in the past.)

 

“But the Department of Defense only consumes a small portion of domestic steel output. And this has decreased over the past decade as composites technology has advanced,” Bialos said.

 

Scissors said the United States has other ways to take on China over steel trade issues, other than invoking national security.

 

“Talking about it as a national security issue – I don’t think it’s necessary and I don’t think it’s justified,” he said.

 

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Vale’s Q1 nickel output falls on operational issues

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About Vale

 

Vale SA is a Brazilian multinational corporation. Engaged in metals and mining. It is one of the largest logistics operators in Brazil. Vale is the largest producer of iron ore and nickel in the world.

Vale’s nickel production declined in the first quarter of 2017. It was affected by planned maintenance shutdowns and operational challenges. Output of finished nickel came to 71,400 tonnes in the first three months of the year. It went down by 2.9% from the corresponding period of 2016.

In the fourth quarter of 2016, the miner produced 83,000 tonnes of nickel. This also represented a 14% decline.

Decline happened “mainly due to planned maintenance shutdowns in Indonesia and Japan. And someoperational challenges”.

Nickel & iron ore production

 

Production at Vale’s Thompson operations came to 4,800 tonnes of nickel in the first quarter of 2017. Down by 22.6% y-o-y and down 33.3% against the fourth quarter of 2016.

This reflects “the scheduled Q1 2017 transition to a single-furnace operation and certain operational issues. Including damaging elements in the founder feed and a hot metal leak in the smelter that resulted in approximately 10 days of production loss”.

Meanwhile, production from the Sudbury mines, in Canada, reached 17,900 tonnes in the first quarter of 2017. 8.2% lower than in the first quarter of 2016 and down by 10.1% from the fourth quarter of 2016.

According to Vale, “Sudbury source production was adversely affected, mainly due to inventory drawdown during the Q4 2016 and Q1 2016 periods”. (Fastmarkets)

Sudbury is expected to transition to a single furnace in the fourth quarter of 2017. It took its furnace number 2 offline in March. For a three-month rebuild and expansion

of its capacity.

“This will be the stove in operation when Sudbury officially transitions to a single furnace. Sudbury will have a three-week surface plant-wide scheduled maintenance shutdown in the second quarter of 2017.”

Nickel production decline

 

Vale’s total nickel production from all its Canadian operations came to 36,100 t in the first quarter of 2017, down by 1.4% from a year earlier and 16.8% lower than in the fourth quarter of 2016.

Meanwhile, Vale’s Indonesian operation saw its nickel in matte production reach 17,200 t in the first quarter of 2017. 2.0% higher than in the same period of 2016. But 12% lower than in the fourth quarter of 2016.

“The weaker nickel in matte production was due to the adverse impact of a planned maintenance works in its kilns and furnaces, if compared with Q4 2016.” (Vale)

Meanwhile, production of finished nickel from PTVI totaled 16,300 t in the first quarter of 2017, down by 8.4% on an annual basis and 25.2% lower than in the fourth quarter of 2016.

The output was negatively affected by a scheduled annual maintenance shutdown at the Matsusaka refinery in Japan.

By contrast, production of finished products from Vale’s New Caledonia operation (VNC) reached a record of 10,200 t in the first three months of 2017.

 

This represents an increase of 5.2% from the first quarter of 2016 and is 14.6% higher than in the fourth quarter of 2016.

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China is creating a state-owned consortium to discuss about Saudi’s Crown Jewel Aramco

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Saudi Aramco

Most popularly known as Aramco, is a Saudi Arabian national petroleum and gas company. Firstly, it is based in Dhahran. Its value has been estimated between US$1.25 trillion and US$10 trillion. Which makes it the world’s most valuable company.

Secondly, Saudi Aramco has the world’s largest proven crude oil reserves. Estimated at more than 260 billion barrels. It also has the largest daily oil production. It owns, operates and develops all energy resources based in Saudi Arabia.

 

Vision 2030

Saudi Arabia’s Deputy Crown Prince, Mohammad bin Salman, has accepted a report from the consulting firm of Mc Kinsey & Co. Named entitled Vision 2030. Seems as his blueprint for turning the Saudi economy from oil. Laying the foundations for advanced private sector. Following, he has also decided to sell a 5-10 percent stake in the country’s national oil company.

Through an initial public offering. A number of international investment banks think the IPO and Aramco’s market capitalization will be in the vicinity of two trillion dollars. Therefore, newly listed company with the largest market capitalization on the planet.

Financial and industry experts do IPOs determination and the pricing of shares. On the basis of the company’s economic and financial data. And prevailing market conditions.

In the case of a ‘standard’ oil company, this would be based on extensive geological findings of retrievable reserves. And ultimately on discounted annual earnings of the company after all applicable taxes. Would these requirements and projections be followed in the same format for an Aramco IPO? Probably not. Because the calculations would require extensive intrusion into Saudi Arabia’s perception of a number of highly queasy covenants.

 

China State-Owned Consortium

China is gathering a consortium that will act as a headstone financier in the initial public offering of Aramco. People present at this meeting will possess high prudence of the discussions. This consortium includes state-owned oil giants and banks and its sovereign wealth funds.

Saudi Aramco is a key exporter to China together with Russia’s Rosneft. With potential $100 billion equity sale that would be the world’s largest to date.

Chinese possible investment, makes it more probably that the national energy giant would search for a listing in Asia. With Hong Kong instantly the favorite among stock markets in the region.

“The IPO will help decide which country can secure the crude supplies from the company and Saudi Arabia going forward.

 

“The company would consider participating in the IPO depending on market conditions.” (Wang Dongjin’s words.) Sinopec says the oil giant would discuss the IPO with Aramco.

 

Asia Register

In conclusion, Saudi authorities plan to list up to 5 percent of Aramco. On the Saudi stock exchange in Riyadh, and also one or more international markets.

Also, the $100 billion IPO price tag is based on Aramco being valued at $2 trillion. There are different versions about valuation of this giant.

“The Saudis are serious about Asia. They can maintain market share there. At the end of the day, Aramco needs to sell its oil. This is just another way of guaranteeing a long-term market.” (Reuters)

 

 

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Rio Tinto’s iron ore output cut by weather conditions

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About the company

 

Rio Tinto is a British-Australian multinational, and one of world’s largest metal and mining corporations. Rio Tinto(RIO.AX) (RIO.L) on Thursday said first-quarter iron production from Australia fell 3 percent. In comparison with the same period a year ago. Mostly due to wet weather at its mines. Heavy rain ruined Rio’s outputs. Despite weakening ore prices it kept its full-year guidance intact.

 

Pilbara

The Pilbara is a large, dry, thinly populated region in the north of Western Australia. Also It is known for its Aboriginal peoples. Furthermore, having ancient landscapes, the red earth, its vast mineral deposits, in particular iron ore. Pilbara mines output totaled 77.2 million tonnes, the company said. Full-year shipping guidance was kept at 330 million-340 million tonnes.

Shipments from Australia

 

Shipments from the Australian mines in the first quarter were flat at 76.7 million tonnes against the year-ago period, but down 13 percent from the previous quarter.

Ship loading was impacted by a cyclone, with parts of its rail line hit by heavy rainfall.

“Despite these disruptions, shipments were in line with the first quarter of 2016 and guidance for 2017 remains at 330 to 340 million tonnes,” the company said.

 

Iron ore producers are facing a promptly cut down of the iron ore prices. Rio Tinto and rivals Vale (VALE5.SA), BHP Billiton (BHP.AX) (BLT.L) and Fortescue Metals Group (FMG.AX) . It is happening amid waning demand from China, the biggest market for ore.

China imported 90.3 million tonnes of iron ore in March this year. China has the biggest appetite for iron ore and also the biggest market.

The worldwide iron ore surplus reached 70 million tonnes last year – more than total U.S. consumption last year – and could balloon to 90 million tonnes in 2017, according to Citigroup.

Iron ore prices are down more than 33 percent since a mid-February peak of $94.86 a tonne and forecasters are warning of a further pullback. (Reuters)

 

Iron ore prices would backtrack to U$55 a tonne in the fourth quarter. Australia’s Department of Industry, Innovation and Science predicted. Next year’s forecast calls for iron ore prices to reach $51.60 a tonne at the end of the year.

 

Other minerals

In other minerals, Rio Tinto stuck to a full-year target of producing between 3.5 million 3.7 million tonnes of aluminum following a 2 percent rise in first-quarter production.

 

Mined copper guidance was subdued to 500,000-550,000 tonnes from as much as 665,000 tonnes as a result of a strike at the Escondida mine in Chile. And the curtailment of production at the Grasberg mine in Indonesia. While Chile is the world’s biggest copper producer, and sales of the metal make up for about 60% its export earnings. In Escondida mine strike, workers gave up because they asked for different conditions.

In conclusion, refined copper production guidance remains unchanged at 185,000 to 225,000 Rio said.

 

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Africa’s Potential in growing production: Gabon Oil Market

Gabon is Africa’s fourth largest oil producer. (in Sub-Saharan Africa.) With an output of around 220,000 barrels per day, dominated by international oil majors Total and Shell.

 

Gabon Trade Last Previous Highest Lowest Unit
Balance of Trade 3711.95 3572.48 3964.22 439.20 FCFA Million
Exports 6168.03 5829.90 6168.03 1125.40 FCFA Million
Imports 2456.08 2257.42 2456.08 560.60 FCFA Million
Current Account 341.00 439.00 1516.50 236.30 FCFA Million
Current Account to GDP -8.10 6.70 22.88 -31.07 Percent
Gold Reserves 0.40 0.40 0.40 0.40 Tonnes
Crude Oil Production 210.00 210.00 374.00 205.00 BBL/D/1K

 

 

Production

Firstly, crude Oil Production in Gabon averaged 273.97 BBL/D/1K from 1994 until 2016. Reaching an all time high of 374 BBL/D/1K in August of 1995. And a record low of 205 BBL/D/1K in April of 2015. Secondly, crude Oil Production in Gabon remained unchanged. At 210 BBL/D/1K in March from 210 BBL/D/1K in February of 2016.

Also, production in Gabon comes from a portfolio of over 20 non-operated onshore and offshore fields.

As a result of near term cash flow optimization and decisions by the field operators. Due to the low oil price, reduced activity will continue across Tullow’s non-operated West Africa portfolio. Rather, there is flexibility. To increase capital investment in the medium term. To offset production decline in these mature assets, as market conditions improve.

 

Oil Reserves

In addition, both on land and offshore, Gabon possesses ample oil resources. In terms of authenticate recoverable reserves. While according to the Oil & Gas Journal (OGJ), Gabon had 2 billion barrels of proven oil reserves. Especially relevant, the end of 2012, Gabon was the fifth-largest oil producer in Sub-Saharan Africa. Due to its position behind Nigeria, Angola, Sudan & South Sudan, and Uganda. Most of Gabon’s oil fields are located in the Port-Gentil area and are both onshore and offshore. Therefore, Gabon’s oil production has been reduced by toward one-third from its peak of 370,000 barrels per day (bbl/d) in 1997. To 244,000 bbl/d in 2012.

 

Oil Consumption In Country

 

Averaging around 14,000 bbl/d , over the last decade, oil consumption in country has remained permanently low. Yet, consequently, more than 90 percent of output is exported (around 250,000 bbl/d on average) over the last decade.

Throughout the history, Gabon’s oil production has been concentrated in one large oil field and supported by several smaller fields. As a result, the largest field matured and production declined. In process, the other fields emerged and replaced dwindling production. Furthermore, dominant fields have included Gamba/Ivinga/Totou (1967-1973), Grondin Mandaros Area (1974-1988), and Rabi (1989-2010). Most of all the Rabi oil field, as Gabon’s major success, significantly boosted the country’s total output in the 1990s. It reached 217,000 bbl/d at its peak in 1997. Although Rabi is still one of Gabon’s largest producing fields, it has matured and production has gradually declined to about 23,000 bbl/d in 2010.

Same, since Rabi’s climb-down, a new large field has not yet cropped up, since recent exploration has yield only modest finds.

Therefore, country ranks third largest in sub-Saharan Africa, after Nigeria and Angola.

 

OPEC Membership

 

Hence, Gabon was a member of OPEC from 1975 to 1995.

Seems like it withdrew on the grounds that it was unfair for it to be charged the same membership fee as the larger producers but not to have equivalent voting rights.

These recent years over 90% of Gabon’s oil output has been exported, mainly to the USA.

In conclusion, as years went by, Gabon became OPEC’s member once again in 2016. In the april of 2016, Gabon officially sent the rejoining quest to OPEC. As having a substantial net export of crude, which OPEC rules as a state country needs to have, it became a part of OPEC’s ‘family’ for the 2nd time.

 

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OPEC and non-OPEC dedicated to restoring OIL market stability

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Bringing global inventories down

 

Mohammad Barkindo, OPEC secretary-general, saying that all OPEC and non-OPEC oil producers are taking part in a bringing the global stability to the Oil market.

Speaking in the UAE, he said agreement data in March is showing better conformity by the oil producers than in February.

“OPEC and non-OPEC producers agreed in December to cut supplies for six months. Helping lift oil prices to about $55 a barrel after a two-year slump. OPEC will review policy for the second half of this year at a May 25 meeting.”(Reuters)

Any decision taken in this field would be brought up to maintain good interest of all producing and consuming countries. He didn’t say whether the agreement would be extended for another half year. But he promised all the resolutions will help the OIL market stability.

 

Oil market Facts

 

Oil steadied on Wednesday. After OPEC said it was committed to eroding a global supply. Overhang that has dogged markets since 2014, but with U.S. output and inventories rising, analysts said prices looked vulnerable. (Yahoo finance)

The oil price got an early lift from comments by Mohammad Barkindo.

Brent crude futures LCOc1 were up 5 cents at $54.94 a barrel at 0908 GMT, while U.S. West Texas Intermediate (WTI) futures CLc1 were up 3 cents at $52.44 a barrel.

“Is sentiment on the oil market now taking a negative turn again? Looking at the latest price reactions, one might conclude that the only reason for the previous price rise was the expectation of further production cuts on the part of OPEC,” (Commerzbank strategist Carsten Fritch’s comment.) (Reuters)

“After all, the oil price is dismissing reactions to the factors which would normally sustain it. Ever since the Saudi oil minister (Khalid) al-Falih put at least something of a dampener on such expectations.”

OPEC and other producers such as Russia have agreed to cut output by almost 1.8 million bpd during the first half of 2017.

 

 

U.S. Impact on oil supplies

 

Speaking about politics, U.S. President Donald Trump ordered examination of whether the elevation of sanctions against Iran was in the United States’ national security interests.

Most of U.S. sanctions against Iran were lifted in late 2015 under a nuclear deal. Letting Tehran to more than double its crude exports over 2016. This move just added a bit to the global oversupply.

U.S. markets remain heavily oversupplied, as well as the global markets.

Although crude inventories fell by 840,000 barrels in the week to April 14 to 531.6 million barrels. They held near record highs, while gasoline stocks rose by 1.4 million barrels as refinery runs increased by 334,000 bpd.

 

Solving the problem

 

“Unless the (EIA) data shows something drastically different, this report should cause a severe dent in the bullish case (for oil prices),” said Sukrit Vijayakar, director of energy consultancy Trifecta. (Reuters)

Restoring the OIL market inventories and the unlikely trends which are increasing every day would be a serious deal. The enormous supplies of oil from U.S. part, and the prices downward trend in global markets are making a fuss and ruining the stability of this resource.

It is represented as a huge problem, as well as on global level, mainly for OPEC countries. Whose aim is to control their oligopoly over Oil supplies.

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‘Buy American, Hire American’ might have some impact on U.S. steel

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Buy American, Hire American

 

Executive order of U.S. president, Mr. Donald Trump left a few open questions behind. Trump made a decision about reviewing the U.S. Visa program. Changing the position of high-skilled foreign workers in the country. Putting technology firms and the outsourcing companies that serve them, on notice that possible changes may happen.

Policing “Buy American” provision has been difficult till now. Even if it exists in the U.S. law for a long period. Negations granted to foreign companies that undercut their U.S. counterparts on pricing.

Trump promised to regularly police these provisions, but avoided to tell details about how that is going to happen.

 

Different Opinions On Subject

President of Chicago-based Lapham-Hickey Steel, Bill Hickey, said: “Talk of Buy American is in the game for decades. Even if so, American or foreign contractors often find loopholes to use imported steel.”

“Politicians all talk the same, but at the end of the day it just doesn’t work.”

Charles Bradford said focusing on “Buy American” for U.S. steel does not take into account that some steel products are not produced in the United States. So if applied improperly, it could cause supply problems in a U.S. market. In which up to 25 percent of steel was imported in the first quarter of this year.

“The people who have pushed for this don’t have a clue and they don’t know math. Cutting off the supply of goods not made in the United States would create fresh problems for U.S. companies.”

Instead of courageous action promised last year by Trump, on the NAFTA , on China, and free trade agreements, the new administration has “not shown much evidence of doing so.” (Said KeyBanc Capital Markets steel analyst Philip Gibbs.)

“I’m a lot less optimistic than I was few months ago. So far what I’ve seen coming out of the Trump administration is the same as the prior administration.”

As a result, Gibbs said investors should dial back expectations that Trump will do anything meaningful on trade, or on infrastructure. Which is where such an order could make a difference.

 

Investors Reaction

 

Investors seemed to shrug off Tuesday’s executive order.

 

Nucor Corp shares closed up 0.2 percent at $57.33, AK Steel Holding Corp gained a penny to end at $6.32 and United States Steel Corp closed down 0.5 percent at $28.73.

 

Labor Unions

 

 

The move was welcomed by labor unions. Workers said that under current practice, “contractors often try to avoid the law through loopholes to buy cheap and often substandard foreign products like many from China.”

 

Steel Impacts

 

Thomas Gibson, chief executive of lobby group the American Iron and Steel Institute, said in a statement that “Buy American” provisions “are vital to the health of the domestic steel industry. Also they have helped create manufacturing jobs and build American infrastructure.”

 

Michelle Applebaum, Veteran steel industry analyst said : “Trump has just created more risk for anyone who wants to import steel. If he puts money behind enforcement that will force people to play by the rules, that will be a good thing.”

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