OECD cancels CLI release

Market: Biofuels, Chemicals, Coal, Crude oil, LPG, Metals, Natural gas, Oil products, Petrochemicals
09/03/20

The OECD has cancelled its scheduled monthly release of composite leading indicators (CLI), because of the rapid spread of the coronavirus outbreak.

The OECD said the monthly assessment, which is designed to anticipate turning points in economic activity relative to trend 6-9 months ahead, has not been able to capture the effects of the outbreak, such is the rapidity of the spread.

"In Europe, for example, tendency surveys were collected before the scale of the… outbreak in northern Italy became known," the OECD said. "In countries such as China, Japan and Korea, which were all much closer to the epicentre of the outbreak, the effects have already started to appear in CLI sub-components, and so too, in our current assessment for these countries, which is easing growth momentum."

The OECD last month highlighted a "high degree of uncertainty" in its CLI assessment arising from the coronavirus outbreak. The survey last month pointed to stable growth momentum, albeit below long-term trends, just as they did in January. The OECD will release its next CLI survey in April.

The effects of the coronavirus, including travel restrictions and slowing economic activity, are having a deleterious effect on oil demand. The IEA today said it expects global demand to fall this year, for the first time since 2009.

By Ben Winkley

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News

07/11/24

US W mining essential after Trump victory: ITIA

London, 7 November (Argus) — The rise of protectionism and prospects of increasing tariffs between the US and China prompted discussions about the need to mine tungsten domestically in the US during the International Tungsten Industry Association (ITIA) conference in Barcelona this week. "The development of domestic tungsten production in North America is critical," a US tungsten consumer told Argus . The hard metal is gaining attention from the Department of Defence (DoD) owing to its applications within defence industries and potential future use in nuclear fusion. The lack of domestic tungsten is considered a significant risk to US national security. The US introduced a 25pc tariff on imported Chinese tungsten-related products effective from 1 August 2024. Furthermore, imports of tungsten-mined ore from China and Russia for DoD procurement will be banned from 2027. The DoD is providing an increasing number of grants for companies to establish domestic manufacturing. It is doing so through programmes such as the Defence Production Act Investments (DPAI), which, since the beginning of the fiscal year 2024, issued 55 awards totalling $555mn. This funding initiative for domestic manufacturing has bipartisan support from both Republicans and Democrats, but it could accelerate with Donald Trump in the White House. The president-elect proposed tariffs of up to 20pc on all foreign goods and 60pc tariffs on all imports from China on the campaign trail. China accounts for more than 80pc of global tungsten production. One conference attendee told Argus he anticipates the tariffs to be a reality and not mere rhetoric. Any measures could provoke a retaliatory response from China, which has already imposed export controls on dual-use materials such as antimony, gallium and germanium. Despite this, some traders express scepticism about the need for the US to produce its tungsten, as consumers are sourcing material from "friendly jurisdictions" and political allies such as Portugal and Spain, and have plans to buy from South Korea. Additionally, the demand for virgin material may decrease, given the increasing viability of recycling, suggesting that less material may be necessary. However, amid regional shifts, one participant emphasised, "If the US becomes isolated, the material needs to be produced domestically." By Cristina Belda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Find out more

News

EU minor metal markets await US reaction to Trump win

07/11/24

News

07/11/24

EU minor metal markets await US reaction to Trump win

London, 7 November (Argus) — Europe's minor metal markets have been slow to react to Donald Trump's re-election as US president, and any price movement in response is pending a reaction from US consumers and further details of Trump's tariff plans. The biggest point of interest for European market participants is the potential impact of Trump's tariff plans and whether they would apply to critical minerals. Trump in the past has said his administration would apply tariffs upwards of 60pc on all US imports from China and a 20pc tariff on imports from the rest of the world to protect American manufacturing. But this also runs the risk of driving up inflation. Minor metals trading firms are hopeful that exceptions will be made for critical minerals and that Trump's plans could be watered down and take some time to implement. "Knowing Trump, there will be a lot of negotiating and country blackmailing before the final list is established. I would also expect a lot of exceptions for critical metals that are needed for aerospace, military, space and other high-tech industries," a minor metals trading company told Argus this week. "He certainly announced increased tariffs for several products of Chinese origin, but it could take months for any plan to actually be implemented," another market participant said, noting that they would take a more watchful approach rather than follow any knee-jerk reactions from the market. In addition to higher prices for metals imported from China, the other major risk factor associated with a more intensified US protectionist policy is that China will ramp up retaliatory measures in the form of export restrictions on metals for which it holds a dominant supply position. China has instituted export controls on gallium, germanium and antimony since the middle of last year, contributing to a dramatic surge in import prices for the latter two metals in the rest of the world. Supply of tungsten, a critical metal for the mining and aerospace industry, is also dominated by China, and it is widely viewed as the next most likely candidate for export controls. If geopolitical tensions escalate, tungsten supply chains may attempt to relocate to countries that have better relationships with the US. "Countries such as Thailand and South Korea are going to get real busy," a US tungsten recycling company told Argus . Meanwhile, the new US administration could benefit sectors that consume tungsten carbide, including energy and mining. "We will probably see more stability in mining projects in the US and a fast-tracking of permits for strategic metals," a supplier said. Faster permits could also boost the domestic production of antimony in North America, even though most products are still in the early stages of development. Despite hopes that the new US administration could make some tariff exceptions for critical minerals, many such minerals are already subject to import tariffs in the US. On 27 September, president Joe Biden's administration implemented 25pc tariffs on some chromium, cobalt, indium, tantalum and tungsten products imported to the US from China, despite strong opposition from stakeholders across the markets. All five of these metals were included in the US Secretary of the Interior's 2022 critical minerals list. Furthermore, Trump previous administration imposed tariffs on 5,745 items in 2018, including but not limited to, battery metals such as nickel, cobalt, lithium and manganese, as well as key electronics and aerospace metals such as gallium, germanium, bismuth and certain tungsten products. Trump did make exceptions for antimony and rare earths at the time, which he removed from its initial tariff list of more than 6,000 items. Many of these tariffs started out at 10pc in September 2018 but rose to 25pc by May 2019, with mixed impacts. The most recent wave of tariffs from the Biden administration prompted an uptick in demand from US consumers and trading companies between the announcement of the tariffs and their implementation. In the first half of this year, Chinese exports of chromium to the US surged to 6,221t, up by 417pc from the same period a year earlier, as exporters rushed to get material on the water before the tariffs came into force and US chromium buyers sought to build stocks. Likewise, US demand drove up exports of Chinese unwrought tantalum to 162t in January-August, more than doubling from 63t a year earlier, customs data show. The US is highly dependent on unwrought tantalum metal imported from China, with China's supplies accounting for more than half of its total imports in recent years. But in the days immediately following Trump's win, US demand has remained steady. "I expect that only the people who are the most risk-prone or certain about the duties will want to stockpile this early," a trading firm said. By Sian Morris and Cristina Belda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

EU's Hoekstra balances divergent calls on climate

07/11/24

News

07/11/24

EU's Hoekstra balances divergent calls on climate

Brussels, 7 November (Argus) — EU climate commissioner Wopke Hoekstra, nominated again for the role, balanced conflicting calls around climate legislation in a hearing today with members of the European Parliament (MEPs). Some MEPs were in favour of tougher climate legislation, while others demanded delays to targets. Hoekstra defended key climate energy legislation, including EU CO2 reduction targets for cars and vans, while maintaining a cautious approach on expansion of the EU emissions trading system (ETS) to new sectors. Hoekstra committed to a 2026 ETS review that touches upon maritime, aviation, municipal waste and negative emissions, in response to a question from German centre-right EPP MEP Peter Liese, who has been a key parliament negotiator for ETS reforms. "Negative emissions are a cornerstone of making it to net zero. I'll absolutely look into the ramifications, whether this could be included," said Hoekstra, commissioner-designate for climate, net-zero and clean growth. If international efforts to reduce aviation emissions do not deliver, Hoekstra is also open to an ETS that equally impacts EU and international aviation. Hoekstra underlined the pivotal importance for "predictability" of legislation for industry, referencing certain firms' concern at a 12-month delay to the bloc's deforestation regulation. Hoekstra promised a "dialogue" with the car industry about sticking to CO2 standards for cars and vans and the phase-out, from 2035, of new vehicles with an internal combustion engine (ICE). Hoekstra is "all in" for ensuring the EU car industry's success. But the Dutch politician is reticent about delaying penalties for carmakers that do not meet CO2 standards from 2025. For biofuels and e-fuels, Hoekstra does not want to change current EU legislation. The EU should not open the "box that was closed" by EU legislation, notably with a 2035 phase-out that only foresees use of the ICE with non-biogenic CO2 neutral fuels. "I feel there is a bright future for biofuels. We need more, particularly in many other domains," he said, equally noting that the EU needs to "focus first and foremost on electrification". And Hoekstra could give no clear deadline for phasing out fossil fuel subsidies in the EU, but said he would do his best to create transparency on the issue. Speaking notes prepared in advance of the hearing already indicated a cautious approach to new elements in future climate policy. Hoekstra underlined the need for a "business case" for decarbonisation in agriculture and forestry, mirroring the approach taken by EU agriculture commissioner-designate Christophe Hansen. By Dafydd ab Iago Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

US RFS, RIN markets face uncertainty under Trump

06/11/24

News

06/11/24

US RFS, RIN markets face uncertainty under Trump

Houston, 6 November (Argus) — Renewable identification number (RIN) credit prices ticked up slightly today following the re-election of Donald Trump and a likely Republicans control of the US Senate, but uncertainty remains for other biofuel-related markets and policies. An increase in tariffs under Trump or other policy changes to deter biofuel feedstock imports could lower the availability of renewable fuels next year. Biomass-based diesel D4 and ethanol D6 RIN credits, which make up more than 90pc of all RINs generated on a monthly basis, rose slightly early Wednesday, following upward pressure from a rise in soybean oil futures. The soybean oil-heating oil (BOHO) spread rose to its highest level recorded in 2024 at $1.21/USG on Wednesday. RIN prices for current year D4 and D6 rose to 70.75¢/RIN, with both posting 2.5¢/RIN in gains on the day. While farm state lawmakers in both chambers are likely to resist any Trump efforts to repeal biofuels incentives, long-term prospects for the Inflation Reduction Act's "45Z" credit set to kick off in January are now uncertain. The incentive ends at the end of 2027, which gives Trump and his Republican allies substantial negotiating power over the terms of any extension — such as barring refiners from using foreign feedstocks. The election results also mean a Trump administration will have the power to set new biofuel blend mandates under the Renewable Fuel Standard (RFS) for 2026 and subsequent years. The Environmental Protection Agency (EPA) during Trump's first term tried to strike a balance between refiner and biofuel interests, setting increasing volume mandates but issuing more waivers from program obligations. While a second Trump term could be similar, regulators under the program's "set authority" now have more discretion to weigh various economic and environmental factors when setting volumes instead of tracking mandated volumes that lapsed after 2022. Federal judges weighing EPA's authority under this new phase of the program last week expressed concern about some of the agency's decision-making, meaning any court order to rethink or reset volumes would now fall to a Trump administration. Under the Clean Air Act, which sets the framework for the RFS, refineries that process 75,000 b/d or less of crude have a pathway to waive biofuel blending obligations if they can prove they would suffer "disproportionate economic hardship." Precedent over these small refiner exemptions (SREs) affect the supply and demand balance of credits, which in turn alter the economics biofuel producers face as they rely on RIN credits as a source of revenue. From 2017-2021, the first Trump administration dialed back environmental regulations and more generously doled out SREs. During that span of time, EPA also chose not to adjust the renewable volume obligations on larger refineries to account for those that had secured waivers. This helped create an oversupply of D4, D5, and D6 credits and drove prices down to more than five-year lows. Cellulosic biofuel D3 credits in today's market also face a different set of parameters from the program's earlier years. The cellulosic waiver credit allowed producers to purchase waivers for D3 obligation given a shortage of RINs. But this mechanism changed under EPA's "set authority" and the Biden administration has brushed off a request from refiners to both lower requirements and make available waiver credits. Current year D3 prices have risen as high as 350¢/RIN this year as a result as cellulosic biofuel production trails agency expectations. A Trump administration could be more sensitive to future industry requests to relax these requirements and could set less ambitious cellulosic targets for future blend mandates. RINs are credits traded and produced by refiners and importers to show compliance with the RFS. Obligated parties can produce credits when renewable fuels are blended into conventional transportation fuels or can purchase credits from other RIN producers. By Matthew Cope and Cole Martin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Mexican peso plummets on Trump win

06/11/24

News

06/11/24

Mexican peso plummets on Trump win

Mexico City, 6 November (Argus) — The Mexican peso fell sharply against the US dollar as markets priced in potential retaliation against Mexico following former president's Donald Trump's victory in the US presidential election. "A Republican Senate majority and potential House win raise the chances of Trump's radical reforms, which could hurt Mexico's economic dynamism," said a financial analyst from Mexican bank Monex in a note today. The peso initially dropped around 3pc to Ps20.71/$1 early today, hitting a two-year low before recovering to Ps20.20/$1 by midday. The peso may weaken further, as Mexico is vulnerable to tariff hikes amid strained relations over issues like immigration and the opioid crisis, according to a desk report from a major Mexican bank. Trump repeatedly threatened tariffs on Mexico during his presidential campaign, most recently pledging a 25pc tariff on all Mexican imports unless President Claudia Sheinbaum's administration launches a severe crackdown on Mexico's drug cartels, which ship fentanyl and other drugs across the border to the US. Recent constitutional amendments in Mexico, including judicial reforms and proposed eliminations of independent regulators, may also add downward pressure on the peso, according to the report. "The government's goal to direct private-sector involvement could limit market forces," it noted. Mexico's state-owned oil company Pemex typically offsets peso depreciation due to its dollar-denominated oil export revenues, which help cover increased import costs. "Pemex's exports and domestic sales are tied to international hydrocarbon prices, providing a natural hedge," the company stated in its most recent report. Still, analysts warn that Pemex's focus on domestic refining over crude exports could erode this hedge, leaving it more exposed to foreign exchange swings on USD-denominated debt. By Édgar Sígler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more