OECD cancels CLI release

Spanish 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

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07/11/24

German energy-intensive industry reduces output

London, 7 November (Argus) — Production from Germany's energy-intensive industrial sectors was lower in September than a year earlier for the first time in seven months, driven by lower generation from the chemicals sector. Energy-intensive industrial production fell by about 3.3pc in September from August, according to data from German statistical office Destatis ( see data and download ). This was driven largely by a 4.3pc fall in output from the chemicals industry. And overall industrial output was about 1.8pc lower than in September 2023, falling year on year for the first time since February this year. The chemicals industry has warned of lower business confidence in the sector since the summer . Energy-intensive industrial branches previously showed signs of a slow recovery, but general manufacturing output across Germany has been on a consistent downward trajectory in recent months ( see manufacturing index graph ). Manufacturing output across all industrial sectors fell on the month by about 2.5pc, having risen on the month by 2.6pc in August. Third-quarter output as a whole was about 2pc lower than in the second quarter. Industrial economic activity has remained "very weak" recently, German economy and climate ministry BMWK said. But it expects a bottom to form in about the new year. BMWK has predicted that Germany will be in a technical recession in 2024 , before a return to 1.1pc GDP growth in 2025. The German economy started on a downward trajectory in 2022 , triggered by higher energy prices on the back of a halt to Russian gas deliveries to the country. And it has since been hampered by other structural factors such as labour shortages and a high bureaucratic burden. Higher gas prices could drive output lower A steady rise in gas prices in recent months could lead industrial firms to curtail domestic industrial production or use LPG instead of gas for some industrial processes. Argus assessed the German THE everyday price at an average of €40.68/MWh in October, about 56pc higher than the €25.98/MWh in February, the index's lowest point this year. Much higher gas prices since 2022 have driven a drop in Germany's industrial gas demand. Gas use in German industry of 256.5TWh in 2023 was about 22pc lower than the pre-crisis 2018-21 average of 327.6TWh, according to Destatis data released earlier this week ( see sector demand graph ). Firms either curtailed production in reaction to higher prices or switched to LPG in some processes in which gas is used as an energy carrier. But some processes, such as the production of ammonia through the Haber-Bosch-synthesis, use methane as a feedstock, which means they cannot shift to LPG as easily. Gas used as a feedstock reacted more strongly to the energy crisis than the gas used for energy. Gas use as a feedstock in the chemicals industry fell by 36pc in 2023 from 2021, while gas use for energy fell by only a quarter. Many fertiliser producers curtailed capacity in 2023, and Europe's largest fertiliser producer, Yara, expects its European gas costs to rise on the year this winter . The producer has already indicated it will shift its focus towards cheaper ammonia production in the US and away from Europe. Industrial gas use on track to rise in 2024 German industrial gas demand is on course to be higher this year than in 2023, based on daily data ending at the end of October. Industrial gas use for production processes other than space heating was 746 GWh/d in January-October, about 8pc higher than a year earlier, according to Argus estimates. But if September's industrial output drops extend to a multi-month trend, this would pull down the average for this year as a whole. Industrial demand typically falls in December when the holiday period limits economic activity, which could push down the average further. And the collapsed German governing coalition is unlikely to send strong recovery signals to the German economy. German market area manager THE publishes a combined dataset for gas demand by industry and the power sector. Argus splits out power-sector gas demand data by assuming operational efficiencies of 39-42pc, in line with fuel use data from Destatis, and factors out seasonal demand swings linked to space heating by looking at analogue trends in the residential and commercial sector ( see demand split graph ). Argus' estimates diverge from Destatis' annual demand data by only about 1-3pc, except for a 6pc gap in 2021 ( see Destatis vs Argus estimates graph ). By Till Stehr German manufacturing index index, 2021=100 German industrial gas demand by sector TWh German industry and power demand split GWh/d Destatis data vs Argus estimates GWh/d Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

German government collapse could delay energy policies

07/11/24

German government collapse could delay energy policies

London, 7 November (Argus) — The collapse of the German coalition government may delay critical energy security policies currently under discussion, with industry and power associations expressing concerns about potential political standstill on such issues in the coming months. Asked in Berlin on Thursday, energy minister Robert Habeck said he does not expect a general agreement between the remaining red-green government and the conservative Union, which would ensure all further projects in this parliamentary period. And "it remains to be seen" if some decisions could be made together with the opposition on a case-by-case basis where the interests of government and CDU align, Habeck said, although energy security could be one topic where bills could be passed during the minority government phase before the end of this year. CDU politicians including on the state level had "constantly" written him letters to ask when some laws would "finally" be passed, he said, highlighting that while he does not expect "a great deal of helpfulness" he hopes the opposition will work with the government on the basis of how beneficial planning security would be for Germany as a whole. Among the energy security laws waiting to be passed is the draft law that abolishes the German gas storage levy on cross-border interconnection points , while the government has not yet passed its power plant strategy nor submitted the second of its two planned "solar packages". Chancellor Olaf Scholz on Wednesday said that among the legislative projects he was trying to pass before the end of the year were "immediate measures for our industry" on which he was currently deliberating with "companies, unions and associations". He said he would quickly try to begin speaking to opposition leader Friedrich Merz around the questions of defence and economic stability, since the economic stabilisation "cannot wait until elections have taken place". The coalition government collapsed after Scholz sacked finance minister Christian Linder , leading the latter to withdraw his party from the ruling coalition. An election looks likely in early 2025. Industry and renewables associations in particular voiced concerns about the timing of the collapse and potential political stagnation, with general leader of chemicals association VCI calling for elections at "the earliest possible time" to avoid "stalemate and political standstill", while the federation of German industries BDI said the country needs a "new, effective government" with a parliamentary majority "as quickly as possible". VCI stressed that Germany needs low energy prices, faster permitting and less bureaucracy, while BDI highlighted that existing market uncertainty is likely to rise with the arrival of the new US administration at the beginning of 2025, when Scholz plans to hold a vote of confidence. And wind association BWE stated that the country "cannot afford to stand still", while solar power association BSW appealed to members of the Bundestag to "make decisions and compromise" on important energy policy issues across party lines. Renewables association BEE called for laws and budget funds already in process for the continuity of energy measures to be adopted by December, stating that "even in a political crisis" the country "cannot afford" stagnation and stalemates. Conservative opposition sister parties CDU and CSU have been polling well ahead across 2024 at around 30-33pc of the vote. While the parties agree with the ruling coalition on several aspects of energy policy — including supporting hydrogen-fired and climate-neutral gas-fired generation — they notably diverge on the topic of nuclear generation. Germany completed its long-awaited nuclear phase-out in April 2023, but the CDU/CSU this week announced it would conduct an investigation into whether the last plants to be decommissioned could feasibly be reactivated. The CDU/CSU also reiterated its support for the development of fourth and fifth-generation nuclear reactors. Nuclear plants are notorious for lengthy construction times, meaning a single parliamentary term may not be enough to see projects through without cross-party support, and the ruling Greens and SPD remain anti-nuclear. The country has also not yet decided on a final storage location for its existing nuclear waste, which will need to be stored there for "one million years", according to the final report from the commission for the storage of highly radioactive waste. But the CDU and SPD have both voiced support for the introduction of a national green gas sales quota , with the CDU/CSU this week highlighting green gas quotas in the gas grid as a way to leverage the market to reach climate goals. By Till Stehr and Helen Senior Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

US W mining essential after Trump victory: ITIA

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. "Many parties want us to move this project forward as quickly as we can," said Oliver Friesen, executive director of junior miner Guardian Metal, which is developing the largest tungsten deposit in the US, Nevada. "If we were to start production today, the tungsten concentrate from (our project) Pilot Mountain would represent the only primary domestic production in the US," Friesen said. Guardian Metal anticipates it can source 20pc of US tungsten consumption within three years. 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.

EU minor metal markets await US reaction to Trump win

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.

EU's Hoekstra balances divergent calls on climate

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.

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