Mexican ag, LPG prices drive July inflation

Spanish Market: Metals, Natural gas
08/08/24

Gains in agriculture and LPG gas price helped drive Mexico's headline inflation in July to its highest level since May 2023, although core price gains continued to ease.

The consumer price index (CPI) rose to an annual 5.57pc in July, up from 4.98pc in June and increasing for a fifth consecutive month, Mexico's statistics agency Inegi said today.

A big driver behind the July reading are fruit and vegetable prices, which climbed by 24pc in July, compared with 18pc in June.

Farm goods, and tomatoes in particular, have been hit by a double dip of bad weather with two months of extreme drought before flooding rains began to hit in late June at an active start to this year's hurricane season.

Also hitting the consumer price index (CPI), energy inflation reached 9.2pc in July from the same month in 2023. The group was led by higher LPG prices, up 26pc over last year. Low-octane gasoline prices were next highest, up 6.9pc. Electricity prices followed, rising 5.35pc on an annual basis. Domestic natural gas was the only energy item to decline, dropping 3.4pc in July.

Banorte, however, stressed that core inflation – which excludes volatile food and energy – did ease again in July, slowing to 4.05pc for the month from 4.13pc in June, marking 18 consecutive months of easing.

In a note, Banorte said energy prices stand to benefit from base calendar effects in the coming months.

Mexican bank Citibanamex noted the lower core as well in a note, adding how the recent rains are beginning to reach the most drought stricken areas, and this should help begin to contain non-core prices. "We expect annual headline inflation to resume a gradual downward trend starting in August, and we maintain our estimates for the end of 2024 at 4.4pc for headline inflation and 4.1pc for core inflation," the bank said.

The CPI increased by 1.05pc in June from the prior month, when it posted a 0.38pc monthly gain, said Inegi.

The central bank's monetary policy committee today lowered its reference interest rate to 10.75pc from 11pc, its first reduction since March.

The central bank cited the continued drop in core prices, adding the inflationary environment might allow for further rate adjustments, considering "global shocks will continue fading and the effects of weakness in economic activity."

By James Young

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09/08/24

Finnish, Baltic gas demand up by 13pc on year in July

London, 9 August (Argus) — Combined Finnish and Baltic gas consumption increased on the year in July, but remained firmly below pre-2022 levels. Combined demand in Finland, Estonia, Latvia and Lithuania last month rose to 2.37TWh from 2.1TWh in July 2023, although it was still well below the 2018-21 average of roughly 3.7TWh ( see graph, data and download ). This was a second consecutive month-on-month increase following demand at a near two-year low in May. Demand increasing between May and July is an unusual pattern, as pre-2022 consumption in the region tended to decline over the course of the summer before reaching a nadir in July or August. The power sector was probably the main contributing factor to higher overall gas demand, as year-on-year increases in Latvian and Lithuanian gas-fired output more than offset lower Finnish generation ( see table ). In Latvia in particular, gas-fired generation jumped more than seven times compared with a year earlier, despite power demand remaining stable and hydropower output nearly doubling. Instead, Latvian gas-fired production displaced some net imports, which fell to 258GWh from 372GWh in July last year. Latvian gas demand peaked over the month at 27 GWh/d on 22-26 July, drastically above the average for other days of just 8 GWh/d. These were the same days that Latvia produced the majority of July's gas-fired power. Prices on the regional GET Baltic exchange averaged €37.84/MWh in July, down by 5pc on the month but up by 3pc on the year. July broke the three-month trend of consecutive month-on-month increases, with prices having fallen in all four markets. Firms traded 500GWh on the exchange, up from 358GWh in July last year. Lithuania accounted for 40pc of trades, followed by the joint Latvian-Estonian market at 35pc and Finland with the remaining quarter. Maintenance to change flows Maintenance at the pivotal Kiemenai interconnection point on the Latvia-Lithuania border for most of August will change regional flow dynamics. No capacity will be available in either direction at Kiemenai on the 3-25 August gas days, making it impossible to send regasified LNG from Lithuania's Klaipeda LNG terminal northward to Latvia for storage at the Incukalns facility. Klaipeda sendout consequently has dropped since 3 August, averaging 29 GWh/d on 3-8 August, compared with 101 GWh/d in July. Despite the maintenance and demand remaining stable, an additional LNG delivery for 10 August was added to Klaipeda's schedule . This half-cargo may be mostly destined for reloads, as four small-scale reloads are planned at Klaipeda after the 10 August delivery. Some of these reloads could potentially go to Finland's off-grid terminals at Tornio and Pori, which are no longer supplied with Russian LNG after Gasum halted its purchases in late July because of sanctions . But while maintenance at Kiemenai has started, restrictions further north on the Balticconnector have ended, enabling sendout from the Inkoo terminal to step up significantly to 85 GWh/d on 1-8 August from a much lower 32 GWh/d in July. Planned maintenance reduced capacity from Finland to Estonia on the Balticconnector to just 5 GWh/d for all of July, limiting sendout from Inkoo only to what could be absorbed by the domestic market and the small amount that could be sent southward. Maintenance also will reduce Finnish exit capacity to Estonia to zero on 14-27 October and 4-17 November. By Brendan A'Hearn Finnish + Baltic July gas-fired power generation GWh Jul-24 Jul-23 Jun-24 ± Jul 23 ± Jun 24 Estonia 2 2 2 0 0 Latvia 79 11 3 68 76 Lithuania 74 31 53 43 21 Finland 28 117 40 -89 -12 Total 183 161 98 22 85 — Fraunhofer ISE July consumption by country GWh Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

UK TRA proposes 2.9mn t HRC import quota

09/08/24

UK TRA proposes 2.9mn t HRC import quota

London, 9 August (Argus) — The UK Trade Remedies Authority (TRA) has recommended splitting the country's safeguard import quota for hot-rolled coil (HRC) into two, and has increased it to almost 3mn t. The quota for HRC, product category one, is currently around 1mn t and divided on a country-by-country basis. The TRA has recommended splitting the product into 1a and 1b, with 1a remaining distributed as 1 currently is and have an around 1mn t allocation, and with 1b having a 1.9 mn t volume that can be sourced from anywhere. 1b is for "downstream processing", which does not include coil being turned into hot-rolled sheet. It will predominantly be used by UK-based producer Tata, although some others, such as tube manufacturers, may also be able to use it. And 1b will have a cap of around 37-42pc, to ensure no one exporter dominates the quota. The TRA started a review of the quota in February, in response to Tata's increased import requirements as it takes down its blast furnaces ahead of the installation of a 3mn t electric arc furnace in 2027. "We propose maintaining the current quota volumes for steel used for commercial applications and creating a new quota accessible for downstream processing". Sources suggest Tata will initially be looking to import around 2mn t of HRC and 1mn t of slab before the expansion of its Kalinganagar site in India is complete, after which it intends to ramp up slab purchases to around 1.5mn t. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

PCI price relativity to PLV climbs to a high

09/08/24

PCI price relativity to PLV climbs to a high

Shanghai, 9 August (Argus) — Opposing fundamentals in the Australian pulverised coal injection (PCI) market and premium low-volatile (PLV) coking coal market narrowed the price spread between the indexes. But it remains to be seen whether market conditions will continue to support strength in PCI prices. Market fundamentals of the two products have been vastly different in the past two months, with a mismatch of firm demand and tight supply supporting PCI prices, while PLV continues to decline in an oversupplied market amid a persistently weak steel sector. The Argus daily fob Australia assessment for low-volatile PCI increased by $25/t from 14 June to $205.50/t on 5 July, the highest level since 6 November 2023, before gradually declining to $185/t on 8 August. But PCI prices remain high, with July's average relativity to the fob Australia PLV index at 83pc compared with an average relativity of 61pc in the first half of this year. Meanwhile, the Argus -assessed Australian PLV index has fallen by $47.10/t from 2 July to $212.50/t on 31 July, the lowest level since August 2022, before making a small recovery to $215/t on 1 August. Prices held steady for four days before inching down again to $213.75/t on 8 August in a subdued market. Bottlenecks on Russian railways tightening Russians PCI supply and demand centered in south America, Europe and southeast Asia have contributed to stronger Australian PCI prices. "Russian supply definitely seems tighter than many expected, with a lot of term customers scrambling to bring forward or increase term allocations," an Australian supplier said. "The fob Australia PCI market is currently a seller's market. Buyers are trying to find out what cargoes are available but there are hardly any volumes that can be sold on the spot market as term buyers are still trying to increase term volumes." Some buyers, particularly in northeast Asia, have also looked to reduce their reliance on Russian coal. "Because of growing US sanctions on Russian suppliers, some buyers are trying to increase their intake of Australian PCI, which is in short supply, so they may not have many options other than to pay up," an international trading source said. But the switch remains unattractive for buyers with access to Russian supplies as they continued to express reticence towards the recent increase in Australian PCI prices. A northeast Asian buyer that was in the market for August-loading PCI eventually bought Russia-origin PCI at $165/t on a cfr basis on 23 July, noting its price competitiveness when compared with indicative offers of Australian low-volatile PCI at about $200/t fob at that time. Expectations that PLV prices would fall further have prompted questions about whether current PCI prices can continue to remain firm. "The PCI market remains relatively tight, but if there are end-users in Europe or southeast Asia reselling premium hard coking coal cargoes, it means production is down and they will not need as much PCI as before," an Australian producer said. "Effectively, PCI is a coke replacement, in that it reduces the amount of coke needed to make a tonne of steel," an international trading firm said. "So if PCI prices get too close to, or above, the other coking coal tiers, you would just make more coke and use less PCI." Fob Australia PCI vs fob Australia coking coal $/t Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Japan’s Mitsui lifts aluminium ingot offtake in Brazil

09/08/24

Japan’s Mitsui lifts aluminium ingot offtake in Brazil

Tokyo, 9 August (Argus) — Japanese trading house Mitsui has raised its stake in Nippon Amazon Aluminium (NAAC) to increase its offtake of low-carbon aluminum ingots produced in Brazil, as it aims to enhance its decarbonisation and metal businesses. Mitsui increased its shareholding in NAAC, which has a stake in Brazilian aluminum refiner Aluminio Brasileiro (Albras), to 46pc from the current 21pc for an undisclosed sum. The increased stake will boost Mitsui's offtake of Albras' aluminum ingots to 140,000 t/yr from the current 80,000 t/yr. It plans to sell the increased offtake mainly to Japanese consumers. The firm has delivered Albras' low-carbon aluminum ingots mainly to Japanese users. NAAC has a 49pc stake in Albras, which manufactures 450,000 t/yr of aluminum ingots. It cuts carbon dioxide emissions during the production process by using renewable power. Mitsui expects increased demand for light, recyclable aluminum produced with renewable energy with an accelerating decarbonisation trend and aluminum requirements for various goods like vehicles, aircraft, construction materials, cans and electric wire. It also predicts a continued tightness in supplies of low-carbon aluminum. Mitsui also invested in India-based scrap metals trader and manufacturer MTC Group to take advantage of rising metal demand in India. By Nanami Oki Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

German court stops N05-A gas field construction again

08/08/24

German court stops N05-A gas field construction again

London, 8 August (Argus) — A German court has annulled the permit for a seafloor cable necessary for the planned gas drilling platform N05-A in the Dutch and German North Sea on environmental grounds. Lower Saxony state water authority NLWKN had upheld an earlier permit decision on 19 July against a complaint by environmental organisation DUH, which had argued that stone reefs discovered in the area deserved additional environmental protection. The administrative court at Oldenburg annulled the permit today after DUH had sued NLWKN, saying that the permit was "likely to be unlawful upon summary examination of the factual and legal situation". NLWKN had ordered a compensation payment without sufficiently weighing up conservation interests against other interests, the court said. The underwater power cable is intended to connect the gas extraction platform in the Dutch North Sea with a nearby wind farm on the German side of the border. DUH has repeatedly called on the Lower Saxony authorities to withdraw the permit on the grounds of new information for the environmental impact assessment. The N05-A gas project has been met with continuous opposition from environmental groups as well as local municipal authorities. They had achieved a temporary stop to construction in early June at a Dutch court, which was subsequently lifted . Greenpeace protested at the construction site on 31 July, before operator firm ONE-Dyas achieved an injunction at a Dutch court to stop Greenpeace from obstructing the installation. ONE-Dyas "has received all necessary permits to start gas extraction" from the Dutch side, the firm told Argus in June. But no permit is in place to extract any gas from the German side of the gas field as yet. And any further delay would probably move the timeline for first gas substantially back from December this year, ONE-Dyas said previously. The Dutch government granted an extraction and construction permit for the N05-A field in 2022. The field could produce about 2bn m³/yr in its initial phase, ONE-Dyas said previously. NLWKN or ONE-Dyas can escalate the decision to the next higher court for an appeal, the court said. By Till Stehr Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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