Trump says tariffs on China could remain in place

: Crude oil, Fertilizers, Metals, Natural gas
19/03/20

The tariffs imposed by the US on imports from China could remain in place even after the two countries sign a comprehensive trade agreement, President Donald Trump said today.

"We are not talking about removing (tariffs), we are talking about leaving them for a substantial period of time," Trump told reporters at the White House today. "We have to make sure that if we do a deal with China, China lives by the deal. Because they had a lot of problems living by the previous deals."

Trump's remarks appear to drive a harder bargain for a potential deal to end the ongoing trade war than what US officials have suggested they would seek. US trade representative Robert Lighthizer has told members of Congress the terms of the agreement would include lifting the tariffs in exchange for extensive changes in China's trade policies, with the possibility of reimposing tariffs later if Washington believes its concerns are not addressed.

Trump is proposing a different sequence, keeping the tariffs in place unless China is shown to adhere to its end of the trade deal.

The terms of the agreement outlined by Lighthizer would include an inspection mechanism to ensure Beijing's compliance on the so-called "structural issues" — protecting intellectual property, ending forced technology transfer and lifting restrictions on US companies' participation in banking and other sectors. The US administration holds that the large US trade deficit with China — $419bn last year — reflects Beijing's protectionist measures that it is working to overturn.

The enforcement mechanism will include monthly meetings between the US Trade Representative's (USTR) office and the Chinese Commerce Ministry, quarterly meetings at the deputy ministerial level, and a semi-annual meeting between Lighthizer and his Chinese counterpart to review complaints from companies.

While public remarks by Trump and his senior Cabinet members in recent weeks provide an outline of what Washington expects, Beijing's position is less clear. Both sides insist that negotiations are going well and making progress, even though the timeline for a meeting between Trump and Chinese president Xi Jinping that was expected to seal the deal is starting to slide.

Chinese market participants expect the US to lift all tariffs imposed last year once the agreement is signed, paving the way for Beijing to lift the retaliatory taxes on imports of energy, agricultural and other commodities from the US. The trade war cut off China's imports of crude and LNG from the US for most of the second half of 2018.

Trump last month he wanted a "grand deal" covering all bilateral issues — preferably agreed to in a one-on-one session with Xi. A meeting between the two leaders was tentatively scheduled to take place this month at Trump's Mar-a-Lago property in Florida. But it is delayed until April, US officials said. Lighthizer and treasury secretary Steven Mnuchin are expected to travel to Beijing next week to continue negotiations. Lighthizer last week said the two sides remain apart on major issues.

The bargain offered by the US may be a hard one for Beijing to accept, especially the enforcement mechanism. Beijing has offered to buy more US energy and agricultural products, in addition to addressing structural issues. Chinese negotiators likely would prefer to finalize terms of the agreement before committing to Xi's meeting with Trump.

Existing US tariffs affect about half of the $539bn/yr in imports from China, including many chemical and industrial products. USTR has indefinitely postponed a further escalation in tariffs. Reciprocal tariffs imposed by Beijing cover 90pc of the $120bn/yr of China's imports from the US, including most energy commodities.

"We have our representatives going there this weekend to further the deal. We are taking in billions and billions of dollars in tariff money, and for a period of time that will stay," Trump said.

"Recent consultations between the economic and trade teams of China and the US have made substantial progress," the Chinese foreign ministry said. "We believe the two teams will follow the instructions of the two heads of state and reach a mutually beneficial and win-win agreement on the basis of mutual respect."

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24/11/14

Cop: German opposition pushes for Article 6

Berlin, 14 November (Argus) — Germany's main opposition parties have welcomed the progress achieved on Article 6 of the Paris Agreement in at the UN Cop 29 climate summit in Baku, Azerbaijan. They have called on Germany and the EU to make better use of the instrument to allow for more cost-efficient climate action. Germany's dominant opposition party, the right-of-centre CDU/CSU, on 14 November commended the framework under Article 6 as an efficient way of reducing greenhouse gas (GHG) emissions. Article 6 of the Paris accord aims to help set rules on global carbon trade. The Article 6 mechanism allows for reductions to happen where they are quickest, cheapest and easiest to be carried out, the CDU head of the working group on climate action and energy, Andreas Jung, said in a debate in the lower house of parliament, the Bundestag. The deputy head of the FDP faction Lukas Koehler, also speaking in the Bundestag on 14 November, called on Germany and the EU to "finally" integrate the Article 6 in their climate action plans. Koehler argued that if for instance Germany's progress in emissions reduction should turn out to be too slow, the country could temporarily shift its efforts — and the associated finance — to where more rapid mitigation might be achieved, such as Brazil. The EU, of which Germany is a member state, will not make use of Article 6 credits, at least until 2030, to reach its so-called nationally determined contribution (NDC) – its climate action pledge — under the Paris climate accord. The EU has been seeing progress on ongoing Article 6 negotiations at Cop 29, the European Commission's principal advisor for international aspects of EU climate policy Jacob Werksman said today, "mostly because parties are now agreeing with the EU and others that were concerned about the transparency and accountability of the bilateral markets that operate under Article 6.2". Werksman believes there is enough momentum for negotiations to be concluded next week, noting that the atmosphere has "improved" compared with previous negotiations, which echoes the sentiment expressed by a number of negotiators earlier this week . Werksman pointed in particular to the US now agreeing with others and helping to broker compromises. Koehler also warned German government representatives in Baku to refrain from "expensive" pledges which may strain the country's budget. Developed countries agreed in 2009 to deliver $100bn/yr in climate finance to developing nations, and Cop 29 is focused on the next iteration of this — the new collective quantified goal (NCQG) . In a statement, Germany — represented by Scholz despite his absence at the Cop — and other G7 members like Canada, France, or the Netherlands agreed that "developed countries must continue to take the lead and live up to existing finance commitments". Germany faces early elections as the government lost its majority last week following the sacking, by chancellor Olaf Scholz of the Social Democrat SPD, of finance minister Christian Lindner of the pro-business FDP party and the FDP's subsequent withdrawal from the ruling coalition. Polls suggest that the CDU/CSU group will easily win the next federal elections which are scheduled to take place on 23 February. The FDP's persistent refusal to allow Germany to take on more debt to enable more public funding, including of clean technologies, was the main reason for Lindner's sacking. By Chloe Jardine and Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

LAT Nitrogen halts sales to Germany on high gas costs

24/11/14

LAT Nitrogen halts sales to Germany on high gas costs

London, 14 November (Argus) — Major European producer LAT Nitrogen has withdrawn from the German market today owing to a surge in gas costs. LAT Nitrogen produces nitrogen-based products for the fertilizer and industrial chemical markets. It sells CAN, ASN and NPK 15-15-15 to the German market. "We will closely monitor the development of gas prices before considering a return to the market," LAT Nitrogen market intelligence and demand planning analyst Harald Lindner said. Front-month natural gas prices on the Dutch TTF have climbed steadily over the past two months, reaching more than €45/MWh today, up by €10/MWh from September. CAN is a key nitrogen fertilizer used in the German market and spot prices have stagnated at about €280/t bulk cif inland and have failed to grow ahead of the season, despite higher list prices. Yara raised its CAN asking price on 16 October to €305/t bulk cif inland for delivery to Germany and the Benelux countries, up from its previous offer of €295/t bulk cif inland. Buying interest from farmers has been incredibly slow ahead of spring applications this year. Market coverage in Germany for nitrogen fertilizers for the 2024-25 fertilizer year is estimated to be 40-45pc, down from an average of 60-65pc by mid-November. Weak grain prices, reduced farm incomes and warehouses full of unsold agricultural produce are also said to be behind the lack of demand for fertilizers from consumers. Some wholesalers are expecting sales to remain slow until the start of 2025, which will give distributors logistical challenges to deliver product ahead of early spring applications. LAT Nitrogen began maintenance in mid-September on some of the lines at its Linz site in Austria, affecting downstream fertilizer output of ammonia, nitric acid, CAN and NPKs. This was due to be finished by early November. The Linz site is a major source of fertilizers for central and eastern Europe, with CAN 27 annual production roughly at or above 600,000t in typical recent years, according to latest IFA data. The 429,000 t/yr prilled urea plant at Linz was unaffected by the maintenance and is running as normal. By Suzie Skipper Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Guyana hires floating generators to avert outages

24/11/14

Guyana hires floating generators to avert outages

Kingston, 14 November (Argus) — Guyana is lifting its floating power capacity to 111MW with the rental of plants that the government says will prevent widespread power cuts over the next two years. The government has contracted a 75MW power barge from Turkish firm Karpowership that installed a 36MW barge in May, finance minister Ashni Singh said on Wednesday. The government has not released the terms of the contracts for the floating plants that are being fired by imported heavy fuel oil. Karpowership has been given a two-year contract that the government says will expire with the scheduled commissioning of a $2bn natural gas project that includes a 300MW power plant. The project will be fed by gas from a deepwater block being worked by US major ExxonMobil. The agreements with Karpowership "will take us just beyond the period when the new plant comes on stream," Guyana's vice president Bharrat Jagdeo said. The growing oil producer in northern South America faces a widening power deficit as state power utility GPL cannot meet demand created by a rapidly expanding oil-fired economy, the government said. Power demand in the country of 750,000 people has grown from 115MW in 2020 to 175MW currently and is projected to reach 205MW by year-end, the government said. GPL's fuel oil-fired output of 165MW "does not allow for a comfortable reserve so we need adequate redundant capacity," an official told Argus . Guyana's contract for power barges from Karpowership is the company's third in the region. Six of the company's floating plants are supporting Cuba's faltering power system, while another is stationed in the Dominican Republic. By Canute James Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

European urea market braces for CBAM impact in 2026

24/11/14

European urea market braces for CBAM impact in 2026

London, 14 November (Argus) — European producers and traders of urea are preparing for the phase-in of the EU's Carbon Border Adjustment Mechanism (CBAM) in early 2026. While EU producers expect their market share to rise, questions about the implementation, pricing, and oversight remain, leading to uncertainty among agricultural urea traders. The European AdBlue market is also weighing the possible impact. Under CBAM, which was passed by the EU in May 2023, urea importers will have to buy certificates to cover the carbon emitted during production wherever the plant is located. In the UK, the government confirmed its CBAM application on fertilizers and other commodities from 1 January 2027. CBAM is aimed at creating a level playing field for imports to the EU and the UK, while nudging non-EU countries towards climate action. European producers of urea currently have to contend with lower margins because their production cost is higher than that of non-EU manufacturers since the introduction of the EU Emissions Trading System (EU ETS). European producers are therefore at a disadvantage. The transition period in the EU for CBAM began on 31 October and will last until 31 January 2026. During this time, urea importers must provide quarterly reports on their imports and the carbon emitted during production. In February 2026, the phase-in for CBAM will begin. After that point, importers must buy enough CBAM certificates to cover at least 80pc of embedded carbon each quarter. Urea imports will therefore become more expensive in 2026. The exact increase in fertilizer prices, including urea, will depend on the cost of CBAM certificates, which in turn will be based on the weekly average price for EU ETS allowances. EU ETS certificates are currently priced at €66/t CO2 but are due to rise in the future. Calculating an exact price for CBAM certificates is difficult, Argus was told by affected parties. But estimates range anywhere from average indications of €10-20/t or even up to €80-100/t for imported urea. Higher prices will inevitably be passed on to the end-user. However, if one assumes that CBAM will add €10-20/t on the price of agricultural grade urea, then the estimates suggest that the cost of a loaf of bread will rise by €0.10-0.50, which is negligible, a European fertilizer wholesaler suggested. Given the uncertainty of CBAM's effect on pricing, some suppliers are cautious about trading too far into the future. Agricultural buyers purchase product in advance of the key application seasons, but importers often attempt to time purchasing around dips in international prices. European producers welcome CBAM European urea producers have welcomed the introduction of CBAM. They have sold automotive grade urea (AGU) at a premium to imports for several years, and as a result, they have lost market share. Norwegian fertilizer producer Yara said in its third-quarter results that it plans to only progress projects with the highest returns and concrete potential margins, driven by firm regulatory changes like the EU ETS and CBAM. The ETS and CBAM policies are likely to lift urea prices in Europe , and this would trigger increased nitrate fertilizer and NPK margins for Yara, if upgraded from low-carbon ammonia, according to the producer. Some traders expect AGU imports to fall with the phase-in of CBAM, and domestic producers' market shares to increase again. However, the European market relies on imports for both agricultural and automotive grade urea so heavily that a lasting, significant drop in imports seems unlikely, analysts said. "Fertilizer import quantities, including agricultural grade urea, will not be negatively affected by CBAM as importers will absorb the new costs, as those that are subject to duties have done so previously," a German trader said. There is, for example, not nearly enough prilled or granular urea production in Europe to cover demand, making imports impossible to avoid. In 2023, the EU 27 imported just over 5mn t of urea from just the top three non-EU suppliers — Egypt, Algeria and Russia — with an additional 6.3mn t from both within the EU and outside. Urea imports in January-August 2024 were 7.2mn t, down by 8pc from 7.8mn t in the first eight months of 2023. During this period imports from Egypt, Russia and Algeria accounted for almost 51pc. Furthermore, European urea traders have expressed concerns that it may be difficult for authorities to check carbon emissions at plants outside the EU, and that potential loopholes could allow foreign product to enter the market at discounted rates. There are also questions surrounding how the EU will regulate issuing CBAM certificates. Importers will not have to buy CBAM certificates, for example, if the producer has already paid a carbon price in the country of origin. Impact on AGU and Europe's AdBlue market The European AdBlue market might also feel the effects of the CBAM. AdBlue is produced by mixing AGU with deionised water. While most AdBlue in Europe is produced by primary producers using domestic urea, there are an increasing number of so-called diluters, which import competitively priced urea, and then offer AdBlue at a discount. If the price gap between domestic and foreign urea is closed, diluters might be forced to increase their prices as well. AdBlue traders in Germany and the Netherlands suggest that a narrowing price gap between these secondary producers and primary ones could affect the former's market share. The market share has been growing steadily in the past few years. That growth might be halted or even partially reversed once CBAM comes into effect. According to Argus calculations, AGU consumption in Europe will continue to rise until 2027, in line with the projected growth in AdBlue demand ( see graph ). AGU imports, similarly, are expected to grow until 2029, peaking at about 85,000 t/yr. By Natalie Müller and Suzie Skipper Projected growth in Europe Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Cop: EU ETS volatility problem for corporate CCS case

24/11/14

Cop: EU ETS volatility problem for corporate CCS case

Baku, 14 November (Argus) — Price fluctuations in the EU emissions trading system (ETS) make it difficult for carbon capture and storage (CCS) projects to attract finance, delegates at a UN Cop 29 climate conference side event in Baku, Azerbaijan, heard today. Fluctuations in the EU ETS price make it more difficult to model the support provided to CCS projects through avoided compliance costs, law firm Latham & Watkins partner Jean-Philippe Brisson said. These ups and downs are "very difficult for corporates", Japanese bank MUFG director Yukimi Shimura said. The benchmark front-year EU ETS contract has closed at an average of €66.20/t ($69.82/t) of CO2 equivalent (CO2e) so far this year in Argus assessments, compared with €85.30/t CO2e last year. While carbon pricing is an "absolute must" for CCS, if ETS cost avoidance is your only revenue stream it is very difficult to convince financials or board members to support projects, Swiss cement major Holcim vice president Pavan Chilukuri said, as the long-term viability of projects is not guaranteed. Additional funding is therefore needed to accelerate project implementation, Chilukuri said. This could be in the form of revenues from carbon dioxide removal credits — generated when plants run on biogenic energy and the carbon captured — or carbon contracts for difference. The CCS hub concept — where a number of sites capturing CO2 are located near each other to make use of the same transportation and storage infrastructure — can also help to limit costs, he said. But hubs come with their own cross-chain risks, Shimura said, including uncertainty surrounding liability for issues such as delays. The UK government — which is developing two CCS clusters — is doing an "excellent job" to minimise such risks, Shimura said. But more needs to be done in the US and Asia, with a role to be played by governments, she said. Most CCS activity remains concentrated in the US because incentives there are very strong and fixed for 12 years, Brisson said, referring to the $85/t tax credit for CCS offered under the country's Inflation Reduction Act. But even this is now "not good enough", Shimura said, as inflation has pushed costs up since the figure was set. By Victoria Hatherick Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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