1. Environmentalists Push for White House Ban on New US Oil Ports
- After US President Joe Biden halted approvals for new LNG terminals this January, climate activists are now pushing the White House to implement a similar regulatory pause for crude oil shipping facilities.
- The pressure from Sierra Club comes after the Department of Transportation quietly approved a deepwater port (SPOT) off the coast of Texas developed by Enterprise Products Partners, capable of exporting VLCCs.
- There are currently three other crude export facilities under federal review, proposed by the likes of Energy Transfer, Phillips 66, or Trafigura, which could be halted in case the environmentalists' lobbying is successful.
- Environmentalists argue that the DOT is failing to evaluate the greenhouse impacts of deepwater export terminals, saying that any new port facility would be equivalent to 90 new coal-fired plants over a time span of 30 years.
2. Europe's Gas Outlook Turns Increasingly Bullish
- Even though European gas consumption is lingering in a period of weaker spring demand, hedge funds are increasingly bullish about the region's gas prices, with net length reaching the highest since February 2022.
- According to ICE data, the net-long position in the benchmark TTF gas futures rose for a fourth straight week.
- The European gas balance was also impacted by Denmark's Tyra gas field seeing a slower-than-anticipated ramp-up,…
1. Environmentalists Push for White House Ban on New US Oil Ports
- After US President Joe Biden halted approvals for new LNG terminals this January, climate activists are now pushing the White House to implement a similar regulatory pause for crude oil shipping facilities.
- The pressure from Sierra Club comes after the Department of Transportation quietly approved a deepwater port (SPOT) off the coast of Texas developed by Enterprise Products Partners, capable of exporting VLCCs.
- There are currently three other crude export facilities under federal review, proposed by the likes of Energy Transfer, Phillips 66, or Trafigura, which could be halted in case the environmentalists' lobbying is successful.
- Environmentalists argue that the DOT is failing to evaluate the greenhouse impacts of deepwater export terminals, saying that any new port facility would be equivalent to 90 new coal-fired plants over a time span of 30 years.
2. Europe's Gas Outlook Turns Increasingly Bullish
- Even though European gas consumption is lingering in a period of weaker spring demand, hedge funds are increasingly bullish about the region's gas prices, with net length reaching the highest since February 2022.
- According to ICE data, the net-long position in the benchmark TTF gas futures rose for a fourth straight week.
- The European gas balance was also impacted by Denmark's Tyra gas field seeing a slower-than-anticipated ramp-up, reaching peak production only by Q4 due to technical issues with a power transformer.
- This past week has seen an upsurge in October call options at a strike price of €40 per MWh, whilst simultaneously selling €25 per MWh puts, with the overall trade in ICE TTF calls coming in at the highest level since at least 2020.
3. India Faces Worst Summer Power Shortages in Years
- India is bracing for the biggest power shortfall in 14 years next month after drier-than-expected weather has led to a decline in hydropower generation and coal-powered capacity might not be enough to offset those losses.
- The Indian government's Central Electricity Authority expects that peak shortages might reach 14 GW during nighttime hours in June when solar power generation is not available.
- The power supply gap is the widest since 2009-2010 as India's hydroelectricity output, some 12% of the country's electricity matrix, fell at the steepest pace in four decades on erratic rains.
- Coal-fuelled power generation rose almost 14% year-over-year in the year ended March 31, outpacing the 9.7% increase in renewables output and accounting for a whopping 77.2% of India's electricity market.
4. BHP Opened a Pandora's Box With AngloAmerican Bid
- AngloAmerican rejected BHP's initial $39 billion takeover bid, but the expectation of an improved bid, political interference as well as other mining companies trying to outbid BHP have made AngloAmerican the main M&A story of 2024.
- Being founded in Johannesburg and still heavily relying on South African mines, the BHP takeover bid might run into political opposition, too, as South Africa's mining minister Gwede Mantashe indicated he wouldn't support the deal.
- South Africa has had a shaky history with BHP as the Australian major spun off all South African assets from its 2001 BHP-Billiton merger, a fate mostly probably shared by AngloAmerican's assets in the country should the deal go through.
- Following the BHP bid refusal, global commodity trader Glencore has expressed an interest in the company and said it is studying an approach, potentially triggering a bidding war for AngloAmerican.
5. Russia Lifts Export Duties on Coal to Spur Exports
- Russia has temporarily removed tariffs on thermal coal and anthracite exports from May 1 to August 31, seeking to boost coal exports amidst an intensifying market share battle for Asia.
- Coal exports out of Russia have been struggling in 2024 to date, recording only 44.1 million tons compared to 38.5 million tons in January-April 2023, as operations have been marred by rail constraints, sanctions and export duties.
- The removal of tariffs and concurrent decrease in port fees should send Russian coal exports higher as the country lost market share to South Africa, Australia and Colombia, with higher availability pushing coal lower.
- Kpler data shows that Asia's coal imports reached an all-time high of 105 million tons in December 2023, and the continent's purchasing activity moved even higher this year with average imports up 6% year-over-year in January-April 2024.
6. Sparking Fears of Food Inflation, Wheat Prices Are Set to Soar
- Bad weather and capped Ukrainian grain supplies are putting global wheat supply under strain, with weeks of heat and inadequate rain in Russia prompting analysts to drastically cut harvest outlooks.
- Dryness has similarly impacted Ukraine's wheat harvest and total output is expected to drop 6% from a year earlier, with export possibilities still limited by the collapse of the Black Sea Grain Deal in July 2023.
- Aggravating fears of adequate supply, higher-than-usual rains in France have worsened the quality of this year's crop whilst Australia's harvest was adversely affected by parching summer temperatures.
- Chicago wheat futures are up 15% on the month, currently 653 cents per bushel, with hedge funds reversing their bearish bets on the agricultural commodity and the net short of 47,866 contracts in the week ending April 28 is the lowest in two years.
7. Copper Breaks Through $10,000/Mt Threshold
- For the first time since May 2022, copper prices have surged past the $10,000 per metric ton threshold, with key market forecasters such as Goldman Sachs raising their end-year targets to $12,000/mt.
- Softening US jobs data lifted the metals market, reviving speculation that the Federal Reserve interest rate cuts are not that far off, with swaps markets now indicating a 54% chance of a Fed rate cut by the end of 2024.
- The sentiment was also boosted by the unlikely resumption of copper mining in Panama, 5% of global supply, after the country's president-elect Jose Raul Molino ruled out talks with First Quantum until arbitrations are dropped.
- As LME copper inventories declined to 104,375 metric tons, the lowest since September 2023, the metals markets started speculating about a potential stockout episode by Q4, seeing stocks running dangerously low.