Wednesday , September 18 2019
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Alternative tech could dent diesel demand in US road freight sector

Semi trucks are the workhorse of modern road freight. These large, two or three axel on-road trucks are used to haul freight trailers and, on average, each one travels over five times the distance of a typical US driver annually – at one-fifth the miles per gallon efficiency. In 2018, US semi trucks demanded over 2 million b/d in petroleum products – primarily diesel. S&P Global Platts Analytics anticipates this energy need will grow through 2040 on the back of growing population...

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LNG sector transformation underway as long-term contracts dwindle

Global LNG procurement trends are undoubtedly shifting toward shorter contracts with smaller volumes and increasingly flexible commercial terms. With many long-term supply contracts set to roll off in the coming years, renewals are likely to be for shorter timeframes. The traditional 15-20 year agreements that underpin LNG projects will be much harder to come by, and only long-term contracts by large core suppliers such as Qatar will continue to form the backbone of global LNG supply. The...

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Commodity Tracker: 6 charts to watch this week

Geopolitical risk and oil markets top this week’s pick of energy and commodities themes from S&P Global Platts editors. Plus, Ukraine’s role in European gas supply, steel scrap prices as a bellwether for economies, and a milestone approaches for US LNG exports. 1. Global oil markets on alert after attacks on Saudi oil facilities   Click for full-size infographic What’s happening? Attacks on Saudi Arabian oil facilities at Abaiq and the kingdom’s second-largest oil field,...

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Ferrous scrap plays catch up after steel’s dramatic tumble

Ferrous scrap prices have crashed over the past five weeks, finally coming more in line with weakened steel prices, which have fallen by a larger magnitude since the middle of 2018. Using CFR Turkey scrap as a gauge, spot prices of HMS I/II 80:20 have fallen $136.5/mt from their peak in March 2018 as of September 12. Over the same period, rebar prices on an FOB Turkey basis have fallen by a larger $172.5/mt, S&P Global Platts data show. While in percentage terms, prices of scrap have...

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China steel, refining capacity rises as supply-side reforms come under pressure

China’s supply-side reform agenda was launched by President Xi Jinping in late 2015 with a view to stripping out excess capacity that had built up in key industries during China’s emergence as an economic power. Industries targeted in a five-year plan presented in 2016 by the country’s top economic planner, the National Development and Reform Commission, included steel, coal, cement and aluminum. These sectors were deemed to have become too big, too polluting, and in some cases too dependent...

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London missing out on Aramco IPO could be a blessing in disguise

Saudi Arabia is getting deadly serious about the stock market flotation of state oil giant Aramco, just not in London. Once tipped as a potential host for what could be the world’s largest initial public offering, Brexit chaos and the prospect of Jeremy Corbyn seizing power have significantly diminished the City’s chances of becoming the international home for Aramco’s shares. Missing out would be a blow to prestige, but it could also be a blessing in disguise. Aramco – which the kingdom’s...

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Japan’s nuclear power generation ramps up in 2019 but hurdles lie ahead

Dynamics in the Japanese power market have been a major bearish force acting on the global LNG market this year. Weak power demand, increasing renewable generation, notably solar, and higher nuclear output have depressed fossil fuel needs, and LNG in particular, as S&P Global Platts Analytics highlighted in a recent report. Ahead of the Platts Analytics Client Seminar in Singapore, Bruno Brunetti and Andre Lambine explore key aspects of the Japanese power market. Japan’s nuclear...

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Commodity Tracker: 6 charts to watch this week

Globalization of natural gas markets, OPEC’s struggle to balance oil supply and price, and platinum coming to the fore as an investment vehicle are all covered in this week’s selection of essential charts from S&P Global Platts editors. 1. Global gas price differentials keep tightening…   What’s happening? Gas spot prices across regions have converged in recent weeks due to the continued gas glut in an increasingly globalized gas market, with surplus LNG cargoes...

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IMO 2020 and the Forties de-escalator in Dated Brent

The International Maritime Organization’s decision to cap the sulfur level of global marine fuels on January 1, 2020 has been the dominant story in the oil markets for the last two years. Among the many questions raised by the imminent 0.5% cap on sulfur in marine fuels, some crude oil market participants are now asking what the implications could be for the Forties de-escalator, the key sulfur value adjustment mechanism that lies at the heart of the North Sea’s Brent crude complex. To...

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LNG must become more price-transparent and sustainable to thrive in next decade

The trend towards LNG commoditization has gathered pace, fueled by significant additions of elastic supply and demand and growing liquidity in both physical and financial LNG markets. This presents immense opportunities to LNG stakeholders. But the prospect of supply shortfalls and gluts through the next decade to 2030 is a warning sign that the industry is still exposed to abrupt investment cyclicality, a phenomenon known to cause disruptive supply shocks, price volatility and demand...

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