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Commodity Tracker: 6 charts to watch this week

China’s latest economic data continues to paint a subdued picture for commodity and energy demand, while lower drilling counts in the US raise questions about the pace of future supply growth. S&P Global Platts editors shed light on these and other trends, including a Nordic wind power boom, US-Turkey steel trade, and more.   1. China and commodities: a tale of two inflations   What’s happening? China’s consumer price index (CPI), released last week, hit a nearly 6 year high, as...

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The Week Ahead Excluding Brexit

I feel a bit like the proverbial guy that asks, "Besides that, Mrs. Lincoln, how did you like the play?" in trying to discuss the week ahead without knowing the results of the UK Parliament's decision on the new deal negotiated between Prime Minister Johnson and the EU.   I will write a separate note about Brexit before the Asian open. However, there are several other developments next week that will help shape the investment climate.   Europe is front and center.  Three issues outside...

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Same Three Drivers in the Week Ahead but Changing Tones

Three themes have dominated the investment climate:  US-China tensions, Brexit, and the policy response to the disinflationary forces.  None have been resolved, which contributes to the uncertainty for businesses, households, and investors.  However, the negativity that has prevailed is receding a little.  It begins with the most substantive progress on Brexit in months, but also entails a possible new tariff truce between the US and China. Indeed, we irreverently suggested that the...

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Insight from Washington: Oil market shifts have diminished potential SPR role

Speculation over a release of crude oil from the US Strategic Petroleum Reserve may have kept prices relatively in check in the wake of the recent attacks on Saudi oil facilities, but the amount the US government could have got to market may be well below levels needed to offset any significant supply loss. While expectations are that the US could quickly bring tens of millions of barrels of crude in response to a disruption, the SPR may not be able to distribute much more than 1.5 million...

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Commodity Tracker: 4 charts to watch this week

Asian demand for light crude oil grades and record US gas exports to Mexico are in the sights of S&P Global Platts editors this week. Plus, European gas price trends and the prospects for German power plant fuel switching. 1. Asian crude buying helps widen spread between light and heavy grades   What’s happening? Asia was quick to respond to the growing uncertainty over Arab Light and Arab Extra Light crude supplies following the September 14 attacks on core Saudi oil...

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US-China trade conflict’s mounting impact on commodity flows and demand

The US-China trade dispute has evolved into a very different animal in the past year. After multiple bouts of tariffs and counter-tariffs, on August 23, Beijing slapped a 5% levy on US crude for the first time, targeting a commodity already influenced by the trade tensions, and adding to a swathe of US-origin commodities like propane, LNG and soybeans. This was part of a wider tariff on $75 billion of US imports into China. US President Donald Trump responded with raising tariffs on $550...

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Sluggish global steel demand pressures iron ore, met coal prices

Global steel mill margins have shrunk in 2019, in turn pushing down iron ore and coke consumption and prices for coking coal. In 2018 Platts benchmark US hot rolled coil (HRC) spot prices exceeded $1000/mt delivered Midwest for the first time since 2008, and the sustained run in steel pricing and demand since 2016 delivered high profits for steel producers.   High global steel prices last year have quickly been forgotten, as offtake from steel buyers in the US and Europe reduced into...

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1/9/19: U.S. Non-Financial Corporate Sector: Stagnation in Net Value Added

Value added by the U.S. non-financial corporates has been languishing well below the cyclical peak for some months now: In fact, since Q3 2016, net value added by the non-financial corporations has been running below long run trend, and has been basically flat. This suggests substantial pressures build up in the economy, consistent with all previous early indicators of a recession. Interestingly, there is zero evidence of any improvement in the non-financial economy in the U.S. since...

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Talking and Fighting in the Week Ahead

Equity markets and the US dollar closed last week and August on a firm note.  Ahead of the weekend, the dollar rose to new highs for the year against the euro, Swedish krona, Norwegian krone, and the New Zealand dollar.  While the next set of US and Chinese tariffs start September 1, the market is making the most of the lull. At the same time, US and Chinese officials probe each other to see if sufficient disruption has been felt to force concessions.  Talking and fighting are not...

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Insight from Washington: US refiners remain pragmatic amid tariff disputes

Like many ways the Trump administration has reshaped US policy norms, the use of tariffs and tariff threats to address non-trade policy issues with other countries is here to stay, and companies like US Gulf Coast refiners are learning to adapt. That reality has set in for the energy sector not only because of the ongoing trade conflict with China, but also since President Donald Trump’s threat to impose a 5% tariff on all Mexican imports. Although the threat was called off at the 11th...

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