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The biggest weekly oil gain in three-months as Russia reduces fuel exports
The oil prices rose on Friday. They are on course to reach their highest level since early June, as Ukraine's attacks against Russia's energy infrastructure led Moscow to restrict fuel imports and to be close to cutting crude production. Brent futures rose 13 cents or 0.2% to $69.55 per barrel at 0454 GMT. U.S. West Texas Intermediate crude futures increased 22 cents or 0.3% to $65.20 per barrel. Both benchmarks are up over 4% in the past week. This is their largest increase since the week ending June 13. The gains were backed by the ongoing Ukrainian drone attacks targeting Russian oil infrastructure and NATO's warning that it was ready to respond if Russia violated its airspace in future. Also, Russia's decision to halt exports of key fuels is a support for these gains," IG analyst Tony Sycamore stated. Alexander Novak, the Russian deputy prime minister, said that the country will introduce a partial export ban until the end the year on diesel and extend the existing export ban on gasoline. Moscow is on the verge of reducing its crude production due to a decline in refinery capacity. There are fuel shortages in several Russian regions. The NATO warning that it would respond to any further violations of airspace in its area has heightened tensions over the Russia-Ukraine conflict and increased the possibility of sanctions against Russia's oil sector, according to Daniel Hynes, analyst at ANZ. This week, both benchmarks hit their highest levels since the beginning of August. The drop in U.S. crude oil inventories was a shock and Ukraine's attacks against Russia's energy infrastructure were also factors. The Bureau of Economic Analysis of the Commerce Department released its latest estimate of Gross Domestic Product (GDP) growth in the United States at a rate of 3.8% annualized, which is an upwardly-revised rate, last quarter. Stronger-than-expected economic data could make the Federal Reserve more cautious about cutting interest rates. Last week, the U.S. Federal Reserve cut interest rates by 25 basis points, its first reduction since December. It had also signalled that more cuts would be coming. Prices were also impacted by the announcement made on Thursday by the Kurdistan Regional Government that oil exports will resume in 48 hours. In a note, ANZ's Hynes stated that "Geopolitical Tensions reversed previous losses after a historic agreement was reached allowing the resumption exports from Iraqi Kurdistan. This could return up 500kb/d on the global market." (Reporting and editing by Edwina Gubbs and Kate Mayberry; Sudarshan Varadhan)
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SBM Offshore Starts Construction of FSO for Trion Oil Field off Mexico
Dutch-based SBM Offshore has cut the first steel for Chalchi floating storage and offloading (FSO) at COSCO Shipyard in China, marking the start of construction of the unit bound for deployment at Trion deepwater oil field, offshore Mexico.The FSO’s name, Chalchi, is inspired by Chalchiuhtlicue, the Aztec water deity, symbolizing the project’s strong connection to Mexico’s rich heritage, SBM Offshore said.This Suezmax-based FSO will feature a Disconnectable Turret Mooring (DTM) system engineered by SBM Offshore and will be moored at the Trion field in 2,300 meters of water.It will be capable of storing up to 950,000 barrels of crude oil over its 27-year design life.To remind, SBM secured a contract with Woodside Energy, the operator of the Trion project, to build the FSO back in 2024, in addition to the transportation and installation job for the FSO and the floating production unit (FPU), secured earlier by SBM.“We are proud to support Mexico’s inaugural deepwater development in collaboration with Woodside, and its partner Pemex, leveraging SBM Offshore’s proven experience and commitment to innovation. Looking ahead, we’re eager to continue driving excellence and delivering results alongside our talented teams,” SBM Offshore said.The Trion project is a joint venture between Woodside Energy (60%, Operator) and PEMEX (40%).Woodside made final investment decision (FID) for Trion project in June 2023.Trion field will be developed through an FPU with an oil production capacity of 100,000 barrels per day.The FPU, to be built by South Korea’s HD Hyundai Heavy Industries, will be connected to the FSO vessel, with the first oil is targeted for 2028.Woodside Hires Subsea 7 for Trion Subsea Installation Services Offshore MexicoWood Secures Trion FPU Topsides JobSouth Korean Shipbuilder to Build Floating Production Platform for Mexican Offshore Project
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Ørsted Picks Port of Tyne to Support Hornsea 3 Offshore Wind Farm
Ørsted has signed a lease agreement for up to 100,000 square meters at the Port of Tyne, one of the UK’s major deep-sea ports, to support the development of its Hornsea 3 offshore wind farm.The site, located at Tyne Clean Energy Park in South Shields, will be fundamental to the construction and completion of the 2.9 GW Hornsea 3 offshore wind farm, which, once complete, is expected to be the world’s single largest offshore wind farm.The Denmark-headquartered company will use the site to marshal secondary steel components for the project before each unit is loaded onto the Wind Orca, a state-of-the-art jack-up vessel owned by Cadeler ahead of setting off to the Hornsea 3 siteLocated 160 kilometers off the Yorkshire coast, Hornsea 3 is an $11.3 billion (£8.5 billion) infrastructure project set to generate enough green energy to power more than three million UK homes, boosting energy security and delivering local and national economic growth through supply chain investment.“Ørsted’s decision to base its marshalling operations at the Port of Tyne marks another significant milestone for the North East. It represents a clear vote of confidence in the infrastructure, skills and capabilities we have developed at the Tyne Clean Energy Park.“This partnership is not only about delivering clean energy – it is about securing international investment, driving economic growth and creating the highly skilled jobs that will sustain our communities for generations, anchored by our best-in-class offshore wind base,” said Matt Beeton, Chief Executive Officer at the Port of Tyne.As well as partnering with the Port of Tyne for marine access to Hornsea 3, Ørsted is working alongside industry-leading partners to deliver the 197 offshore wind turbines needed for the project.Severfield, a U.K. structural steel contractor, and Smulders, a multidisciplinary construction firm located on the River Tyne, will fabricate and supply secondary steel components.“The construction of Hornsea 3 will greatly improve energy security for the UK, as well as bringing investment into the local and national economy. This means home-grown clean power, skilled jobs and economic growth.“Ørsted’s vision is to create a world that runs entirely on green energy and the dedication of skilled workers all over the U.K., including at the Port of Tyne, will help make that happen,” added Jason Ledden, Senior Project Director, Hornsea 3 at Ørsted.
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Iron ore to drop weekly as EU prepares steep tariffs against China steel
The European Commission's plan of imposing steep tariffs on Chinese imports of steel weighed on iron ore futures, which fell on Friday. As of 0310 GMT the most traded January iron ore contract at China's Dalian Commodity Exchange was trading 0.56% lower, at 799.5 Yuan ($112,10) per metric ton. It was expected to end the week with a 0.74% decline. The benchmark September Iron Ore on the Singapore Exchange dropped 0.09% to $100.55 a ton and was expected to end the week with a 0.19% loss. Handelsblatt, a German business newspaper, reports that the European Commission intends to impose tariffs between 25% and 50% on Chinese steel products. This measure is designed to protect domestic producers and limit imports of steel as global overcapacity continues putting pressure on profit margins. Analysts predict that China's steel imports will hit a record this year. This trend is exacerbated due to the weak demand for domestic real estate. A Singaporean trader, who spoke on condition of anonymity because he was not authorized to speak to the media, stated that limiting steel imports is intended to support domestic steel producers as well as ensure the survival of local industry. The trader said that these measures are a reflection of the growing concern as Western economies recognise the importance to maintaining some manufacturing capability in the country for strategic resilience. According to Mysteel, the Chinese consultancy, inventories of five major carbon steel products rose by 0.7% during the week ending September 25. This reversed the declines that had occurred in the two previous weeks. Analysts from ANZ have noted that inventory growth has accelerated in the last few weeks, supporting the steel and raw materials markets. Coking coal and coke, which are used to make steel, also fell on the DCE. They lost 0.98% each and 1.49% respectively. The benchmark steel prices on the Shanghai Futures Exchange have fallen. Rebar dropped 0.73%. Hot-rolled coils fell 0.63%. Wire rod fell 0.43%. Stainless steel declined 0.58%. ($1 = 7,1322 Chinese yuan). (Reporting and editing by Sumana Nady; Reporting by Lucas Liew)
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Shanghai copper catches up to Freeports; prices are high but still limit gains
Shanghai copper prices rose on Friday, with supply disruptions a concern following Freeport's declaration of force majeure. However, gains were limited due to weaker demand and high prices. As of 0212 GMT, the most traded copper contract on Shanghai Futures Exchange rose 0.48%, trading at 82470 yuan (11,559) a metric ton. As of 0212 GMT, the benchmark three-month price for copper at the London Metal Exchange had increased by 0.03%. It was now $10,263 per ton. Shanghai copper prices rose to their highest level in a year on Thursday, after Freeport announced that it expects its Indonesian unit’s production will be 35% less than originally estimated by 2026. Analysts at Chinese broker Haitong Futures stated that the high prices are due to restocking in anticipation of China's National Day Holiday from October 1 through October 8. This is expected to have an impact on demand. Further gains in copper prices will depend on downstream acceptance of high prices. A state-run news outlet reported that China was studying ways to regulate its capacity for copper smelting. Chen Xuesen is vice chairman of the China Nonferrous Metals Industry Association. Chen said that copper enterprises should oppose a "style of involution" competition which is detrimental to both the industry as well as the country. Nickel, lead, and zinc were all down, but aluminium, tin, and zinc remained unchanged. Nickel fell 0.87% for SHFE base metals. Zinc rose 0.3%. Lead dropped 0.18%. Aluminium and Tin were little altered.
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Fortescue Chairman Forrest doubles-down on renewables to challenge Trump
Australian miner Fortescue is experiencing strong interest in its decarbonization-related offerings, Executive Chairman Andrew Forrest said in an interview, as he challenged U.S. President Donald Trump's claim that climate change is the "greatest con job" in the world. Fortescue, Australia's fourth-largest iron ore miner, has set ambitious targets for decarbonization. However, it was forced to abandon some green hydrogen projects. The fourth largest iron ore miner in the world, Fortescue, blamed the cancellation of an Arizona project on a shift away from green energy in the United States. Forrest, however, said that he would not give up, despite the criticisms of Trump's climate-driven initiatives. Trump had dismissed climate change in his Tuesday address to United Nations General Assembly. Forrest, speaking on Fortescue’s Green Pioneer - the world’s first ship that can run on green ammonia or diesel - condemned Trump’s statement. He challenged the president, to debate him in court, if necessary. "Sue Me, But I'm Saying You Have No Basis of Fact to Say That," the billionaire who was ranked as one of Australia's wealthiest people said. Forrest stated that he would rather get his fuel from the air and the sun than from drilling, baby, drilling. Fortescue announced earlier on Thursday that it had acquired Spanish wind technology firm Nabrawind, and signed a contract for the purchase wind turbines with Envision Energy. Forrest says that these deals will accelerate the deployment and use of renewable energy in Fortescue operations. Fortescue said that it will also deploy a fleet between 300 and 400 battery-powered mine trucks, capable of hauling loads up to 240 metric tons. Deliveries are planned for 2028 through 2030. The company stated that Chinese mining equipment manufacturer XCMG would supply up to half of the trucks and German-Swiss machinery maker Liebherr the rest. Fortescue has a large order book of battery-powered trucks that it developed with Liebherr, Forrest stated, without giving further details. Forrest stated that the miner would likely exceed its goal of generating and storing 2 to 3 gigawatts in renewable energy at its domestic iron ore operations by 2030. Forrest stated, "We'll probably do more than this because more people want to join us." (Reporting and editing by Thomas Derpinghaus in New York. Shariq Khan reported from New York.
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The biggest weekly oil gain in three-months as Russia reduces fuel exports
Oil prices rose on Friday and are on course to reach their highest level since early June, as Ukraine's attacks against Russia's energy infrastructure force Moscow to restrict fuel imports and cut crude production. Brent futures rose 15 cents or 0.2% to $69.57 per barrel at 0100 GMT. U.S. West Texas Intermediate crude futures increased 23 cents or 0.4% to $65.21 per barrel. Both benchmarks are up over 4% in the past week. This is their largest increase since the week ending June 13. The gains were backed by the ongoing Ukrainian drone attacks targeting Russian oil infrastructure and NATO's warning that it was ready to act if Russia violated its airspace in future. Also, Russia's decision to halt exports of key fuels is a support for these gains," IG analyst Tony Sycamore stated. Alexander Novak, the Russian deputy prime minister, said that the country will introduce a partial export ban until the end the year on diesel and extend the existing export ban on gasoline. Moscow is on the verge of reducing its crude production due to a decline in refinery capacity. There are fuel shortages in several Russian regions. The benchmarks for both oil and gas reached their highest level since August 1, this week. This was due to a sudden drop in U.S. crude inventories, as well as the attacks by Ukraine on Russia's energy grid. The Bureau of Economic Analysis of the Commerce Department released its latest estimate of Gross Domestic Product (GDP) growth in the United States at a rate of 3.8% annualized, which is an upwardly-revised rate, last quarter. Stronger-than-expected economic data could make the Federal Reserve more cautious about cutting interest rates. Last week, the U.S. Federal Reserve cut interest rates by 25 basis points, its first reduction since December. It had also indicated that more cuts would be coming. Prices were also impacted by the announcement made on Thursday by the Kurdistan Regional Government that oil exports will resume in 48 hours. (Reporting and editing by Edwina G. Gibbs; Sudarshan V. Varadhan)
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Handelsblatt reports that the EU is planning tariffs between 25% and 50% on Chinese steel products.
Handelsblatt, a German business newspaper, reported that senior officials at the European Commission had told them they planned to impose tariffs between 25% and 50% on Chinese steel products and other related products within the next few week. The European Commission has not yet commented. Ursula von der Leyen, the President of the European Commission, had stated earlier in this month that it would be proposing a new way to limit steel imports for domestic producers to protect them. Global overcapacity is straining margins. It also makes it difficult for Europe's Steel Industry to invest into decarbonisation. She said the Commission would be proposing a long-term, new trade instrument that would replace the steel safeguards. According to global trade rules the EU cannot extend existing steel safeguards past mid-2026. Analysts predict that China's exports of steel will reach a record high in this year. They are forecast to rise between 4% to 9%, to 115 to 120 million tons. China produces more than half the steel in the world. The country is looking for new markets as a result of a long-term property slump that has dampened consumption on its domestic market. China Trade Remedies Information estimates that 54 tariffs or other trade barriers will be imposed on Chinese steel starting in 2024. Analysts believe more exports of Chinese steel will lead to further restrictions. Tariffs of up to 50% on steel imports from the United States also affect European producers. After a series of warnings from the industry about shortages, and the potential for smelter closures, the European Union began monitoring scrap metal imports and exports in late July. Scrap metal is an important input for EU smelters, and is also a key component of their efforts to reduce carbon dioxide emissions. (Reporting from Frankfurt by Christoph Steitz and Katha Kali in Bengalur; Editing by Nick Zieminski, Krishna Chandra Eluri).
ASIA GOLD - China gold prices hit a multi-year low, but other Asian hubs are continuing to purchase.
The physical gold demand in China has weakened this week with discounts reaching multi-year lows. Meanwhile, in other major Asian centers, despite high prices, steady purchases have continued in anticipation of future gains.
The spot gold price reached a record-high of $3,790.82 Tuesday. It is currently up 1.4% this week.
Dealers in China have increased discounts from $31 to $71 per ounce
The trading volume at the Shanghai Futures Exchange is still significant, despite the increasing discounts on gold. This trend could be due to the desire for quick profits on the CSI300 which may have a slight impact on gold's performance. Hugo Pascal is a precious metals dealer at InProved.
China's blue chip CSI300 Index is up nearly 2% this week and has reached its highest level since February 2022.
In India, premiums
Investors are buying up bars and coins. Ashok Jain of Mumbai's Chenaji Narsinghji, a gold wholesaler, said that they are paying premiums over the record prices in hopes that the rally will continue.
On Friday, domestic gold prices were around 112,500 rupees for 10 grams after reaching a record of 114179 rupees this week.
Mumbai-based dealers with a private banking firm noted that jewellers are increasing imports in anticipation of higher duty rates, which will be expected following a revision of the fortnightly import base price.
In October, Indians celebrate Dussehra (Diwali) and Diwali (Diwali), when gold is regarded as auspicious.
Hong Kong's premiums varied from $1.50 up to $2.
The trend of buying gold is expected to continue. This will be especially true if the prices drop, as this could lead to increased purchases, according Brian Lan, managing Director at Singapore's GoldSilver Central.
Japan's bullion
(source: Reuters)