The clock runs out May 1 on temporary exemptions for EU countries from US Section 232 tariffs on aluminum and steel imports. Steel market sources question the likelihood of Europe’s current exemptions being extended.
Also May 1, BP will be the last of the oil majors to unveil first-quarter financial and operating results. Meanwhile, there are rising expectations the US will re-impose sanctions on Iran in the month ahead.
In the sugar markets, futures traders will be wondering just how low the sweet crop can go. Further downward pressure is expected this week, which threatens to take the London No. 5 contract to its lowest levels since 2008.
Our social media question for this week: How low can sugar prices go? Tweet us your thoughts with the hashtag #PlattsMM.
In Europe's power markets, traders are bracing themselves for a hydro glut next month, as snow melt has started across the Alps and the Nordic states. Elsewhere, coal traders will be eyeing a financial arbitrage opportunity this week.
Finally, this week will see the S&P Global Platts T2 ethanol benchmark move basis from FOB Rotterdam to FOB ARA. This means the Platts assessment will incorporate cargoes loading from Amsterdam and Antwerp, better representing the active load ports across NWE.
Video Transcript
In this week’s highlights: BP and Iran are the main focus of the oil market; further downward pressure is expected on sugar; and power traders are bracing themselves for a hydro glut.
But first, metals.
On Tuesday, the clock runs out on temporary exemptions for EU countries from US Section 232 tariffs on aluminum and steel imports.
EU leaders, including French president Emmanuel Macron and German chancellor Angela Merkel, were in Washington DC last week for last-minute talks with US President Donald Trump. However, steel market sources question the likelihood of Europe’s current exemptions being extended.
The US is seeking compromises EU leaders are unwilling to provide to make the exemption permanent. Several major steel mills, including Voestalpine and others in Northwest Europe, have already started requesting exemptions for steel imported into their US facilities. Turkey, reeling from the potential loss of export markets amid US and European measures, has launched its own investigation into steel imports.
On the oil front, there are rising expectations the US will re-impose sanctions on Iran in the month ahead; markets will be weighing the results of a Middle East tour by newly confirmed US Secretary of State Mike Pompeo over the weekend.
Meanwhile, BP on Tuesday will be the last of the oil majors to unveil first-quarter financial and operating results. These are likely to confirm the boost to upstream earnings being enjoyed by most oil companies due to higher oil prices, offset by weaker refining margins.
However, BP has already indicated a pause in its upstream production growth in the first quarter, after its oil and gas output grew by a whopping 12% last year.
In the sugar markets, futures traders will be wondering just how low the sweet crop can go.
Amid global oversupply, London No. 5 futures dropped to historic lows last week. Having dipped below $320 per metric ton, the contract has struggled to break above the same level since then. New York’s No. 11 contract has also been feeling the heat recently, as you can see in our chart.
Further downward pressure on sugar is expected this week, which threatens to take the No. 5 contract to its lowest levels since 2008.
That’s the subject of this week’s social media question: How low can sugar prices go? Tweet us your thoughts with the hashtag #PlattsMM.
In power markets, traders are bracing themselves for a hydro glut next month, as snow melt has started across the Alps and the Nordic states. The expected inflow is keeping power prices low despite bullish gas and coal, sending generation margins downhill.
Spain is already ahead, with hydro reservoirs filling at their fastest rate since 2011. Auctions this week of June capacity on UK cables to France and the Netherlands will reveal to what extent the market is factoring in the snowmelt effect.
Coal traders will be eyeing a financial arbitrage opportunity this week.
Despite continuing bearish fundamentals for physical coal demand in Europe, there has been a recent uptick in prompt-month prices of coal delivered to Northwest Europe on a CIF basis. That has prompted traders to take advantage and resume trading US cargoes into Europe.
US Central Appalachian cargoes were heard offered at a discount of roughly $3 per metric ton last week, as a large utility hedged its physical cargoes against the paper price.
Finally, this week will see the S&P Global Platts T2 ethanol benchmark move basis from FOB Rotterdam to FOB ARA. This means the Platts assessment will incorporate cargoes loading from Amsterdam and Antwerp, better representing the active load ports across Northwest Europe.
The change reflects the fact that activity in the broader ARA trading hub has been increasing in recent years, further underpinning the liquidity of the physical assessment. The change will take place on Tuesday.
Thanks for kicking off your Monday with us, and have a great week ahead.