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Market Movers Europe, Oct 21-25: Putin hosts heads of state at Russia-Africa Summit, as Brexit taints EU carbon market

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보기: Market Movers Europe, Oct 21-25: Putin hosts heads of state at Russia-Africa Summit, as Brexit taints EU carbon market

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  • Viral Shah
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  • Energy Electric Power Oil Metals
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  • 05:19

In this week's highlights: Russia's role in global commodities will be a major focus; the EU carbon market will be eying Brexit developments; the thermal coal industry will be meeting in Lisbon from Monday at the Coaltrans event, and the International Energy Agency publishes its 2019 renewables outlook.

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In this week's highlights: Russia's role in global commodities will be a major focus; the EU carbon market will be eying Brexit developments; and the IEA publishes its 2019 renewables outlook.

Russia's global ambitions are in the spotlight this week as President Vladimir Putin hosts heads of state and ministers from across Africa at a Russia-Africa Summit in the Black Sea resort of Sochi on Wednesday, encompassing topics from science to housing, and of course commodities.

Among those present will be Egyptian President Abdel Fattah el-Sisi, courting more Russian investment on top of Rosneft's stake in the giant Zohr gas field in the Mediterranean.

From the Russian side, Lukoil CEO Vagit Alekperov will be discussing his company's longstanding efforts to build a presence in West Africa in countries such as Cameroon and Ghana.

Russia's overseas role is again under discussion on Thursday at a Eurasian Economic Forum in Verona.

Speakers include Rosneft CEO Igor Sechin, whose company was forced to halt work in Iraqi Kurdistan last week due to Turkish incursions into nearby Syria.

Novatek chairman Leonid Mikhelson, whose company spearheads Russia's Arctic LNG exports, will also address the event.

Elsewhere, Iraq's southern oil infrastructure is the topic of a "Basra Mega Projects" conference in Istanbul on Tuesday, with several top officials in attendance.

Sticking with political difficulties, all eyes in the EU carbon market will be on Brexit developments this week after the UK and EU agreed a deal, but the UK parliament withheld its approval.

As you can see from this chart, the market has been highly sensitive to all the twists and turns in the Brexit saga.

The deal would mean the UK would be likely to stay in the EU Emissions Trading System until the third trading phase ends on December 31, 2020.

This would maintain demand from UK-based companies this year and next.

While bullish on the surface, there are factors that could limit the upside for prices, including decisions by the UK on when it would bring to market its free allocation and auction supply for 2019.

On Saturday, a vote on the Brexit deal in the lower house of the UK parliament was withdrawn after members backed an amendment withholding parliamentary support from the deal until both houses of parliament have approved the legislation to enact it.

This has thrown the expected date of Brexit up in the air.

Parliament earlier passed a law forcing Prime Minister Boris Johnson to request an extension from the EU of the Brexit process beyond the planned date of October 31st.

Johnson has complied with the law and sent the letter but without signing it.

He also sent two other letters to the EU.

One saying the first letter was from parliament, not the government, and a third saying the government does not think an extension is in either side's interest.

This means the carbon market will be watching whether the EU offers an extension, and - if it does - how long it will be.

The UK government has said it will either hold a meaningful vote on the deal or try and pass the legislation implementing the bill this week.

Should the parliament approve the deal or the implementation legislation in time, the UK might be able to leave the EU with a deal by October 31st.

However, the other wild card might be parliament attaching an amendment to any legislation, making approval of the deal dependent on a referendum.

For a referendum to be held, there would have to be a delay to Brexit.

Moving on to a major source of emissions, the thermal coal industry will be meeting in Lisbon from Monday at the Coaltrans event.

Delegates will discuss the upcoming winter demand season, supply-side rationalization and demand shift from Europe to Asia, after a near 40% year-on-year fall in seaborne thermal coal prices.

Also at the event, steel mills and coking coal market participants will discuss the outlook for steel raw materials demand.

This comes after a slowdown at steel plants in Europe and Brazil this year, and Chinese GDP growth falling to a 6% rate.

As you can see from the chart on your screen, benchmark coking coal prices in September fell to their lowest in three years.

That brings us to our social media question of the week: How much downside is there for coking coal prices for the rest of 2019? Tweet us your view with the hashtag #PlattsMM.

Now, let's end this Market Movers on a more environmentally friendly note.

The IEA is due to publish its Renewables 2019 report today, offering analysis and forecasting out to 2024.

European power market watchers will want to test their own assumptions against the agency's 46% capacity growth outlook, with distributed solar in the driving seat.

The report is also expected to include insight into the future of hydrogen as European states grapple with decarbonizing heat and transport.

Thanks for kicking off your Monday with us, and have a great week ahead!