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Portways-Magazine-April-2018-Issue- Second Week

OIL & ENERGY 8 Singapore

OIL & ENERGY 8 Singapore viscosity spread at 10-month high on tight blending component avails The viscosity spread between Singapore 180 CST high sulfur fuel oil and 380 CST HSFO widened to a 10-month high Tuesday, as demand for 180 CST HSFO climbed amid limited availability of blending components to produce the lower viscosity fuel oil grade. The viscosity spread, or the premium that 180 CST HSFO commands over 380 CST HSFO, surged $1.42/mt day on day to $13/mt Tuesday, a 10-month high. The viscosity spread was last assessed higher at $13.03/mt on May 26, 2017, S&P Global Platts data showed. “There is relatively less of the components required to blend 180 CST HSFO. And a chunk of what is available seems to be finding homes elsewhere within the region too,” a trader said about the recent strength in the 180 CST HSFO market. “I think we are beginning to get to the level now where people are likely to start looking at alternative ways to blend 180 CST [HSFO] to sell into the shorts.” “It does look like going to a point where gasoil cutting to make 180 CST HSFO might look like an alternative, but I don’t think we are quite there as yet though,” another trader said. The Singapore HSFO market was a mixed bag from a sentiment standpoint, with respect to the quality of fuel oil grades, traders said this week. The 180 CST HSFO market continued to garner support amid a tight availability of blending components to make the lower viscosity grade product, while sentiments around the bunker grade 380 CST HSFO market remained bogged down due to a lack of incremental demand amid ample supply. The cash differential for the utility 180 CST HSFO grade rose 39 cents/mt day on day to $$1.38/mt Tuesday, while the cash differential for 380 CST HSFO inched 2 cents/ mt lower on the day to minus $1.24/mt. Source: Platts UK GAS-Prices firm as gas flows to the Continent Russia’s Rosneft says swing oil output as part of OPEC cooperation ‘not senseless’ British prompt gas prices firmed on Wednesday as a major pipeline switched to export gas to the Continent rather than receive supplies and weather forecasters lowered temperatures for the coming days. Day-ahead gas was up 0.6 * pence, or 1.23 percent, at 49.50 pence per therm at 0800 GMT Within-day gas rose 0.9 * pence to 49.25 p/therm The IUK interconnector between the UK’s Bacton ter- * minal and Belgium has begun exporting gas to the continent, marking the start of the socalled summer gas season. During the season, which * started on April 1, there is typically lower gas demand for heating. Weather forecasters monitored * by Thomson Reuters have reduced temperature forecasts by 0.4 degrees Celsius for the weekend and by 0.2 degrees for next week. The gas system is balanced with * consumption seen at 266.6 million cubic metres (mcm) and supply at 268.5 mcm, according to National Grid data. Two LNG tankers arrived in the * UK earlier this week and their sendout is supplementing the market. Another two LNG tankers are * expected to arrive on Thursday and Sunday at the Dragon terminal Dutch day-ahead gas prices * edged up, trading at 18.70 euros per megawatt hour, up 0.05 euro. The benchmark Dec-18 EU carbon contract was 0.2 euro down * at 13.50 euros a tonne. Source: Reuters Kremlin-controlled energy producer Rosneft said a proposal by Russia’s second-largest oil producer and competitor, Lukoil, to regulate oil output in line with the price swings “was not quite senseless”. Vagit Alekperov, the head of Lukoil, in an interview with RIA news agency last week proposed that the participants of the global deal aimed at reducing oil output think about the possibility of raising production if oil prices were on the up and cutting it when prices were falling. “I would say that the opinion of Vagit Yusufovich Alekperov … is not quite senseless,” Rosneft’s spokesman Mikhail Leontyev told Reuters. He added Rosneft would not make any of its proposals public as it was for the Russian energy ministry to express the country’s overall stance towards the global deal which expires at the end of this year. Saudi Crown Prince Mohammed bin Salman told Reuters last month that Saudi Arabia and Russia are working on a historic long-term pact, possibly 10 to 20 years long, that could extend controls over world crude supplies by major exporters. This week, Russian Energy Minister Alexander Novak said Russia and Saudi Arabia were thinking about a format for cooperation which could be for the longer-term and which may include “implementation of some joint actions” if needed. Source: Reuters

COMMODITY 9 JSW Steel posts record 16.27 million tonne output JSW Steel on Wednesday posted its highest monthly and quarterly crude steel production as of 31 March—1.52 million tonne (MT) and 4.31 MT, respectively. During the entire 2017-18, the company produced 16.27 MT, which also is its highest annual output, JSW Steel said in a statement. “The monthly production of 1.52 MT for March signifies a capacity utilisation of 101%,” it said. The production last month was high as compared to 1.45 MT during the same month in 2016-17. The output in January-March stood at at 4.31 MT, up 5% from the production in the year-ago quarter. The annual output grew 3% to 16.27 MT from 15.80 MT in the preceding financial year. JSW Steel, which has a capacity of 18 MTPA, is a part of the diversified $12 billion JSW Group with presence in steel, energy, infrastructure, cement, ventures and sports. The company is in expansion mode and aims to raise its capacity to 40 MTPA by 2030. Source: PTI Brazil Soybean Rally Signals China Already Spurns U.S. Imports China iron ore hits 10-month low amid mounting U.S. trade tensions Chinese iron ore futures fell to their lowest levels in 10 months on Monday amid growing concerns about demand as inventory piled up in the world’s top steel maker and tensions with the United States grew The most-active iron ore for May delivery on the Dalian Commodity Exchange settled down 1.4 percent at 433 yuan ($68.62) per tonne. In early morning trade, it hit 425.5 yuan, its weakest since late June 2017. Worries that a mounting U.S.-China trade dispute would hurt demand for steel and its raw materials, including coke and coking coal, also hurt sentiment. “Traders are likely to remain risk-averse as the trade conflict between the United States and China continues to escalate,” said ANZ in a research note. Stocks at China’s ports fell from record highs to 161.03 million tonnes, down 0.4 percent from China’s hunger for soybeans from Brazil, the world’s top exporter Board of Trade and domestic prices at the port. porters, he said. Brazil’s output may climb to a record 117.1 million the previous week, according to weekly data compiled by Steel- Home consultancy. It marked the first drop in a of the oilseed, has spurred The premium jumped be- metric tons with exports month. a price rally, signaling the Asian nation quietly started to eschew cargoes from the U.S. weeks ago. cause China has opted for Brazilian supplies at the expense of U.S. cargoes, Pedro Dejneka, a partner at Chi- estimated at 73 million tons, while domestic processing accounts for 42 million, Dejneka said. That Investors were also adding bearish bets as trading resumed after a two-day public holiday in China on Thursday and Friday. China warned late last week it cago-based MD Commodi- means China will contin- was fully prepared to respond The premium paid for ties, said in a telephone in- ue to rely on U.S. ship- with a “fierce counter strike” soybeans loading in May terview. “China has already ments to meet demand. of fresh measures if the United at Brazil’s Paranagua port has jumped 63 percent to $1.17 a bushel in the past month, according been retaliating against the U.S. behind the curtain.” If the Brazil premium rises “Brazil still can’t supply all the Chinese demand alone,” he said. The U.S. is States follows through on President Donald Trump’s threat to slap tariffs on an additional $100 billion in Chinese goods. The most-traded October rebar to data from broker Ary too much, U.S. supplies un- the world’s second-biggest on the Shanghai Futures Ex- Oleofar. The cost reflects der tariff may become more exporter. change eked out small gains, ris- the difference between futures on the Chicago attractive to Chinese buyers, along with other im- Source: Bloomberg ing 0.6 percent to settle at 3,362 yuan ($532.81) per tonne. Source: Reuters

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