|Day's Range||33.31 - 34.32|
(Bloomberg) -- For more than two decades, Zimbabwe has been trying to break ground on a giant coal-power complex by the world’s biggest man-made reservoir. China just agreed to get the $4.2 billion project underway.The development near the southern shore of Lake Kariba is good news for Zimbabwe, where a collapsing economy and erratic policies have deterred foreign investment for the past 20 years.But it flies in the face of a growing global consensus that has seen financial institutions from Japan to the U.S. and Europe shun investments in coal projects. That retreat leaves the way open for Chinese companies—many with state backing—even at the risk of undermining the spirit of China’s international commitments to fight climate change.“We are very pleased that the project is going ahead, especially as major banks in the world are forced to stop financing coal-fired power stations,”?Caleb Dengu, chairman of RioZim Energy, the company that owns the project, said in a response to questions. “This is testimony of Chinese commitment to development projects in Africa. The Chinese are interested in joining hands.”China is certainly in need of friends: A global backlash is building over Beijing’s handling of the coronavirus outbreak first identified in the Chinese city of Wuhan—evidence of a deficit of trust that was compounded by incidents of racism toward Africans in the southern city of Guangzhou last month. Yet pumping money into coal just underlines China’s creeping isolation in backing plants that generate large quantities of greenhouse gases and other pollutants.For financial institutions, “the ever-increasing reputational risk of funding a project like this, and the high likelihood that it would end up as a stranded asset, should make them very wary of getting involved,” said Tracey Davies, director of Cape Town-based shareholder activist organization, Just Share.In fact, the Chinese government promised back in 2017 to green its Belt and Road Initiative overseas construction plan to promote environment-friendly development in line with United Nations goals. President?Xi Jinping pledged last year that the program must be green and sustainable.Yet Chinese companies and banks are involved in financing at least 13 coal projects across the continent with another nine in the pipeline, according to data compiled by Greenpeace. Since 2000, the?China Development Bank?and the?Export-Import Bank of China?alone have supplied $51.8 billion of finance for coal projects globally, according to the Boston University Global Development Policy Center.?“Despite promises to shift support to green and low-carbon energy, Chinese banks have continued to bankroll coal power projects,” said?Lauri Myllyvirta, lead analyst for the Centre for Energy Research and Clean Air, an independent research body. “China has enormous state-owned thermal-power manufacturing and engineering firms that rely on overseas deals to stay in business.”President Xi regularly mentions China’s commitment to multilateralism through fighting climate change as a signatory of the Paris Agreement. China, however, is unlikely to divest from coal anytime soon. Despite hefty investment in renewable energy over the past decade, China still mines and burns about half the world’s coal.China has undoubtedly made progress. By 2018, China had exceeded its target for reducing CO2 emissions, Foreign Minister?Wang Yi told the UN climate action summit in New York in September. He touted increases in non-fossil fuel use and in forestation along with sales of some 1.25 million electric cars that year. And yet now, as it claws its way out of the pandemic-induced slump, Beijing has started to roll back restrictions on industrial pollution and slash subsidies for cleaner energy.There shouldn’t be a “one-size-fits-all approach” for green development in poorer nations, but rather the decision should be based on a host country’s natural resources, according to Yu Zirong, a vice director at the Chinese Academy of International Trade and Economic Cooperation, a think tank affiliated with the Ministry of Commerce.“For countries with rich coal resources, it is impossible to completely forbid them using coal,” said Yu, who spoke at a forum on sustainable Belt and Road Initiative in October in Beijing. “The key is how to use them more reasonably.”That’s a sentiment shared by Lefoko Moagi, Botswana’s minister of mineral resources, green technology and energy security.??Botswana has Africa’s biggest coal resources after South Africa, according to the government.?“The world is continually looking at coal as a dirty mineral. Make no mistake: we all subscribe to a greener world. But we believe that we just can’t leave an abundance of a god-given natural resource just like that. We need to exploit it more cleanly for the benefit of our communities and the benefit of the nation,” he said in an interview in February. “This is an opportunity for countries like China to come into this space.”China’s agreement to invest is a rare win for Zimbabwe, which is currently subject to power cuts of as long as 18 hours a day as it doesn’t produce enough electricity to meet demand and can’t afford to pay for adequate imports.The project was initially owned by London-based miner?Rio Tinto Group, the one-time parent of?RioZim Ltd, which in turn owns Riozim Energy. It was set aside as Zimbabwe’s relations with the U.K., its former colonizer, deteriorated. After the project was revived in 2016,?General Electric Co. and a unit of?Blackstone Group LP?didn’t pursue initial inquiries, according to Dengu, the company’s chairman.Power Construction Corp. of China, the state-owned company known as?PowerChina, has been contracted to build the first phase of the plant known as Sengwa, which includes a 700 megawatt generation unit, as well as a pipeline from Kariba Dam to bring the water needed and power lines at a total cost of $1.2 billion. Funding is likely to come from Industrial & Commercial Bank of China, while China Export and Credit Insurance Corp., or Sinosure, may provide the country risk cover needed, according to Dengu. Both are owned by the Chinese government.Repeated calls to ICBC and Sinosure went unanswered.?PowerChina said that?its overseas coal-related projects will adopt the most efficient technologies to reduce pollution?emissions, and will abide by local environmental regulations and standards?while aiming to provide stable and cheap electricity supply for host countries. ?Last month a deal was signed for the rest of the project, which will add a further 2,100 megawatts at a cost of $3 billion.?China Gezhouba Group, which is partly state-owned, will develop the project and lead fund raising, Dengu said. The company didn’t respond to calls and an email request for comment.“The Chinese are looking at the business opportunity,” said Dengu. “We bring the market knowledge and management capacity, they bring the finance and the technology.”Rio Energy had few other options. European banks no longer fund coal projects and over the last year the biggest banks in South Africa have committed to reducing their coal funding under pressure from shareholders. Morgan Stanley and Citigroup Inc. are also among those to curb or halt project financing?for coal-related projects.While the Zimbabwean project is sizable among those being considered by Chinese companies, it is not the biggest. PowerChina has signed a memorandum of agreement with South Africa’s Limpopo provincial government to build a power plant of at least 3,000 megawatts at a cost of $4.5 billion.Not all are welcomed by local communities.Sengwa would draw water from Kariba, a reservoir already so depleted by recurrent droughts attributed to climate change that its hydropower turbines operate at a fraction of their capacity. The South African government is facing a lawsuit because coal-fired power plants there cause some of the world’s worst air pollution.Read More:?People Are Dying From Eskom’s Pollution in South Africa“It’s a fading industry,” said?Han Chen, who manages the international energy policy program at the New York-based?National Resources Defense Council. “So they are going places where the environmental standards are low so they can use more polluting equipment that is cheaper to operate.” Of 11 coal projects in Africa she tracks that are likely to get foreign support, 10 involve Chinese state-owned entities.As banks in other countries including Japan and South Korea snub coal, those projects will increasingly rely on China.“Chinese banks will find themselves increasingly alone in funding new coal plants, both at home and around the world,” said Christine Shearer, director of the coal program at Global Energy Monitor.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Today we will run through one way of estimating the intrinsic value of Yanzhou Coal Mining Company Limited (HKG:1171...
Shares of Occidental Petroleum(NYSE: OXY) tumbled more than 10% by 3 p.m. EDT on Wednesday. Weighing on the oil company were its weak first-quarter results and its struggles to manage its lofty debt load amid crashing crude oil prices. Occidental Petroleum posted a steep loss during the first quarter.
Despite the better-than-expected EIA crude oil data, prices likely declined because of the huge build in distillates that reflected the demand destruction on the airline and over-the-road truck industries.
The situation on the ground in Libya is growing worse and forces of Field Marshall Haftar continue to effectively blockade all Libyan ports and export terminals
Based on the early price action and the current price at $1688.30, the direction of the June Comex gold futures market into the close on Wednesday is likely to be determined by trader reaction to the 50% level at $1682.40.
Dallas Fed President Robert Kaplan said that the Fed will not step in to save "highly leveraged" or insolvent oil and gas companies.
Silver markets initially tried to rally during the trading session on Wednesday but gave back the gains as we get close to the 50 day EMA. By doing so it suggests that there are still a lot of concerns when it comes to industrial demand.
Crude oil markets pulled back a bit during the trading session on Wednesday, as the 50 day EMA came into play, and of course the $27 level has a certain amount of influence on this market as well.
Natural gas markets pulled back a bit during the trading session on Wednesday, breaking below the $2.00 level. That is a large, round, psychologically significant figure that traders will pay quite a bit of attention to.
The British pound broke down below support during the trading session on Wednesday, breaking below the crucial ￥132 level that I have been talking about. By doing so it suggests that we have further to go to the downside.
This article should help to clear up our interpretation of the major market trends and our advanced technical analysis tools and utilities.
Crude oil has experienced a sharp turnaround in sentiment this past week. The rally has been driven by a combination of a recovery in gasoline demand as lock-downs begin to ease and optimism that production cuts are easing the supply glut. Later today the market will focus on the Weekly Petroleum Status Report from the US Energy Information Administration for data that can support the current positive momentum
The late sell-off in US stocks yesterday has not prevented gains in Asia and Europe. Most of the equity markets, including the re-opening of China, gain more than 1%. Australia was a notable exception, falling about 0.4%, and Taiwan was virtually flat.
(Bloomberg) -- The uneasy truce that settled over oil markets this month as some of the world’s largest producers began cutting output belies the raging competition among exporters seeking to preserve their share of a diminished market.Saudi Arabia, the world’s biggest exporter, appears to be winning the fight for sales as it slashes prices for its crude. Producers globally are struggling to retain customers as the coronavirus destroys demand for fuel. After flooding the market in April, producers are now scaling back shipments as part of the deal by OPEC+ suppliers to soak up the glut in oil.For evidence of where the Saudis have been winning, look no further than last month’s crude exports. Saudi Arabia was the only one of OPEC’s top four producers to boost sales to India in April, according to Bloomberg tanker tracking. The kingdom’s shipments to China doubled, and its exports to the U.S. reached 1 million barrels a day, the most since August 2018.“The Saudis are doing very well,” said Ahmed Mehdi, a research associate at the Oxford Institute for Energy Studies, referring to the battle for buyers. “Aramco has been aggressive in protecting market share in Asia.”State oil producer Saudi Aramco slashed its official selling prices for April crude sales to some of the lowest levels in decades, undercutting rivals. For cargoes loading for Asia in May, Aramco cut pricing even further, and it’s expected to widen discounts to that region for June.That helped Aramco to place its crude even amid a surge in supply. Saudi exports to China more than doubled in April to 2.2 million barrels a day, the highest level since Bloomberg began tracking flows at the beginning of 2017. Shipments to India, at 1.1 million barrels a day, were also the highest in at least three years.The case of India highlights Saudi gains. Iraq, the second-biggest member in the Organization of Petroleum Exporting Countries, edged the Saudis for the top spot in oil sales to the South Asian country for most of the last three years.Last month, however, Iraq’s exports to India plummeted to the lowest since June 2018 as the South Asian country shut down much of its economy to counter the coronavirus and refiners there reduced operating runs and rerouted cargoes. The increase in Saudi exports to India in April almost exactly offset the decline in Iraqi sales.Like other producers, Saudi Arabia must contend with a plunge in demand due to coronavirus lockdowns. Brent crude has lost about half its value this year, and the benchmark closed above $30 a barrel on Tuesday for just the first time in three weeks.Saudi Aramco made deeper pricing cuts than Iraq for its key grade for sale to Asia for both April and May. Barrels of Saudi Arab Light crude are even selling at a rare discount to Iraqi barrels for May.Saudi exports to the U.S. surged to an average of 1 million barrels daily, the most since August 2018. Aramco generally exports to America from the Persian Gulf, but April’s flows included the first observed cargo from one of the kingdom’s Red Sea ports to the U.S. West Coast in at least three years. A second shipment embarked on the same route in early May.Figures for the amount of oil loaded for a specific location may rise because some tankers have yet to indicate their final destinations.The Saudis aim to defend sales from competing crude from the U.S., Russia and Africa, said Gavin Thompson, vice chairman for energy in the Asia Pacific region at consultant Wood Mackenzie Ltd. Aramco’s pricing cuts for May “gave clear notice of its strategic goal to ensure that its crude remains highly competitive in Asia,” he said in a note.(Updates third chart; adds oil price in ninth paragraph; possible destination changes in 12th.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.?2020 Bloomberg L.P.
Oil markets fell back Wednesday, as fresh evidence of the demand destruction caused by the coronavirus pandemic triggered a bout of profit-taking. At :9:20 AM ET (1320 GMT), U.S. crude futures traded 3.7% lower at $23.68 a barrel, while the international benchmark Brent contract fell 2.5% to $30.17. The U.S. private sector shed just over 20 million jobs in March, according to a report by payrolls processor ADP (NASDAQ:ADP), as measures to contain the coronavirus pandemic devastated the country's economy.
Until the production cuts start to work their way through the global economy, the primary focus will be on the pace of the easing of restrictions and lockdowns and their effects on demand.
The oil market downturn hit?Occidental Petroleum?(NYSE: OXY) hard during the first quarter. Occidental Petroleum reported a net loss of $2.2 billion, or $2.49 a share, for the quarter, in large part because of several non-cash writedowns. The biggest was a $1.4 billion impairment charge of its investment in?master limited partnership?Western Midstream Partners?(NYSE: WES), which it acquired as part of its $55 billion deal for Anadarko Petroleum.
Oil prices slid and world equity markets seesawed on Wednesday as investor hopes for a pickup in business activity were dashed by downbeat economic data and a rise in U.S. crude stockpiles to three-year highs that highlighted low fuel demand. Remarks by U.S. President Donald Trump that cast doubt on a trade deal signed in January with China helped pull U.S. stocks lower before the market's close. The safe-haven Japanese yen and dollar rose on data showing U.S. private payrolls tumbled by a record 20.2 million workers in April, German industrial orders fell at a record pace in March, and British construction activity fell to an all-time low last month.
Asian stocks?were mixed on Wednesday morning with Chinese markets returning from a?five-day?holiday. Investors were cautious?as they monitored?Chinese reaction to accusations from top U.S. officials that the COVID-19 virus?originated?in a Wuhan lab. "There is a distinct risk-off tone to greet China coming back from holiday," Stephen Innes, chief global markets strategist at?AxiCorp, told Reuters.