MARKET NEWS. Friday, Apr 13, Coal News

Transcription

1 Friday, Apr 13, 2018 MARKET NEWS Coal News The API2 Cal19 contract opened 70cents higher than Monday s close at $80.00/t in line with the support shown in the German Power Cal19 market which opened 15cents higher at 37.30/MWh. The two markets moved in correlation through the rest of the session with the German Power Baseload Cal19 market closing 15cents higher on the day at 37.30/MWh. The Zhengzhou Commodity exchange continued upon its downward trajectory setting fresh lows for this year at Yn556.40/t closing Yn1.00 lower on the day at Yn588.40/t. NEWC physical produce for May-18 delivery found support through today s session fluctuating around the $95.00/t handle having closed on Friday at $93.70/t. The Q218 API2 v NEWC spread closed 70cents higher at -$10.00 with the Cal19 API2 v NEWC spread closing 65cents lower at -$5.65. The API2 Cal19 market fluctuated in a $1.50 range closing 70cents higher at $80.00/t after setting intraday highs at $80.40/t early in the afternoon session. Backwardation across the API2 curve came under further pressure with the Q218 v Cal19 spread closing 50cents lower at $3.00 with the Cal19 v Cal20 spread closing flat at $3.40. Backwardation across the NEWC curve also came under pressure with the Q218 v Cal19 spread closing 55cents lower at $7.35 with the Apr-18 contract closing 75cents lower at $93.40/t. Pg. 1

2 Iron Ore News Market Comment Chinese futures firmed this morning, closing just off the highs at 453. A quiet morning on the swaps with apr/may getting legged early on alongside Apr/Jun and 0.20 and May/Jun at 0.25, Apr/May later traded at 0.00 in a couple of clips. On the outrights Apr printed and May whilst sep traded early on at with the DCE close to the lows. Tender Rio tender 210k PBF for Apr 25- May 4 laycan, closes at 3 pm today. Rio tender 70k PBF for May 1-10 laycan, closes at 4 pm today. Port Inventory According to Custeel's survey of 42 ports in China, the total port inventory stood at million tonnes on Friday, 13 Apr 2018, down 60,000 tonnes as compared to last Wednesday, 4 Apr 2018, while daily cargoes evacuation increased by 76,000 tonnes day-on-day to 2.73 million tonnes. Technical Report Commodity Currency Intraday Support and Resistance The daily technical on the AUDUSD remains in bearish territory and find resistance at the 233 period MA and trend resistance. A close above (233 MA) would suggest the technical is firming with support at Pg. 2

3 Oil Market News Equities: Wall Street managed to push higher on Thursday, its 3rd positive session in 4 days, despite the potential strike against Syria. Stocks were trading higher for most of Thursday s session, however dropped notably mid-session when media reports were released saying the US had selected 8 potential targets for its military response to an alleged chemical weapons attack in Syria last Saturday. But Jim Mattis, US defence secretary calmed investors concerns saying that the Trump administration hadn t decided that it was going to strike against Syria with Trump confirming on twitter that there was no clear timeline. European equities also closed higher Thursday. Asian equity benchmarks are meanwhile trading mostly in the red. The Shanghai composite index is trading 0.4% lower as trade war concerns weigh on sentiment ahead of the US earnings season. Customs data released shows China s exports fell 2.7% in march y/y while imports grew 14.4%. This puts the country in a trade deficit of $4.98 billion for March, where consensus expectations were for a surplus of $27.21 billion. The Nikkei index has gained 0.67% ahead of the European open Friday. VIX index dropped over 8% on Thursday down to 18.49, below its long-term average of 20. Interesting to note that despite rising trade tensions, the MSCI Emerging Markets Index has risen about 1.5% this year so far, outperforming the S&P 500 s 0.4% loss. This shows that investors appetite for risk remains strong. Earnings season kicks into high gear Friday, with J.P. Morgan, Citigroup, PNC and Wells Fargo due to release results. Bonds: Treasury yields attempting to resolve their wedge formations to the topside with 3.5-6bpt increases across the curve, led by the rate-sensitive belly. The market now appraises Jun FOMC hike odds as being an 87% probability, highest of the move to drive the cheapening at the front. 2yr yield notably made new trend closing high, intraday high at 2.357% set back in mid-mar in the crosshairs now. Market shrugging off geopolitical risk but will be interesting to see if these latest yield rises get lapped up as hedges into the weekend. The $13bn 30yr auction came with chunky concession presaging it to the tune of 5bpts so the result was strong with a 0.1bpt stop-through. Gilts came under some pressure through the session yesterday as the supportive nature of BoE buybacks earlier in the week faded from the market s view. The 10y. Bloomberg market reports highlight that there was some international selling taking place too. Support on the 10y Bund yield in the 0.48% region held up yesterday, with core European bonds sliding in response to Gilt weakness, with the 10y ending the session at 0.515%. It will be worth monitoring how the market handles this support level, with a failure to break below 0.48% becoming more bearish by the day. Note that into the weekend both the US and Spain will receive ratings reviews by Moody s. Currencies: Quiet before the storm with US equities melting up but on the lowest volume of the year so far. Most major currencies were little-changed with ZAR and BRL giving back 1% as commodities rally fizzled, macro reflation bets stay under pressure. Trump talking up re-joining the TPP looking constructive on the trade front, but market taking for granted given presence of Syria geopolitical risk albeit slightly detuned as President Donald Trump scales back on his Syrian stance. Taking a look at the Asian session movements in FX pairs are muted, investors remain cautious, DXY a whisker higher as the EU session beckons. Credit markets: Issuers stuck to the sidelines in the IG primary yesterday with geopolitical concerns getting flagged and corporate earnings ramping up as well. Credit spreads however finished tighter and the absence of supply is expected to be short-lived though and the pipeline remains well stocked with recent deals getting decent support and tighter new issue concessions. IG USD pipeline: Rio Oil (0.6bn; 10yr), IDA, Barclays Africa (0.3bn; 10yr), Westwood (3,5.5yr), Cifi Holdings (0.5bn; 3yr), Transurban Queensland (10yr), Kunzhi, Beijing Enterprises Water, Cometa Energia, IADB (3yr), CGG (5yr), Sisecam (0.8bn), Landsea Green, Marubeni Corp (5yr), Korea Resources (5yr), Apergy (0.3bn),, RGY (5yr), Met Tokyo, OCI NV (1.0bn; 5yr), Lycra Company (0.5bn; 7yr), Mongolian Mortgage, FirstRand (0.3bn; 10yr), Turkiye Finans (0.5bn), CGG (5yr), Sudan (1.0bn), Syngenta, Omantel, Ausgrid (5-10yr), BOC Pg. 3

4 Aviation, Marubeni (5yr), Hanwha Life, KazMunaiGas, Damac Real Estate, Salesforce (2yr), Compass Holdings (8yr; 0.4bn), Noor Bank (5yr), Mannai Corp, Poland, South Africa (3.0bn), Star Energy (15yr),, STLC (5yr), Envision Energy, Assurant (5,10,30yr), JSW Steel, Sprint (4.0bn), Russia (4.0bn), GTT Communications, Thomson Reuters (5.5bn), United Overseas Bank, Angola (2.0bn), Oman. Energy: There has been a paring of geopolitical risk overnight which has resulted in the bulls taking their foot of the gas so to speak. The White House said that no final decision on the Syria response has yet been made with the presidency continuing to assess intelligence and are engaged in conversations with our partners and allies. These include France and the UK, which are still signalling agreement that a strong deterrent response will be necessary. Earlier there were reports the US had mapped out at least 8 targets to attack in airstrikes, but nothing confirmed. The Syrians have apparently repositioned much of their air force assets to Russian airfields in the hope this would make the Western powers reluctant to engage there. The longer the reprisal takes to happen, the more it seems it could be a substantially more expansive and intensive operation than Trump s first limited response to chemical weapons use there. OPEC released a statement yesterday in which they said the global oil stock surplus is close to evaporating citing higher energy demand and its own supply cuts this whilst acknowledging the US Production juggernaut by revising up its forecasts from the US shale producers. Looking ahead, the markets are expected to remain cautious, the narrative of our President, your volatility very much the case at the moment. Baker Hughes rig data give further insight into the US Production outlook going forward. Oil prices shrugged off bearish U.S inventories data to extend major gains at Asian trading close on Thursday. Geopolitical fears appear to be overriding oil fundamental factors at the moment with rising tensions over Syria causing crude futures to rally. Further pushing up of prices was news that Saudi Arabia said they had intercepted missiles over Riyadh. Despite the geopolitical factors, there is evidence that oil supplies are robust, which acts as a weight to prices and could result in a correction to crude futures which could dip should tensions in the Middle East ease. U.S crude inventories rose by 3.3 million barrels to million barrels according to the EIA on Wednesday, while U.S crude production last week reached a record million bps. Lower Chinese demand is also an influence, as Sinopec Corp will shut down its largest refinery (460,000 bpd) for maintenance throughout May. June ICE Brent futures was $1.27 higher at $71.95/bbl, while the rest of the 43-month forward contracts traded between $0.80 and $1.29. Front month May WTI futures was up $1.54 at $66.79/bbl, with the other 44-month forward contracts trading between $0.57 and $1.39. The June Dubai EFS gained $0.06 at $4.03/bbl, while the July Dubai EFS increased $0.03 at $3.93/bbl. The Cal '18 Brent/Dubai rose $0.06 at $2.9/bbl as the Cal '19 contract declined $0.04 at $3.60/bbl. Benchmark 180-cst FO was $6.00 higher for April contracts at $397.75/mt; Cal '18 gained $6.5 to $391.47/mt while the Cal '19 traded $7.29 higher at $353.63/mt. April 180-Dubai cracks were down $0.15 at -$6.10/bbl, the Cal '18 contract dipped $0.2 at -$5.27/bbl while the Cal '19 declined $0.08 at -$6.01/bbl. The 3.5% Rotterdam Barges April crack weakened $0.17 at -$13.29/bbl; the Cal '18 contract lost $0.10 at -$12.06/bbl and the Cal '19 slumped $0.02 at -$14.89/bbl. The front month April ICE LGO futures contract posted gains of $11.00 at $643.25/mt, while the Cal '18 traded $10.47 higher at $629.39/mt and the Cal '19 contract increased $9.6 at $606.9/mt. The April GO EFS differential (10ppm) widened $2.13 at -$9.93/mt while the May contract was down $2.18 at -$8.61/mt. The April Singapore GO 10ppm contract increased $1.19 at $85.01/bbl and the Cal '18 contract increased $1.08 at $83.22/bbl; Cal '19 advanced $0.80 at $80.38/bbl. Pg. 4

5 Pg. 5 The April CFR-naphtha contracts rose $7.75 at $604.50/mt; Cal '18 was up $8.67 at $595.08/mt and the Cal '19 contract increased $7.02 at $556.02/mt. April CFR naphtha-brent cracks were $0.42 lower at -$3.99/bbl; Cal '18 dipped $0.31 at -$2.85/bbl while the Cal '19 declined $0.36 at -$2.83/bbl.