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Oil rises with dollar decline boosting appeal of commodities

EconOct 15. 2020Vehicles drive through the road as shipping containers sit at the Busan Port Terminal, left, and oil tankers stand in Busan, South Korea, on Oct. 13, 2020. MUST CREDIT: Bloomberg photo by SeongJoon Cho. 

By Syndication Washington Post, Bloomberg · Andres Guerra Luz · BUSINESS, US-GLOBAL-MARKETS

Oil rose for a second day amid a weaker dollar and signs of improving demand in China and India.

Crude futures gained as much as 2.3% in New York as the Bloomberg Dollar Spot Index slipped as much as 0.3%, raising the appeal for commodities priced in the currency. Meanwhile, refinery activity in Asia is signaling a bright spot for demand recovery. One Chinese mega-refiner is snapping up barrels of Middle Eastern crude, while India’s refiners have cranked up processing to meet higher consumption during a festive period.

“A weaker U.S. dollar tends to boost all dollar-denominated commodities and vice versa,” said Carsten Fritsch, an analyst at Commerzbank. “This applies in particular to gold, but also to other commodities like crude oil.”

Signs of a demand boost in Asia is helping lift the overall outlook for oil consumption, which continues to struggle to return to normal due to the coronavirus pandemic. At the same time, the structure of the market is signaling strength ahead. The spread between Brent’s nearest contracts is at its narrowest in six weeks, while the contract’s six-month spread is at the strongest since late July.

Rongsheng Petrochemical Co.’s Singapore unit has purchased at least 7 million barrels in the spot market so far this month for delivery in December and January, according to traders who asked not to be identified because the information is private. The company is buying up crude to feed a trial run operation of its expanded refinery in Zhejiang province this quarter.

The oil purchase from Rongsheng’s Singapore unit is “giving a ray of hope for the market,” said John Kilduff, a partner at Again Capital. “We’re seeing demand pick up in the face of constrained supply, helping to push up prices a bit.”

West Texas Intermediate for November delivery climbed 61 cents at $40.81 a barrel as of 12:37 p.m. in New York. Brent for December settlement rose 63 cents to $43.08 a barrel.

Traders’ attention has also turned to plans by OPEC+ to raise supply in 2021 in line with its agreement earlier this year. While some producers inside the group are said to have doubts, the United Arab Emirates and now Russia have said that, for the time being, the group intends to proceed as scheduled. Saudi Crown Prince Mohammed Bin Salman and Russian President Vladimir Putin on Tuesday urged the alliance to comply with agreed cuts as virus infections rise again.

Meanwhile, U.S. crude inventories are expected to have declined by 2.1 million barrels last week, according to the median estimate in a survey of Bloomberg analysts ahead of government data released on Thursday. The industry-funded American Petroleum Institute will report its supply tally later Wednesday.

The outlook for demand from refineries remains precarious, with refining margins severely depressed for this time of year. The so-called crack for combined gasoline and diesel against West Texas Intermediate futures falling toward $9 a barrel. Refineries typically need the spread to be more than $10 a barrel to make a profit processing crude oil.

“They’re minimizing jet fuel, maximizing diesel,” said Stewart Glickman, energy equity analyst at CFRA Research. “There’s only so much you can do with those kinds of levers. The only other lever they have is to start shutting in runs and producing even less.”

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Stocks fall as stimulus hopes fade, banks slump

EconOct 15. 2020

By Syndication Washington Post, Bloomberg · Rita Nazareth, Vildana Hajric · BUSINESS

Stocks dropped after Treasury Secretary Steven Mnuchin downplayed the chances of striking a stimulus deal before the election.

Traders also parsed earnings from big banks, with Wells Fargo & Co. tumbling 6% after posting a profit slump and warning that net interest income could “get a little bit softer” in 2021. Bank of America Corp. slid amid an increase in trading revenue that was just a fraction of its competitors’ gains, while Goldman Sachs Group Inc. outperformed after earnings per share jumped to a record that was almost twice as high as analysts predicted. Energy stocks joined a rally in oil, with Concho Resources Inc. soaring 10% on a news report that ConocoPhillips is in talks to acquire the company.

Mnuchin said at a conference that getting a stimulus agreement “before the election and executing on that would be difficult.” His remarks came after another in a long series of calls with House Speaker Nancy Pelosi, D-Calif., that have failed to seal a deal. While he hoped for bipartisan support for Senate Majority Leader Mitch McConnell’s, R-Ky., latest idea — a vote on a narrow bill next week to help small businesses — Democratic leaders have no appetite for piecemeal measures now.

“This has been an ongoing drama,” said Paul Nolte, portfolio manager at Kingsview Investment Management. “They’re getting close, they’re not getting close, we’re still talking, we’re not talking. The latest twist I heard is nothing is going to get done until the election. That’s why I think you’re getting the market selling off a little bit.”

Meanwhile, the Joe Biden campaign on Wednesday denied a New York Post report that said the former vice president met with a senior official from a Ukrainian energy firm that was at the center of a controversy over the dismissal of a prosecutor investigating the company.

These are some of the main moves in markets:

Stocks

– The S&P 500 dipped 0.7% as of 4 p.m. EDT.

– The Stoxx Europe 600 Index fell 0.1%.

– The MSCI Asia Pacific Index decreased 0.1%.

Currencies

– The Bloomberg Dollar Spot Index dipped 0.2%.

– The euro advanced 0.1% to $1.1753.

– The Japanese yen appreciated 0.4% to 105.08 per dollar.

Bonds

– The yield on 10-year Treasurys fell one basis point to 0.72%.

– Germany’s 10-year yield dipped two basis points to -0.58%.

– Britain’s 10-year yield decreased two basis points to 0.22%.

Commodities

– The Bloomberg Commodity Index advanced 0.6%.

– West Texas Intermediate crude rose 2.1% to $41.03 a barrel.

– Gold added 0.6% to $1,903.40 an ounce.

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SET sinks as thousands gather for Bangkok rally

EconOct 14. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index closed at 1,263.99 on Wednesday, down 9.44 points or 0.74 per cent. Total transactions amounted to Bt51 billion with an index high of 1,271.10 and a low of 1,257.84.

In the morning session, an analyst at Krungsri Securities expected the day’s index to fluctuate between 1,265 and 1,280 points as worries over domestic developments override progress in talks on fresh US economic stimulus measures.

“The student-led rally [in Bangkok on Wednesday] and uncertainty over commercial banks’ weak third-quarter performances will pressure the index,” he said.

The 10 stocks with the highest trade value today were KBANK, HANA, PTT, IVL, STGT, STA, CPF, NRF, CPALL and KCE.

As of 4.30pm, the price of oil rose by US$0.12 or 0.30 per cent to $40.32 per barrel, while gold rose by $5.90 or 0.31 per cent, to $1,900.50 per ounce.

Other Asian indices were mixed:

Japan’s Nikkei Index closed at 23,626.73, up 24.95 points or 0.11 per cent.

China’s Shang Hai SE Composite Index closed at 3,340.78, down 18.97 points or 0.56 per cent, while the Shenzhen SE Component Index closed at 13,691.04, down 107.54 points or 0.78 per cent.

Hong Kong’s Hang Seng Index closed at 24,667.09, up 17.41 points or 0.071 per cent.

South Korea’s KOSPI Index closed at 2,380.48, down 22.67 points or 0.94 per cent.

Taiwan’s TAIEX Index closed at 12,919.31, down 27.82 points or 0.21 per cent.

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Gold loses its glitter due to strong dollar

EconOct 14. 2020

By The Nation

The price of gold dropped by a sharp Bt350 per baht weight in morning trade on Wednesday, the Gold Traders Association reported.

As of 9.26am, the buying price of a gold bar was Bt27,900 per baht weight and selling price Bt28,000, while gold ornaments cost Bt27,394.12 and Bt28,500, respectively.

At Tuesday’s close, the buying price of a gold bar was Bt28,250 per baht weight and selling price Bt28,350, while gold ornaments cost Bt27,742.80 and Bt28,850, respectively.

The spot gold price dropped sharply, by $34.3 to $1,894.6 (Bt59,065) per ounce, at Tuesday’s close due to a strengthening dollar as investors bought the currency as a safe-haven asset amid uncertainty over the rollout of US economic stimulus measures.

The Hong Kong gold price dropped to HK$17,490 (Bt70,355) per tael on Wednesday morning, the Chinese Gold and Silver Exchange Society reported.

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SET slumps despite progress in talks on new US economic stimulus measures

EconOct 14. 2020

By The Nation

The Stock Exchange of Thailand (SET) Index fell by 5.44 points, or 0.43 per cent, to 1,267.99 in the morning session on Wednesday.

An analyst at Krungsri Securities expected the index to fluctuate between 1,265 and 1,280 points due to a lack of positive sentiments despite the progress in discussions on fresh US economic stimulus measures.

“The student-led protesters’ political rally and uncertainty over weak commercial banks’ third-quarter performance would pressure the index,” he pointed out.

He recommended investors buy the shares of:

> CRC, HMPro, JMart, Com7 and KTC that benefit from the government’s “Shop Dee Mee Kuen” (Shop and Payback) scheme.

> TU, PlanB, STGT, Com7, Asian and CBG, whose third-quarter performance is expected to grow.

The SET Index closed at 1,273.43 on Monday, up 6.29 points, or 0.50 per cent. Total transactions amounted to Bt46 billion, with an index high of 1,277.64 points and a low of 1,265.27.

The index on Tuesday was closed for His Majesty the late King Bhumibol Adulyadej the Great Memorial Day.

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Stocks drop on stimulus deadlock as banks tumble

EconOct 14. 2020

By Syndication Washington Post, Bloomberg · Rita Nazareth, Claire Ballentine · BUSINESS

Stocks fell on speculation that recent gains have outpaced prospects for a quick end to the stalemate over fresh economic stimulus. Treasurys and the dollar climbed.

Banks led losses in the S&P 500, with JPMorgan Chase & Co. and Citigroup Inc. sinking as investors worried that third-quarter earnings signaled just a pause in pain from soured loans. Eli Lilly & Co. tumbled after putting its government-sponsored antibody test on hold due to potential safety concerns, hours after Johnson & Johnson paused its covid-19 vaccine trial. Tech shares outperformed as Amazon.com Inc.’s Prime Day sale kicked off. Apple Inc. unveiled its iPhone 12 line with 5G speeds, but the shares dropped, giving up part of Monday’s surge.

Prospects for U.S. fiscal stimulus before Election Day dimmed on Tuesday, with House Speaker Nancy Pelosi, D-Calif., demanding the Trump administration revamp its latest offer and Senate leader Mitch McConnell, R-Ky., pushing a smaller-scale strategy that she quickly rejected. His proposal to vote next week on just one provision appeared to stoke opposition even from President Donald Trump, who tweeted “Go big or go home!!”

“It’s been a roller-coaster ride in terms of communication from both sides,” said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management. “There are still going to be significant pockets of stress in the economy,” and a fiscal package could help bridge the gap until we do get a vaccine, he added.

Meanwhile, Democrats grilled U.S. Supreme Court nominee Amy Coney Barrett for hours about abortion rights, health-care law, guns and election disputes but made little progress derailing her likely Senate confirmation and a strengthened conservative majority on the court.

These are some of the main moves in markets:

Stocks

– The S&P 500 fell 0.6% as of 4 p.m. New York time.

– The Stoxx Europe 600 Index sank 0.5%.

– The MSCI Asia Pacific Index rose 0.1%.

Currencies

– The Bloomberg Dollar Spot Index jumped 0.5%.

– The euro decreased 0.5% to $1.1749.

– The Japanese yen weakened 0.1% to 105.48 per dollar.

Bonds

– The yield on 10-year Treasurys slid four basis points to 0.73%.

– Germany’s 10-year yield fell one basis point to -0.56%.

– Britain’s 10-year yield decreased three basis points to 0.239%.

Commodities

– The Bloomberg Commodity Index fell 0.3%.

– West Texas Intermediate crude rose 2.1% to $40.24 a barrel.

– Gold weakened 1.5% to $1,894.40 an ounce.

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Private sector to fund building strong human-resource base for target industries

EconOct 14. 2020

By The Nation

Though the Covid-19 outbreak has affected the five-year target to create 470,000 workers, it has given the government and private sector more time to make adjustments in line with the situation post-crisis.

Nayot Kurukitkoson, acting deputy director for the Eastern Economic Corridor (EEC), said the key to constructing a new economic base in Thailand is to first build a strong human-resource base.

The Eastern Economic Corridor Human Development Centre (EEC-HDC) has set up alliances for developing personnel for the 11 industries based in EEC. The new training programs will have better curriculum, better teachers and better tools and teaching materials that will meet the actual needs of the industry. Short courses will also be provided to develop people who have worked in a different field, lack experience or are unemployed.

Initially, courses in 11 fields will be provided, namely robotics; tourism; logistics; marine; aviation; railways; food, modern agriculture and biotechnology; smart electronics; digital; modern vehicles; and medical industry.

The private sector will provide Bt200 million to fund the setting up of network centres in the campuses of state universities.

The first robotics and automation centre called EEC Automation Park was recently set up at Burapha University in collaboration with Mitsubishi Electric.

Collaborations like this will be beneficial, Nayot said, because the private sector will invest in the latest technology and equipment, and students will be able to make the most of it. Besides, he said, the government will not have to find funding for such ventures.

Four centres will be launched next year and another five in 2022, which should help create 40,000 to 50,000 personnel yearly.

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Private sector worried over revised community power plant scheme

EconOct 14. 2020

By The Nation

Flaws in the latest version of the Energy Ministry’s community power plant scheme must be ironed out before it is sent to Cabinet at the end of this year, say stakeholders.

New conditions for the much-delayed project were announced on October 9 after a two-week review. The scheme is meant to boost the grassroots economy that has been hit hard by Covid-19.

However, private sector sources voiced concern at the new plan to select operators via bidding for the rights to sell electricity at a feed-in tariff (FiT) of Bt3-5.3 per unit.

Renewable-energy sector sources are worried that the current FiT rate may affect the cost of electricity.

Companies have also urged the ministry to reconsider other dimensions of the scheme, including its environmental and economic impact, if it truly wants to drive the grassroots economy by generating income for communities.

The project’s targeted total capacity of 150 megawatts aims to generate at least Bt10 billion per year for local communities through the purchase of farmers’ energy crops.

But bid-winners will have to invest an estimated Bt100-120 million per megawatt to construct the biomass power plants.

“Most private companies will not bid for the scheme since they are worried about a repeat of the [Energy Ministry’s] 300MW small power plant hybrid project that dumped the average purchase price to Bt2.44 per unit,” said one private sector source. This had resulted in power-plant projects being delayed or aborted.

The source preferred a previous proposal to select project operators via a lottery method, after screening them to verify they were genuine farmers and power plant operators with agricultural land, to ensure the power plants would actually be built.

The lottery should be promoted as a competition to create benefits for the community, rather than focusing on the selling price. Meanwhile the same company should not be entitled to operate more than 3-5 power plants, in order to diversify investment of entrepreneurs and better distribute money into the economy.

On the ownership of power plants, the source said community enterprises should hold a 10 per cent stake to ensure community participation in operating the plants and in cultivation of energy crops. Under the current plan, the community does not need to hold any stake in the projects.

The National Energy Policy Council (NEPC) will consider the draft community power plant criteria later this month after more revisions by government agencies.

Under the current draft, half of the 150MW total capacity will be generated by biomass fuel, mainly fast-growing bamboo, etc. The remaining 75MW will be generated by biogas.

Plant operators have to engage in contracts with farmers but no longer require the participation of 200-household community enterprises. As such, the current plan does not clarify how the community will receive its aimed-for 10 per cent share of revenue from the scheme, said the source.

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Elite Card to dangle more privileges for foreign investors

EconOct 14. 2020TAT governor Yuthasak Supasorn 

By The Nation

The Tourism Authority of Thailand (TAT) plans to boost foreign investment in real estate via its Elite Card long-stay visa programme, said governor Yuthasak Supasorn.

The TAT-owned Thailand Privilege Card, which runs the programme, aims to lure more investors with two stimulus schemes it will propose to the Centre for Economic Situation Administration (CESA).

The “Flex One” scheme will offer 5 to 20-year visas to foreigners who buy properties worth at least Bt10 million. The cards, worth Bt500,000 to Bt2 million, will be purchased by property developers and then passed on to foreign clients.

Meanwhile the “Flex Plus” scheme will offer a work permit to foreigners who invest at least US$1 million in Thailand. However, they must hold the top-tier Elite card costing a minimum Bt1 million and must invest the $1 million in the first year after visa approval.

If approved by CESA, the TAT will forward the programme to the Cabinet.

Yuthasak expects the schemes to be implemented next year, adding that they will inject about Bt20 billion in extra foreign investment if the TAT can sell 1,000 elite cards under the programme.

Thailand Privilege Card sells around 2,000 elite cards per year, he added.

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Solar pushes aside coal as the cheapest fuel for power, IEA says

EconOct 13. 2020A solar panel farm in China. MUST CREDIT: Bloomerg photo by Qilai Shen 

By Syndication Washington Post, Bloomberg · William Mathis, Jeremy Hodges · BUSINESS, SCIENCE-ENVIRONMENT 

Renewables are set to overtake coal this decade as the world’s favorite fuel to generate electricity, the International Energy Agency says.

Solar photovoltaics are now cheaper than plants fired by coal and natural gas in most nations, the Paris-based researchers concludes in its annual report on global energy trends. Those cheaper costs along with government efforts to slash climate-damaging emissions will increasingly push coal off the grid and give renewables 80% of the market for new power generation by 2030, the IEA says.

The findings mark a profound shift away from fossil fuels in the world’s energy supply at a time when governments everywhere are looking for ways to rein in the greenhouse gases blamed for global warming. While hydroelectric plants will continue to be the biggest source of renewable power, solar is catching up quickly because the cost of manufacturing and installing panels has come down so much.

“I see solar becoming the new king of the world’s electricity markets,” Fatih Birol, executive director of the IEA, says in a statement with the report on Tuesday. “Based on today’s policy settings, it’s on track to set records for deployment every year after 2022.”

The IEA’s projections are based on what it calls the Stated Policies Scenario, which assumes covid-19 is gradually brought under control next year and the global economy returns to levels seen before the outbreak. The scenario includes announced policy intentions and targets that the IEA considers to be backed up by detailed measures for the plans to be enacted.

It also anticipates natural gas demand slowly easing in developed nations, especially Europe, and coal dropping everywhere. About 275 gigawatts of coal-fired capacity worldwide, 13% of the 2019 total, will be shut off by 2025, mostly in the U.S. and European Union. That will more than offset increases in coal demand in developing economies in Asia.

Coal’s share of the global power supply is set to fall to 28% in 2030 from 37% in 2019. By 2040, the fuel that once was a staple of utilities will fall below 20% for the first time since the industrial revolution, the IEA concludes. That decline could be even sharper if governments pick up the pace on decarbonization.

The assumptions require a massive investment in power grids, which need upgrades to absorb supply from more diverse sources that only work when the sun shines or the wind blows.

Investment to modernize, expand and digitize the grid will need to reach $460 billion in 2030, two thirds more than the cost last year. That spending will help roll out 2 million kilometers of new transmission lines and 14 million kilometers of distribution networks, 80% more than was added in the last 10 years, according to the IEA.