EU has Belarus state firms in sanctions sights: Update
Adds Belavia cancelling flights in final paragraph
EU trade with Belarus state-owned firms may be subject to sanctions following agreement in principle by EU leaders. Sanctions could hit state-owned or state-controlled fertilizer, steel, rail, refinery or petrochemical firms, and commodity trading including biomass and forestry that takes place on the state-owned Belarusian Universal Commodity Exchange.
EU leaders yesterday agreed in principle to prepare "further targeted economic" sanctions. An EU official who followed the leaders' discussions on Belarus today confirmed that targeting state-owned or state-controlled enterprises "most definitely is the general sense of the sanctions".
Dutch prime minister Mark Rutte said today that he has never experienced EU leaders being so rapid in agreeing sanctions. Rutte was one of the clearest advocates for targeting state-owned firms so as to hit Belarus President Aleksandr Lukashenko.
"This hits the personal bank accounts of the leaders," said Rutte. European Commission president Ursula von der Leyen also called for sanctions against "businesses and economic entities financing the regime".
But a political agreement between EU leaders to sanction Belarus' state-owned entities is likely to take longer to be worked out and published in the bloc's official journal. Finalisation of economic sanctions requires unanimity among the EU's 27 member states, and may be delayed by individual countries, notably Hungary or others. Last year, Cyprus and Greece held up publication of sanctions against Belarus, Lukashenko and his son and national security adviser Viktor Lukashenko, for several months. The Netherlands' Rutte does not expect Hungary to hold up adoption of measures, but Budapest has previously called for dropping sanctions against Belarus.
Faster implementation is probable of a ban on Belarus airlines from EU airspace and airports. Bloc leaders called for EU-based carriers to avoid overflight of Belarus. Asset freezes and visa bans are likely to come in quickly for officials held responsible for the forced redirecting, to Minsk, of a Ryanair passenger flight from Athens to Vilnius and the detention of opposition journalist Roman Protasevich and others.
Belarusian state-run airline Belavia said today it has canceled flights to the UK, France and Lithuania, following decisions by those countries' governments to ban its operations. Belavia will suspend its flights to London and Paris from today until to 30 October, and its flights to Lithuania from today until 30 June.
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UK decoiler Atlantic Steel enters administration
UK decoiler Atlantic Steel enters administration
London, 3 May (Argus) — Birkenhead-based decoiler Atlantic Steel filed for administration yesterday, according to a filing seen by Argus . The company has been under pressure since its previous owners took a large chunk of cash out of the business as part of a management buyout in 2022. Credit insurers began to pull cover on the business towards the end of last year, and suppliers have been calling retention of title, which protects suppliers in the event of insolvency or bankruptcy, in recent days. Sources suggest the debt of the business at the time of administration is around £18mn. The previous owners are preferential creditors after the banks, as they were due another £5mn from the business, according to Companies House filings. Market sources suggest it is likely the business will be bought out of administration, with other service centres interested in the assets — the lease on the site expires in the next few years but is extendable, and Atlantic operates the largest decoiler in the UK, capable of decoiling over 2.5m wide. It is also situated on the dock at Birkenhead, which cuts inland transportation costs. The UK HRC market has been under pressure for a number of months, in line with the struggles seen in Europe. Argus ' weekly assessment was £605/t ddp West Midlands on 2 May, down from a recent peak of £700/t at the start of February. The assessment reached an all-time high of £1,200/t on 31 March 2022, and the management buyout took place later that year. By Colin Richardson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Italian flat steel trading at premium on low supply
Italian flat steel trading at premium on low supply
London, 3 May (Argus) — Italian coil prices are trading at an atypical premium to northwest EU prices, especially for downstream products such as cold-rolled coil (CRC) and hot-dipped galvanised (HDG) coil. Multiple factors are playing into the current trend, which several producers say is unlikely to be sustainable given higher costs for northwestern mills — most notably, the comparatively brighter economic picture in southern Europe compared with the north, and lower steel output in Italy. Germany manufacturing PMI data has been consistently below Italian levels since August 2022, and registered its last monthly growth nearly two years ago in June 2022. Italian manufacturing has expanded in five months over the same period, registering its last increase in March 2024. In recent years, German manufacturers have been buffeted by the loss of cheap Russian energy, a reduction in demand from key export markets, most notably China, as well as the lack of investment in infrastructure and political difficulties. And yet, German hot-rolled coil (HRC) output increased by 5pc year on year in the first quarter of this year, partially driven by mill restocking, while Italian output slumped by just over 9pc in the same period. Naturally, Acciaierie d'Italia halting furnaces and producing with just one asset of 1 mn t/yr capacity plays a role in the lower overall output, but it has also been running just one rolling line at low capacity. Novi Ligure has nearly stopped, and producing depending on if stocks of raw material match customer enquiry. Financially troubled re-roller Liberty Magona has also produced intermittently and at low levels as it has struggled to obtain letters of credit, and thus only produced when able to buy HRC by paying in advance, or financed by third-parties. Producer Arvedi has taken the decision to drastically reduce or even stop offering CRC over the past year, on its inability to compete with Asian import pricing. CRC is the only major flat steel product to have not been hit by dumping duties in recent years, and weak demand in Asia saw a shift of regional mills to the EU market. Ample quota availability for CRC also meant that safeguards were not a factor, unlike for HDG. Arvedi has continued supplying HDG, and is currently one of two constant Italian suppliers of the material. The only regular supplier of both downstream products has become re-roller Marcegaglia. Again, the mill has mostly been selling CRC for very prompt delivery enquiries, unable to compete with Japanese, Korean and Indian import CRC, which have become the reference. Despite the lower volumes of CRC the producer has been selling, it has tried to maintain the historical €10-20/t differential between CRC and HDG offers, with varying success over the past months. The uncertainty of the HRC import duty on "other countries" material has likely made the producer, which relies heavily on imported coils and is one of the largest spot buyers in the world, less clear on the discounts it can provide given the varied duty it has had to pay in recent quarters. Sales opportunities in central and east Europe over the past months have also aided its order books. Transportation costs, slim margins and regional competition, as well as weak fundamentals, have kept north EU mills more focused on closer-by markets. While some sellers have been present in Italy with both CRC and HDG, they have not been undercutting Italian producers. In addition, demand for HDG has been relatively stable, while stringent safeguard quotas have not allowed Italian prices to fall under pressure from imports. EU car registrations in the first quarter were up by 4.4pc year on year, and although both Germany and Italy posted growth, the German increase was below the average rate for the bloc, while Italy was up by 5.7pc. Clearly, EU producers have offloaded some volumes of both CRC and HDG in the export markets this year, with exports of the products rising dramatically in January-February. The majority of those volumes have come from northwest EU suppliers. Of late, rising import prices have also helped southern mills more, given the quicker impact imports have on domestic prices in the south. By Lora Stoyanova and Colin Richardson HDG CRC spreads $/t Germany and Italy manufacturing PMI Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Indonesia’s Tangguh LNG facility offers Jun-Jul cargoes
Indonesia’s Tangguh LNG facility offers Jun-Jul cargoes
Singapore, 3 May (Argus) — Indonesia's 7.6mn t/yr BP-operated Tangguh LNG facility is offering four LNG cargoes for June-July loading, through a tender that closes on 6 May. The Tangguh LNG project in Indonesia's west Papua province is offering four cargoes on a fob basis for loading on 17, 22, 27 June, and on 2 July, or two cargoes on a des basis. But the delivery windows are unclear. The firm was last in the market in March , when it offered four cargoes on a fob basis for loading during 28-29 April, 1-2 May, 3-4 May and 17-19 May, or three cargoes on a des basis for delivery over 6-8 May, 8-10 May and 12-14 May. But it is unclear if these cargoes were sold eventually. This offer adds to a growing pool of availability for June and July cargoes, as summer restocking demand among traditional major importing region northeast Asia is poised to be lower this year. This is mainly owing to higher inventories after the winter season and more than sufficient contracted term deliveries, buyers in the region said. This is despite Japan and South Korea forecasting higher summer temperatures this year as compared to the previous year, according to the Japan Meteorological Agency and Korea Meteorological Administration on 23 April. Spot prices have remained relatively rangebound at around high-$9s to low-$10s/mn Btu since the end of March despite weak demand. Spot prices have been tracking some strength in Dutch TTF contract prices, which has reduced importers' incentive to step up spot purchases since imported spot has no obvious price advantage. The front half-month of the ANEA — the Argus assessment for spot LNG deliveries to northeast Asia — was last assessed on 3 May at $9.955/mn Btu, lower by about 11¢/mn Btu from a week earlier, but about 71¢/mn Btu higher from a month earlier. Spot demand has been mostly confined to south and southeast Asian importers. Most of southeast Asia is currently experiencing a heatwave, which is likely to continue driving spot LNG demand from firms like Thailand's state-controlled PTT. The firm has issued another tender seeking three deliveries over 1-2, 7-8 and 10-11 July that closed on 3 May. It may have awarded the tender, but further details are unclear, traders said. By Rou Urn Lee Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Australia's WesCEF to pursue Li plans despite hurdles
Australia's WesCEF to pursue Li plans despite hurdles
Singapore, 3 May (Argus) — Australian conglomerate Wesfarmers will still pursue the strategy for its chemicals, energy and fertilisers arm (WesCEF) to be an integrated lithium producer, despite the recent lithium market downturn. Wesfarmers earlier this year warned of unprofitable lithium sales from its Mount Holland project , owing to high production costs as it goes through a ramp-up. But WesCEF plans to weather through the downturn and plow ahead with its lithium downstream developments, given strong long-term fundamentals and despite the market's immaturity and cyclical demand, according to the group's executives on 2 May. Spodumene prices in China — which dominates global consumption of lithium raw materials — were assessed at $1,080-1,180/t on 30 April, down sharply from $5,750-5,900/t at the start of 2023. "It's also worth remembering that when we invested in Covalent and took the final investment decision , lithium hydroxide prices were lower than they are today," said WesCEF's managing director Ian Hansen. Wesfarmers and Chilean lithium firm SQM jointly own Australian firm Covalent Lithium, which looks after the Mount Holland project that includes a mine, concentrator and its 50,000 t/yr Kwinana lithium hydroxide refinery. Completing the refinery's construction and commissioning remains WesCEF's priority, with the mine and concentrator going through a ramp-up, according to WesCEF. The firm is also progressing its potential expansion project for the mine and concentrator, which it submitted an application for environmental approvals. The first lithium hydroxide output out of the Kwinana refinery is still expected in the first half of 2025, with a delay in timeline. Covalent completed its first spodumene concentrate shipment earlier in March, said WesCEF. Wesfarmers expected its share of spodumene concentrate output from Mount Holland to be 50,000t in the current July 2023-June 2024 fiscal year. The share will rise to 150,000-190,000t in the upcoming July 2024-June 2025 fiscal year. Lithium downturn The lithium downturn has led to multiple firms, including major particpants across the lithium and battery supply chain, reporting poor January-March results. Australian lithium and nickel producer IGO, affected by slumps in the lithium and nickel markets, reported its first quarterly loss in years while posting lower output . Major US lithium producer Albemarle's executives have also called the market "unsustainable" in the long run, as it posts a whopping $1.1bn year-on-year fall in sales from its energy storage division. Major Chinese lithium producer Tianqi Lithium also suffered heavy losses, while global lithium firm Arcadium Lithium earlier this year cut its planned sales numbers this year and warned that current market prices will weigh on future supply. South Korea's top battery manufacturer LG Energy Solution (LGES) reported W157bn of operating profit in January-March , but would have reported an operating loss of W32bn if it did not receive almost W189bn in US Inflation Reduction Act tax credits. By Joseph Ho Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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