OECD moderates economic forecast, warns of uncertainty

  • Spanish Market: Agriculture, Biofuels, Chemicals, Coal, Coking coal, Condensate, Crude oil, Electricity, Emissions, Feedgrade minerals, Fertilizers, Hydrogen, LPG, Metals, Natural gas, Oil products, Petrochemicals, Petroleum coke
  • 16/09/20

The OECD today moderated its forecast for global economic contraction this year, but warned of considerable uncertainty to the outlook and said that the Covid-19 pandemic will have long-lasting costs.

In its Interim Economic Outlook, the group said the world gross domestic product (GDP) will fall by 4.5pc this year, and then rise by 5pc in 2021, with most economies ending next year smaller than they were at the close of 2019.

The overall drop is less than in either of the two scenarios the OECD presented in June, one in which Covid-19 is brought under control, and one in which lockdown measures are renewed. The brighter outlook arises from "prompt and effective" government responses, it said. The new forecast assumes that sporadic local Covid-19 outbreaks will continue, but that these will be tackled locally rather than by a return of national lockdowns.

The OECD highlighted considerable differences across countries. It made sharp increases to GDP projections for major commodity consuming countries China and the US. The former's economy will now grow by 1.8pc this year — the only economy forecast to grow — compared with the OECD's March forecast of a 2.6pc contraction. The US economy will shrink by 3.8pc this year, which compares with a prior forecast of a 7.3pc contraction. The OECD moved its projection for the eurozone's economy to a contraction of 7.9pc from its previous forecast for a 9.1pc fall. The forecast for major crude buyer India, where lockdown measures were especially restrictive, is for the GDP to shrink by more than 10pc in its current April-March fiscal year.

As for 2021, the OECD sees all regions returning to growth, with the US at 7.6pc, China at 8pc and India — again in its fiscal year — at 10.7pc.

"But a stronger resurgence of the virus, or more stringent lockdowns could cut 2-3 percentage points from global growth in 2021," the OECD said today. "Without continued government support, bankruptcies and unemployment could rise faster than warranted and take a toll on people's livelihoods for years to come. Policymakers have the opportunity of a lifetime to implement truly sustainable recovery plans… in green infrastructure, transport and housing to build back a better and greener economy."


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03/05/24

Heavy rainfall floods Brazil's Rio Grande do Sul

Heavy rainfall floods Brazil's Rio Grande do Sul

Sao Paulo, 3 May (Argus) — Brazil's southern Rio Grande do Sul state continues to flood after heavy rainfall since 29 April, leading the government to declare an emergency yesterday. The highest volumes reached the central areas of Rio Grande do Sul, with cities receiving rainfall of 150-500mm (6-20 inches), regional rural agency Emater-RS data show. The monitoring station of Restinga Seca city, in the center of the state, recorded rainfall of about 540mm. Rainfall in Rio Grande do Sul overall surpassed 135mm in most of the state, according to the US National Oceanic and Atmospheric Administration (NOAA). Meanwhile, dry weather prevailed in other Brazilian regions. NOAA expects rainfall to abate in the next week, but adverse weather conditions are set to remain. As of today, 154 sections of 68 highways were totally or partially blocked, according to the state's emergency service. The 100MW 14 de Julho hydroelectric plant also partially ruptured . The Rio Grande port has not suspended operations, but handling is slower. Despite the heavy rainfalls, demurrage rates and waiting queues for docking and unloading were not altered. Demurrage rates were stable at $1/metric tonne (t) and the total cost for handling fertilizers remained at $19/t. But market participants expect the situation to change in the coming days, which may increase demurrage rates. If the rain does not stop and the level of the Guaiba River continues to rise, some areas in the port are likely to flood in the coming days, as is the case in part of the Porto Alegre port. Amid slower cargo release, logicitical difficulties and the already-low demand for fertilizer transport services, fertilizer freight rates on the Rio Grande-Dourados route, monitored weekly by Argus , fell by R20/t ($4/t), on average, to R225-250/t. Excessive rainfall to damage 2023-24 soybean crop Rio Grande do Sul is harvesting its 2023-24 soybean crop, set to be the second largest in the country this season. Works reached 76pc of the state's expected acreage by 2 May, posting an weekly advancement of 10 percentage points despite the excessive rainfall, according to the rural agency Emater-RS. Farmers seized shorter windows of more favorable weather — or when rainfall subsided — to intensify field activities, especially in areas expected to register higher yields and that were not deeply affected by a drought earlier in the year. The moisture levels of grains harvested are considered above average and will require more investment in their drying processes. Some areas reported premature germination and plant decay because of the humidity excess. Emater-RS maintains the state's average yields estimated at 3,329 kg/hectare, with recent results remaining within prior projections, according to the agency's weekly report released on 2 May. Thus, soybean production in Rio Grande do Sul is still set to reach a record 22.2mn metric tonnes (t). But market participants agree that forecasts for the state may be revised down in the next weeks, as field surveys begin to accurately assess the excessive rainfall's total damages. By João Petrini, Maria Albuquerque and Nathalia Giannetti Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil hydroelectric dam bursts under record rains


03/05/24
03/05/24

Brazil hydroelectric dam bursts under record rains

Sao Paulo, 3 May (Argus) — Brazilian power generation company Companhia Energetica Rio das Antas (Ceran) found a partial rupture in its 100MW 14 de Julho hydroelectric plant following record precipitation in Rio Grande do Sul state. Flooding from the record rains has left 37 dead and forced more than 23,000 people out of their homes, causing widespread damage across the state, including washed out bridges and roads across several cities. Ceron reported that the dam of the hydroelectric plant on the Antas River suffered a rupture under the heavy rains and the company implemented an emergency evacuation plan on 1 May. Ceron's 130MW Monte Claro and 130MW Castro Alves plants are under intense monitoring, the company said in a statement. Rio Grande do Sul state governor Eduardo Leite declared a state of emergency and the federal government promised to release funding for emergency disaster relief. Leite said the flooding will likely go down as the worst environmental disaster in the state's history. Brazil's southernmost state along the border with Argentina has been punished by record precipitation over the past year owing to the effects of the strong El Nino weather phenomenon, according to Rio Grande do Sul-based weather forecaster MetSul Meteorologia. Brazilian power company CPFL Energia controls Ceran with a 65pc equity stake. Energy company CEEE-GT, which is owned by steel manufacturer CSN, owns another 30pc, and Norway's Statkraft owns the remaining 5pc. The state had declared a state of emergency as recently as September 2023 because of unusually heavy rains that resulted in the death of more than 30 people. Weather forecasters expect El Nino conditions to abate in the coming months over the eastern Pacific. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Brazil's Gerdau eyes special steel mill in Mexico


03/05/24
03/05/24

Brazil's Gerdau eyes special steel mill in Mexico

Sao Paulo, 3 May (Argus) — Brazilian steelmaker Gerdau is considering building another steel plant in Mexico as it seeks to expand its footprint in the country. The company started a feasibility study for the construction of a special steel unit that would have a production capacity of up to 600,000 metric tonnes (t)/yr, chief executive Gustavo Werneck said today. The move follows an optimistic outlook for the country's automotive industry and increased nearshoring — where companies move production closer to the US to tackle supply chain snarls seen during the pandemic. "Important players in the automotive industry, including current Gerdau customers, are expanding their operations to Mexico, which is becoming one of the most relevant countries in the production of automotive parts," Werneck said on a LinkedIn post. He did not give financial details. Gerdau's first quarter crude steel production in North America fell by 2.8pc , but it posted 3.3pc output growth in its special steel business — which includes operations in Brazil and US — mainly driven by automobile production in Brazil, it said. Mexico's auto sales to the US were 0.9pc higher year-on-year in March and first quarter auto exports rose by 1.9pc from the same period of 2023. Gerdau operates two mills in Mexico with a combined nameplate capacity of 1.5mn t/yr. By Carolina Pulice Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Chevron’s oily DJ basin buy boosts gas output


03/05/24
03/05/24

Chevron’s oily DJ basin buy boosts gas output

New York, 3 May (Argus) — Chevron's US natural gas production has surged in recent quarters due to its crude-focused acquisition of Denver-based PDC Energy last August, increasing the oil major's exposure to the US gas market months after that market entered an extended price slump. Chevron's US gas production in the first quarter was 2.7 Bcf/d (76mn m3/d), up by 53pc from the year-earlier quarter and the highest since at least 2021, according to company production data. Chevron's total US output rose by 35pc year-over-year to 1.57 b/d of oil equivalent (boe/d), while US crude output increased by 21pc to 779,000 b/d. The acreage Chevron picked up last year in the DJ basin of northeast Colorado and southeast Wyoming has higher gas-oil ratios than the rest of its US portfolio. Chevron mostly focuses US production in the crude-rich Permian basin of west Texas and southeast New Mexico. Since Chevron closed its acquisition of PDC on 7 August, US gas prices have mostly languished in loss-making territory. Prompt-month Nymex gas settlements at the US benchmark Henry Hub from 7 August 2023 to 2 May 2024 averaged $2.46/mmBtu, down from an average of $4.999/mmBtu in the year-earlier period. In a May 2023 conference call over Chevron's acquisition of PDC, chief executive Mike Wirth expressed optimism for the long-run outlook for natural gas, despite the more immediately dim outlook. "There's going to be stronger global demand for gas growth than there will be for oil over the next decade and beyond as the world looks to decarbonize," Wirth said. Despite lower US gas prices, Chevron has captured $600mn in cost savings from the PDC acquisition between capital and operational expenditures, the company told Argus . Crude prices have also been more resilient. Chevron's profit in the first quarter was $5.5bn, down from $6.6bn in the year-earlier quarter, partly due to lower gas prices. US gas prices have been lower this year as unseasonably warm winter weather and resilient production have created an oversupplied US gas market. A government report Thursday showed US gas inventories up by 35pc from the five-year average. By Julian Hast Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Dutch FincoEnergies supplies B100 biodiesel to HAL


03/05/24
03/05/24

Dutch FincoEnergies supplies B100 biodiesel to HAL

London, 3 May (Argus) — Dutch supplier FincoEnergies has supplied shipowner Holland America Line (HAL)with B100 marine biodiesel at the port of Rotterdam for a pilot test. This follows a collaboration between HAL, FincoEnergies' subsidiary GoodFuels, and engine manufacturer Wartsila to trial blends of B30 and B100 marine biodiesel . HAL's vessel the Rotterdam bunkered with B100 on 27 April before embarking on a journey through the Norwegian heritage fjords to test the use of the biofuel. The vessel will utilise one of its four engines to combust B100, which will reportedly cut greenhouse gas (GHG) emissions by 86pc on a well-to-wake basis compared with conventional fossil fuel marine gasoil (MGO), according to GoodFuels. There is no engine or fuel structure modification required for the combustion of B100, confirmed HAL. The B100 marine biodiesel blend comprised of sustainable feedstock such as waste fats and oils. The firms did not disclose how much B100 was supplied, or whether this is the beginning of a longer-term supply agreement. Argus assessed the price of B100 advanced fatty acid methyl ester (Fame) 0°C cold filter plugging point dob ARA — a calculated price which includes a deduction of the value of Dutch HBE-G renewable fuel tickets — at an average of $1,177.32/t in April. This is a premium of $410.20/t to MGO dob ARA prices for the same month, which narrows to $321.68/t with the inclusion of EU emissions trading system (ETS) costs for the same time period. By Hussein Al-Khalisy Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

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