Keiko squeaks past rival in Peru, investors exhale
The investor community's pick Keiko Fujimori is on track to become Peru's next president, breaking barriers and squeaking past her upstart rival with nearly 90pc of the vote counted after yesterday's hard-fought election.
Keiko garnered 50.4pc to 49.6pc for leftwing schoolteacher and union organizer Pedro Castillo, according to electoral authority ONPE.
The tight run-off election had sent jitters through the business community partly because of Castillo's plan to nationalize strategic mining and natural gas assets now in private-sector hands. The local stock exchange and currency trading are likely to reflect buoyant investor sentiment when markets open this morning.
Fujimori, 46, is poised to become Peru's first woman president and the first child of a former president to be elected here. Her father, Alberto Fujimori, governed with an iron fist in 1990 to 2000, and is currently imprisoned on corruption and human rights charges. Keiko, as she is known, has said she would pardon him if she were to reach the presidency. She ran for the top job and lost in 2011 and 2016.
Keiko's tight apparent victory and her own legal troubles – she has been detained three times in an election fraud and money laundering case – will require a great deal of political finesse as the economy crawls out from the Covid-19 pandemic. Vaccinations are minuscule, with less than 10pc of the population inoculated as of early June.
Peru has had four presidents in five years in a reflection of chronic political turmoil wrought by a system marked by a low bar for impeachment. Caretaker president Francisco Sagasti will hand over the sash on 28 July. Keiko and Castillo were the top vote-getters in 11 April elections, but neither garnered a large enough margin to win outright.
Castillo's supporters are alleging fraud after a quick count by a polling company, Ipsos Peru, gave him a narrow victory.
Regional pattern
Peru's economy expanded by 3.8pc in the first quarter after tumbling by 11pc in 2020. Unemployment remains at 15.1pc. The government at the end of May dramatically revised up its Covid-19 deaths to more than 184,000. It now leads the world in per capita deaths, according to Johns Hopkins University.
In a widely expected regional pattern, Fujimori dominated Lima with close to 66c of the vote. The capital represents one-third of the electorate. She also obtained close to 60pc along the vote-rich northern coast, home to the country's most productive oil wells and state-owned PetroPeru's Talara refinery.
Castillo swept the south of the country with more than 80pc in four regions, including Cusco, where the Camisea gas fields are located. He carried all of the big mining regions as well. Peru is the world's second largest copper producer after Chile, and is among the top producers of gold, lead, silver and zinc.
Fujimori plans to make direct payments to residents of mining zones using 40pc of taxes paid by companies. She also wants mining companies to make a "voluntary contribution" in line with rising mineral prices to pay for agricultural projects, especially irrigation.
Sagasti took office in November after one president was impeached and another forced to resign in less than one week. He was ineligible to run for a full five-year term.
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New US rule may let some shippers swap railroads
New US rule may let some shippers swap railroads
Washington, 30 April (Argus) — US rail regulators today issued a final rule designed to help customers switch railroads in cases of poor rail service, but it is already drawing mixed reviews. Reciprocal switching, which allows freight shippers or receivers captive to a single railroad to access to an alternate carrier, has been allowed under US Surface Transportation Board (STB) rules. But shippers had not used existing STB rules to petition for reciprocal switching in 35 years, prompting regulators to revise rules to encourage shippers to pursue switching while helping resolve service problems. "The rule adopted today has broken new ground in the effort to provide competitive options in an extraordinarily consolidated rail industry," said outgoing STB chairman Martin Oberman. The five-person board unanimously approved a rule that would allow the board to order a reciprocal switching agreement if a facility's rail service falls below specified levels. Orders would be for 3-5 years. "Given the repeated episodes of severe service deterioration in recent years, and the continuing impediments to robust and consistent rail service despite the recent improvements accomplished by Class I carriers, the board has chosen to focus on making reciprocal switching available to shippers who have suffered service problems over an extended period of time," Oberman said today. STB commissioner Robert Primus voted to approve the rule, but also said it did not go far enough. The rule adopted today is "unlikely to accomplish what the board set out to do" since it does not cover freight moving under contract, he said. "I am voting for the final rule because something is better than nothing," Primus said. But he said the rule also does nothing to address competition in the rail industry. The Association of American Railroads (AAR) is reviewing the 154-page final rule, but carriers have been historically opposed to reciprocal switching proposals. "Railroads have been clear about the risks of expanded switching and the resulting slippery slope toward unjustified market intervention," AAR said. But the trade group was pleased that STB rejected "previous proposals that amounted to open access," which is a broad term for proposals that call for railroads to allow other carriers to operate over their tracks. The American Short Line and Regional Railroad Association declined to comment but has indicated it does not expect the rule to have an appreciable impact on shortline traffic, service or operations. Today's rule has drawn mixed reactions from some shipper groups. The National Industrial Transportation League (NITL), which filed its own reciprocal switching proposal in 2011, said it was encouraged by the collection of service metrics required under the rule. But "it is disheartened by its narrow scope as it does not appear to apply to the vast majority of freight rail traffic that moves under contracts or is subject to commodity exemptions," said NITL executive director Nancy O'Liddy, noting it was a departure from the group's original petition which sought switching as a way to facilitate railroad economic competitiveness. The Chlorine Institute said, in its initial analysis, that it does not "see significant benefit for our shipper members since it excludes contract traffic which covers the vast majority of chlorine and other relevant chemical shipments." By Abby Caplan Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
First TMX cargo booked on Aframax to China
First TMX cargo booked on Aframax to China
Houston, 30 April (Argus) — The first cargo shipped on the Trans Mountain Expansion (TMX) crude pipeline is scheduled to load on an Aframax in Vancouver, British Columbia, beginning 18 May for June delivery in China, according to sources with knowledge of the transaction. Suncor provisionally booked the Aframax Dubai Angel for a Vancouver-China voyage at $3.5mn lumpsum, equivalent to $6.39/bl for Access Western Blend, market participants said. In March, China's state-run Sinochem purchased the first TMX cargo — 550,000 bl of Canadian Access Western Blend — for June delivery. The shipping fixture would mark the first Vancouver-China crude delivery since May 2023, according to Vortexa, a possible indicator of steady Asia-Pacific demand to come with increased maritime access for Canadian oil producers. China already receives heavy sour Canadian crude re-exported from the US Gulf coast, with about 110,000 b/d arriving in 2023, Vortexa data show. The new 590,000 b/d pipeline begins commercial service on 1 May, with three Aframax-capable berths at Vancouver's Westridge Marine Terminal, up from one previously. An oversupply of Aframax crude tankers on the west coast of the Americas in anticipation of TMX-driven demand pressured Vancouver-loading rates to six-month lows on 19 April , according to Argus data, but market participants expect demand to increase beginning in the second half of May. Three regulatory approvals remained under assessment by the Canada Energy Regulator (CER) on 30 April. The applications concern piping, valves and other components at two pipeline inspection device traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. By Tray Swanson Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canada’s TMX awaits regulator OK on eve of service
Canada’s TMX awaits regulator OK on eve of service
Calgary, 30 April (Argus) — Regulatory approvals needed for the 590,000 b/d Trans Mountain Expansion (TMX) crude pipeline in western Canada are coming down to the wire on the eve of entering commercial service. The major crude pipeline last week maintained its plan to start commercial operations on 1 May, but three filings remain under assessment by the Canada Energy Regulator (CER) with less than 24 hours to go. Federally-owned Trans Mountain requires all sections, called spreads, of the pipeline to receive regulatory blessing before the line can be put into service. Outstanding are applications pertaining to Spread 5B Part 3, which runs from kilometer post 1064 to 1067, according to CER's website. The segment is near Hope, British Columbia, about 140 kilometers (87 miles) east of the line's terminus in Burnaby. The three applications concern piping, valves and other components at two pipeline inspection gauge (pig) traps and the mainline pipe between the two traps. The traps were added for safety assurance when the operator was allowed by CER to use a smaller diameter pipe as part of the Mountain 3 deviation. Mountain 3 was the last segment of the pipeline to be constructed because of delays relating to difficult terrain while tunneling. TMX will nearly triple the existing 300,000 b/d Trans Mountain system that connects oil-rich Alberta to the docks in Burnaby, British Columbia. Importantly, the line will provide Canadian oil sands producers with a significant export outlet without having to first go through the US. The "golden weld" marking the end of construction occurred on 11 April, according to Trans Mountain. A group of shippers last week expressed concern that TMX would not be ready for commercial service by 1 May. Spreads 6, 7A and 7B stretching from kilometer post 1075 to 1180 were approved earlier in the week, bringing the total number of approvals up to 39. The expansion was first conceived more than a decade ago with the intention of being operational by late-2017, but that date slipped amid cost overruns and repeated delays. By Brett Holmes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Oversupply and fragmentation challenge steel market
Oversupply and fragmentation challenge steel market
London, 30 April (Argus) — Participants in the Turkish and European long steel markets at a major industry event this week anticipated a difficult remainder of 2024, expecting demand to be generally supplied by local capacities. With the Chinese Metallurgical Industry Institute forecasting a 1.7pc drop in Chinese steel demand in 2024 and the country's steel output expected to remain stable, Chinese exports are likely to continue putting pressure on global rebar prices. China's overall steel exports this year so far are on course to exceed the 91.2mn t shipped in 2023. Traders were concerned over the Chinese real estate sector, which, along with infrastructure construction, drives the bulk of Chinese steel demand but has been plagued by a mismatch between housing demand and supply in recent years. Markets outside of China are also likely to be well-supplied for the rest of the year or longer, with a weak construction outlook in Europe and with steel capacity on an upward trend in India and southeast Asia. Government investment in construction projects is likely to drive Indian steel demand to at least 190mn t by 2030, said Somanath Tripathy of the Steel Authority of India Limited (SAIL). But in the near term Indian demand growth has been sluggish while output has increased, with steelmakers Tata and JSW both reaching record steel output in the financial year of 2023-2024. Meanwhile, participants had weak expectations for the European and Turkish rebar markets for the rest of the year. Expectations of a recovery in the European steel sector have largely been pinned on the likelihood the European Central Bank will reduce interest rates at some point in the second half of the year. But a German trader noted while this move would lend some support, high interest rates are far from being the only challenge for the sector. The EU construction sector faces increasingly high costs, partly caused by sustainability requirements, participants noted, slowing investment and weighing on property demand by pushing up prices. The combination of high interest rates and inflation in Turkey, as well as dwindling export options, means several Turkish steel mills are currently running at near 50pc of capacity. Turkish rebar exporters face stiff competition in most export markets from Chinese suppliers, whose fob prices are currently around $70/t lower than Turkey, as well as from north African producers. The challenge for Turkish exporters is structural, with the business model of importing scrap and exporting steel no longer as viable due to higher scrap demand from other regions as well as the significantly lower energy costs of north African and Middle Eastern producers. Some market participants noted in this context, the introduction of the European Carbon Border Adjustment Mechanism (CBAM) could favour Turkish EAF mills in the long run, who are no longer competitive in terms of price in most markets, but whose use of scrap versus direct reduced iron (DRI) makes their production less carbon-intensive than other EAF-based producers in the region. Turkish producers are working to make sure they will be compatible with EU environmental requirements, a Turkish mill source said. But government support for these efforts has been lacking, he added. Overall, protectionist measures have significantly harmed Turkey's export options, as has the outbreak of conflicts and tensions in the region over the past two years. Some Turkish mills have lost up to half of their regular export sales as a result of the halt of exports to Israel and a slowdown in sales to Yemen as a result of the conflict in Gaza and Houthi vessel attacks. Until European prices pick up significantly and north Africa is selling at capacity, Turkish long steel exports will not be competitive in the near future, a trader noted. By Brendan Kjellberg-Motton Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
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