China hits key clean energy target

Iraq-Kurdistan standoff intensifies amid worsening OPEC+ compliance

– The political standoff between Iraq and the Kurdish regional government took a new turn this week after industry associations of oil producers claimed that crude output in the semi-autonomous region had reached 350,000 bpd.

– Kurdish production is the main reason why Iraq cannot meet its OPEC+ production quota of 3.99 million b/d, further angering other members of the oil group as Iraq’s total supply remains around 4 .25 million b/d.

– Baghdad has warned Erbil that if the KRG does not cut production to the “minimum necessary” for its refineries, it will face punitive measures from Iraqi federal authorities, including withholding its share of the budget.

– Iraq vowed to cut its oil output by 3.85 to 3.9 million b/d in September, deepening output limits, as OPEC+ compliance rate barely changed despite lower supply from Baghdad-held territory .

China hits key renewable energy target six years ahead of schedule

– Chinese President Xi Jinping set a goal in December 2020 to reach 1,200 GW in clean energy generation capacity by 2030, however the country’s energy industry already reached that target this summer.

– Already the world leader in renewable capacity, China added another 25 GW of wind turbines and solar panels in July, bringing the national tally to 1,206 GW, bucking the trend in previous years of commissioning two-thirds of…

Iraq-Kurdistan standoff intensifies amid worsening OPEC+ compliance

– The political standoff between Iraq and the Kurdish regional government took a new turn this week after industry associations of oil producers claimed that crude output in the semi-autonomous region had reached 350,000 bpd.

– Kurdish production is the main reason why Iraq cannot meet its OPEC+ production quota of 3.99 million b/d, further angering other members of the oil group as Iraq’s total supply remains around 4 .25 million b/d.

– Baghdad has warned Erbil that if the KRG does not cut production to the “minimum necessary” for its refineries, it will face punitive measures from Iraqi federal authorities, including withholding its share of the budget.

– Iraq vowed to cut its oil output by 3.85 to 3.9 million b/d in September, deepening output limits, as OPEC+ compliance rate barely changed despite lower supply from Baghdad-held territory .

China hits key renewable energy target six years ahead of schedule

– Chinese President Xi Jinping set a goal in December 2020 to reach 1,200 GW in clean energy generation capacity by 2030, however the country’s energy industry already reached that target this summer.

– Already the world leader in renewable energy capacity, China added another 25 GW of wind turbines and solar panels in July, bringing the national tally to 1,206 GW, following a trend in previous years of commissioning two-thirds of the global supply with new energy.

– Despite notable capacity growth, solar and wind still account for only 14% of electricity generated across China, with coal still leading the way with around 40% of total generation.

– China’s levelized cost of electricity remains 40-50% cheaper than in other Asia Pacific countries, with solar profitability for utilities the cheapest energy source and onshore wind expected to overtake coal this year future.

Transatlantic LNG flows to remain strong as Asia arbitrage weakens

– Asian LNG price premiums over US natural gas futures are the highest since 2024 to date, however, a closed US arbitrage will make it very difficult for US exporters to capitalize on higher prices for now .

– The October benchmark JKM price estimate rose to $14.3 per mmBtu this week, a $2.6 per mmBtu premium to US Gulf Coast FOB prices, boosted by a roughly 10% increase in consumption .

– Even though European stocks are now above 90%, future maintenance in offshore Norway, Algeria and Libya will reduce spot availability in Europe, making the Old Continent the preferred destination for US LNG, offering a premium of $0.40 per mmBtu over Asia .

– Northwest European LNG prices are currently trading at a discount of $1.4-1.5 per mmBtu to JKM, however Europe accounts for almost a third of US LNG exports, with Asia accounting for 20%, and the rest coming from the Middle East, North Africa and the Americas.

Healthy demand and dividend anticipation boost Indian stocks

– The Indian stock market is facing a bull ride as the country’s impressive 7.2% GDP growth this year and improving dividend strategies attract investors from around the world.

– Commodities have been particularly strong in 2024 so far, with India’s Nifty Energy Index, a local benchmark for oil producers, refiners and commodity firms, up 31% this year, more than six times the average growth rate globally.

– Despite being state-owned, upstream-focused Oil India has become the industry’s best-performing stock with a 209% year-to-date gain, buoyed by government incentives that include a price premium of 20 % of natural gas produced from new wells.

– Most Indian oil firms have maintained a dividend yield of 4-6%, but the combination of stable gross refining margins, fuel prices and cheaper raw material costs due to Russian and Venezuelan barrels could prompt companies like IOC or BPCL to raise the payments. .

Project delays and transit in Ukraine end hedge funds quick to bet on natural gas

– Hedge funds continue to ramp up their net long positions in European natural gas and LNG markets to hit multi-year highs on expectations that Russia’s pipeline flows to Europe will dry up and on delays to LNG projects.

– In the last reported week ended August 16, money managers’ net long position increased 14%, marking the most bullish position since July 2021

– The largest incremental source of US supply, the 18.1 mtpa Golden Pass LNG project has been delayed to 2026-2027 and will not start next year, while Energia Costa Azul’s first 3.3 mtpa train Sempra is expected to launch in 2026.

– The 5-year transit contract between Russia and Ukraine is set to expire in December, and Kiev has signaled it will not seek to extend it, prompting Brussels to find alternative solutions, such as an Azeri-Russian gas exchange.

Europe’s EV Bonanza is running out as subsidies are phased out

– Car sales in Europe are flat after incremental demand for electric vehicles in recent years appears to be fading as new car registrations rose just 0.4% in July to a total of 1.03 million units.

– The annual statistics are all the more stark as EV car registrations in Germany totaled just 30,762 units last month, down nearly 40% from July 2023 and nearly a third off robust hybrid car sales.

– After paying more than 10 billion to German citizens in electric vehicle subsidies between 2016 and 2023, the German Economy Ministry ended its electric vehicle subsidy program late last year, forcing electric vehicle sales to decline this year.

– The weak performance of electric vehicles has already caused carmakers to react – Volkswagen is said to close Audi’s electric-only plant near Brussels in Belgium, while Mercedes has corrected its future electric vehicle ambitions to the downside.

China is trying in vain to reduce the pressure on the steel industry

– China has temporarily suspended approvals for new steel capacity swaps, a mechanism introduced in 2018 to replace aging facilities with new, more efficient ones, in a bid to tackle production overcapacity.

– In the post-Covid years alone, China commissioned 143 mtpa of pig iron and 153 mtpa of crude steel facilities, increasing total capacity by 13 mtpa and 29 mtpa respectively, with further expansions planned for the remainder of 2024 and 2025.

– According to China’s National Bureau of Statistics, the country’s ferrous smelting and processing industry posted a total loss of ¥2.76 billion ($390 million) in the January-July period, amid a declining real estate sector and more construction slow infrastructure.

– China’s crude steel capacity is believed to have reached 1.3 billion metric tons per year so far, well above last year’s domestic consumption of 934 mtpa, a number that is most likely to decline by 5% this year.