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Market Movers Europe


Market Movers - Europe, Aug 21-25: OPEC weighs up its options

With Andre Agapi, Managing Editor, APAC Agriculture

August 21, 2017 08:42:45 EST (3:06)

OPEC and non-OPEC oil officials meet in Vienna on August 21 to assess the impact of last year’s deal to cut 1.8 million b/d of crude production. The meeting is a technical one and intended to make recommendations rather than take decisions on whether extra measures are needed.


Elsewhere, the new sugar season will be decision time for EU sugar producers on whether to make sugar or ethanol. EU sugar production is expected to rise 17% on the year to almost 20 million metric tons.


Energy traders in Europe will be closely watching any news on checks on components of French nuclear power stations made at Areva’s Le Creusot Forge.


Finally, a lack of components is also affecting the steel industry. China's drive to cut pollution has cut the availability of various key metals and minerals for the steel sector.


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Video Transcript


In this week's highlights, OPEC weighs up its options; traders await news of the EU harvest; and there are worries about another winter of nuclear discontent in France.


OPEC and non-OPEC oil officials meet in Vienna on Monday to assess the impact of last year's deal to cut 1.8 million barrels per day of crude production. The meeting is a technical one and intended to make recommendations rather than take decisions on whether extra measures are needed. Oil ministers will not attend.


Supporters of the deal point to falling oil stocks. But skeptics point to steadily rising OPEC production on a lack of compliance by some members, as well as relatively low prices.


That's our question for social media this week: Are further OPEC production cuts likely before the end of 2017? Tweet us your thoughts with the hashtag #PlattsMM.


Elsewhere, the new sugar season will be decision time for EU producers on whether to make sugar or ethanol. EU sugar production is expected to rise 17% on the year to almost 20 million metric tons. This is because export quotas will end at the start of the season on October 1. This is having a bearish impact on the ethanol industry as traders expect some sugar beet-based ethanol capacity to restart operations.


Moving from sugar to atoms; energy traders in Europe will be closely watching any news on checks on components of French nuclear power stations made at Areva's Le Creusot Forge.


As you can see from the chart, markets reacted nervously last week to the potential for cuts to nuclear availability this winter. Some 400 irregularities in fabrication files for both nuclear and non-nuclear components were discovered in 2016 during an audit of the forge. Around half of these involved nuclear components. This resulted in EDF reducing its annual nuclear production target for 2017.


The review comes against the backdrop of rising coal and carbon prices. Potentially, prices could be driven even higher by another winter of nuclear discontent.


A lack of components is also affecting the steel industry. China's drive to cut pollution has cut the availability of various key metals and minerals for the steel sector.


Mills around the world are facing a quadrupling in the price of graphite electrodes, a critical part of steel production. Chinese exports have halved to around 100,000 metric tons last year. Steel production has been hit in Europe and elsewhere, with some mills having brief outages. Now attention turns to refractories, used in heat insulation in furnaces. Production of key raw materials has been severely reduced in China. This means mills may struggle to ramp up production in the next few weeks despite high margins.


Thanks for kicking off your Monday with us, and have a great week ahead.





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