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Market Movers Europe


Market Movers Europe, Feb 26 - Mar 2: Ruling due on Gazprom, Naftogaz dispute; cold snap expected to impact power market

With Laura Varriale, Associate Editor, Metals

February 26, 2018 09:09:44 EST (3:22)

Steel producers will be leaning on the European Commission this week to respond to the expected implementation of far- reaching import restrictions by the US.


Turning to natural gas, a key decision is expected this week in the near four-year arbitration dispute between Russia's Gazprom and Ukraine's Naftogaz.


In the power market, Arctic temperatures are expected to keep prices buoyant across northwest Europe and the UK, as coal and gas plants are called on to meet a surge in demand.


Meanwhile, in oil, the cold snap is expected to generate extra demand from the kerosene-heating segment, which would lend further support to jet fuel prices.


Finally, Iraqi officials including oil minister Jabbar al-Luaibi host the Iraq Petroleum 2018 conference in Berlin on Tuesday. Our social media question for this week:


What actions do you think President Trump will take on steel imports? Tweet us your thoughts with the hashtag #PlattsMM.

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Video Transcript


In this week’s highlights: A key decision is expected in the long-running dispute between Gazprom and Ukraine over gas transit to Europe; a cold snap across the northwest of the continent is set to have a potentially big impact on power and fuel prices; and efforts to drum up funding for the ongoing reconstruction of Iraq’s hydrocarbons sector will be getting under way thousands of miles away from Baghdad in the German capital Berlin.


But first, let’s take a look at the metals market. Steel producers will be leaning on the European Commission this week to respond to the expected implementation of far-reaching import restrictions by the US.


A little over a week ago it was revealed that President Donald Trump had received three recommendations of action from the Department of Commerce, after a section 232 investigation into whether steel imports posed a threat to national security.


As you can see from the chart, the US is Europe’s second largest export market for steel — and European producers may potentially face hefty tariffs and quotas on exports to the US.


Steelmakers are concerned the US market will be closed off, but the bigger worry is that exports from other regions will be redirected to Europe in the future.


The EU has said it will consider actions in response, but mills are nervous that the EU might be slow to act.


Trump has until April 11 to make a decision. And our social media question for this week: If the US takes action on steel, what impact will it have on Europe? Tweet us your thoughts with the hashtag #PlattsMM


Turning to gas, a key decision is expected this week in the near four-year arbitration dispute between Russia's Gazprom and Ukraine's Naftogaz.


The Stockholm arbitration court ruling is related to Naftogaz's claim that Gazprom has repeatedly underused Ukraine's transit system for supplying gas to Europe.


It could have implications on the way Russian gas reaches Europe, given Kiev's desire to reform its transit operations. A major award in Naftogaz's favor could lead to worsening relations between the two sides.


In the power market, Arctic temperatures are expected to keep prices buoyant across northwest Europe and the UK, as coal and gas plants are called on to meet a surge in demand.


If winds pick up, then the price effect could be muted, but nevertheless this is a welcome opportunity for ageing thermal power stations to fill their boots from a brief period of scarcity pricing.


In oil, the cold snap is expected to generate extra demand from the kerosene-heating segment, which would lend further support to jet fuel prices.


Jet fuel prices in Europe currently sit at their highest levels in over three years, as low stocks in the Benelux region have coincided with a heavy maintenance program globally and strong demand in both Asia and the US.


Finally, Iraqi officials including oil minister Jabbar al-Luaibi hosts the Iraq Petroleum 2018 conference in Berlin on Tuesday.


The event aims to attract investment not only to the country’s upstream oil sector, but also its natural gas and oil refining infrastructure.


Officials from BP and Lukoil, two of the biggest foreign investors in the country, are also among the speakers.


Last week al-Luaibi set a goal of more than doubling Iraq’s refining capacity by 2022 to over two million b/d.


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





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