OPEC+ starts two days of talks amid oil price gyrations, Omicron fears

OPEC+ starts two days of talks amid oil price gyrations, Omicron fears
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Updated 01 December 2021

OPEC+ starts two days of talks amid oil price gyrations, Omicron fears

OPEC+ starts two days of talks amid oil price gyrations, Omicron fears
  • But some analysts have suggested OPEC+ might put its plans to add 400,000 bpd to supply in January on hold

OPEC and its allies begin two days of meetings on Wednesday to decide whether to release more oil into the market or restrain supply amid big gyrations in crude prices and uncertainty about the impact of the Omicron coronavirus variant on energy demand.


Oil prices fell to near $70 a barrel on Tuesday, after hitting a three-year high above $86 in October, posting their biggest monthly decline in November since the start of the pandemic, as the new variant raised fears of a glut.


In November, Brent fell by 16.4 percent, while US crude fell 20.8 percent, the biggest monthly fall since March 2020.

Both contracts rebounded sharply on Wednesday, gaining about 5 percent.


Iraqi oil minister Ihsan Abdul Jabbar said he expected the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to extend existing output policy in the short term, the state news agency reported.


OPEC+ ministers, including those from the group’s biggest producers Russia and Saudi Arabia, have said there was no need for a knee-jerk reaction to amend policy.


Since August, the group has been adding an additional 400,000 barrels per day of output to global supply, as it gradually winds down record cuts agreed in 2020, when demand cratered because of the pandemic.


Algerian energy minister Mohamed Arkab said on Tuesday that OPEC+ would supply the global market with enough oil but urged caution about the impact of the Omicron variant, Algerian state news agency APS reported.


“The threat to oil demand is genuine,” said Louise Dickson, senior oil markets analyst at Rystad Energy. “Another wave of lockdowns could result in up to 3 million bpd of oil demand lost in the first quarter of 2022.”


But Goldman Sachs said the oil price slide in recent days had been excessive, with the market now pricing in a 7 million bpd hit to demand.


Adding pressure to prices, Federal Reserve Chair Jerome Powell said the US central bank was likely to discuss speeding up its reduction of bond purchases amid a strong economy and expectations that a surge in inflation would persist.


OPEC meets on Wednesday at 1300 GMT. That meeting will be followed on Thursday by a gathering of the wider OPEC+ group.


A delegate from the OPEC+ alliance said Wednesday’s OPEC meeting “should be straightforward.” 


But some analysts have suggested OPEC+ might put its plans to add 400,000 bpd to supply in January on hold.


Even before concerns about Omicron emerged, the group had been weighing the effects of last week’s announcement by the United States and other countries to release emergency crude reserves to temper energy prices.


OPEC+ has been gradually scaling back last year’s record output cuts of 10 million bpd, equivalent to about 10 percent of global supply. About 3.8 million bpd of cuts are still in place.


But OPEC’s November oil output has again undershot the level planned, as some OPEC producers have struggled to hike output, a Reuters survey found, after years of low investment and amid global pressures to reduce fossil fuel use.


Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves

Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves
Hyundai Motor Company Dealership
Updated 5 sec ago

Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves

Hyundai Motor expects vehicle production to rebound in H1 as chip supply improves
  • Major automakers and dealers, such as Tesla Inc. and Honda Motor Company, have already raised car prices over the past year

South Korea’s Hyundai Motor Co. forecast on Tuesday its vehicle production would rebound in the first half of this year as a global chip shortage is expected to ease gradually from the second quarter.


“The normalization of auto chip supply and demand is expected in the third quarter, when the capacity of semiconductor companies is expected to rise,” Executive Vice President Seo Gang Hyun said on Hyundai’s conference call.


The shortage will continue in the first quarter due to the spread of the omicron variant, Seo said, adding it was the prolonged COVID-19 pandemic in Southeast Asia and resulting chip sourcing troubles that pushed Hyundai’s sales to less than the targeted 4 million vehicles in 2021.


Southeast Asia is central to the supply of basic chips that drive the world’s cars, smartphones and home devices, with Malaysia’s chip assembly industry accounting for more than a tenth of a global trade worth over $200 billion. COVID-related lockdowns in the region have disrupted several industries since last year.


Hyundai said it expects a 20 percent sales jump in its biggest market, North America, in 2022.


Hyundai and its affiliate Kia Corp, together among the world’s top 10 automakers by sales, have forecast a 12.1 percent jump in their combined global sales for 2022, after their sales fell almost 4 percent short of a target of 6.92 million vehicles last year due to the chip shortages.


Hyundai posted a nearly 50 percent drop in its profit for the quarter ended December, significantly short of analysts’ estimate, mainly due to the payment of corporate taxes.


It reported a net profit of 547 billion won ($456 million), versus 1.1 trillion won a year earlier. That compared with an average analyst forecast of 1.5 trillion won compiled by Refinitiv SmartEstimate.

HIGHER PRICES, OMICRON


Analysts warn that soaring raw material prices, component shortages and logistical bottlenecks caused by the pandemic are likely to further drive up costs in the current quarter.


“It is still difficult to forecast how the chip shortage will pan out ... also there will be other uncertainties involving the spread of the omicron variant and potential issues related to Ukraine tensions,” said Lee Jae-il, an analyst at Eugene Investment & Securities.


Japanese automakers Toyota Motor Corp. and Honda Motor Co. Ltd. have said they plan to curb their production this month due to rising COVID cases and part supply issues.


As supply chain and distribution disruptions continue, delaying deliveries and production, analysts expect Hyundai to raise vehicle prices to mitigate the impact.


Major automakers and dealers, such as Tesla Inc. and Honda Motor Company, have already raised car prices over the past year.


UK manufacturers plan biggest price rises since 1977: CBI

UK manufacturers plan biggest price rises since 1977: CBI
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Updated 16 min 18 sec ago

UK manufacturers plan biggest price rises since 1977: CBI

UK manufacturers plan biggest price rises since 1977: CBI

British manufacturers expect to raise prices by the most since 1977 over the next three months, after facing the biggest increase in costs since 1980 and intense labor shortages, a quarterly survey showed on Tuesday.


The Confederation of British Industry survey showed a rise in orders and the strongest export demand growth since July 2018, but overall optimism fell as businesses battled intense inflationary pressures.


“Global supply chain challenges are continuing to impact UK firms, with our survey showing intense and escalating cost and price pressures,” CBI chief economist Rain Newton Smith said.


British consumer price inflation is rising sharply and hit its highest in almost 30 years in December at 5.4 percent, though there had been some signs in other surveys that the pace of cost growth for businesses was beginning to slow.


Tuesday’s data from the CBI is likely to reinforce the Bank of England’s concern that high inflation is getting baked into businesses’ pricing plans.


The survey showed that the balance of manufacturers expecting domestic prices to rise over the next three months was its highest since April 1977.

The export prices expectations balance was the highest since January 1980.


Average unit costs for manufacturers in the three months to January rose by the most since April 1980, and the percentage of firms reporting difficulties from a lack of skilled workers was the highest since October 1973.


Optimism about the current business situation and prospects for the year ahead both fell to their lowest since January 2021, when the economy was still in lockdown.


However, new orders picked up over the past three months and January’s monthly gauge of new orders held unchanged at +24, just below November’s record reading of +26.

Economists polled by Reuters had forecast a drop to +22. 


China’s car maker Geely in solar factory push

China’s car maker Geely in solar factory push
Updated 27 min 34 sec ago

China’s car maker Geely in solar factory push

China’s car maker Geely in solar factory push

RIYADH: Chinese automotive firm, Zhejiang Geely Holding Group Co. will install solar photovoltaic cells on the roofs of all its plants in the upcoming two years amid green push.

The firm, which is the largest carmaker in the country, wishes to cut carbon emissions by 25 percent by 2025, Bloomberg reported, citing Gong Jin, CEO of Geely JoiNet Energy Co. — the division accountable for transforming the carmaker's production hubs into more sustainable ones.

The division is also planning for the commencement of carbon trading within a year, with an estimated revenue from that move of around 10 million yuan ($1.6 million) annually in three years time.

The solar panel installations in two specific plants located in Xi’an and Ningbo cities respectively will aid the firm in cutting a total of 60,000 tons on a yearly basis.

This falls in line with China’s 2060 carbon neutrality goals which has encouraged businesses from various industries to search for green power generation sources.

Carmakers have allocated billions of dollars in technology to help lessen manufacturing emissions which represent from 75 to 85 percent of total emissions.

China saw a record number of rooftop solar panels installed in 2021, adding 29 gigawatts to the country’s energy capacity.


Russia plans to allow crypto mining, gold-backed stablecoins: Crypto Moves

Russia plans to allow crypto mining, gold-backed stablecoins: Crypto Moves
Updated 39 min 8 sec ago

Russia plans to allow crypto mining, gold-backed stablecoins: Crypto Moves

Russia plans to allow crypto mining, gold-backed stablecoins: Crypto Moves

RIYADH: Bitcoin, the leading cryptocurrency internationally, traded higher on Tuesday, rising 5.14 percent to $36,374 at 12:53 p.m. Riyadh time.

Ether, the second most traded cryptocurrency, was priced at $2,417, up 3.47 percent, according to data from Coindesk.

Other News:

The free circulation of cryptocurrencies must not be allowed as they carry risks for unqualified investors, but Russia may permit the use of gold-backed stablecoins and the mining of cryptocurrencies under government control, according to the chairman of the State Duma Committee on Industry and Trade, Vladimir Gutenev.

Gold-backed stablecoin can also be used for saving, Gutenev told the RIA Novosti news agency.

Such a financial product would be an interesting proposition for both private investors and companies.

The gold-backed stablecoin could be similar to a golden ruble, the parliamentarian elaborated, claiming Russia can employ it to circumvent sanctions and the policy of containment applied against the country.

The coin can also be used to facilitate regular and transparent economic relations with other countries, according to Bitcoin.com.

Commenting on Bank of Russia’s call for a ban on crypto mining, Gutenev said he thinks that cryptocurrency farms can be allowed to operate legally if their activities are under strict control of the state.

Miners can take advantage of the abundant energy resources and favorable climate conditions in some Russian regions, provided their facilities are powered transparently and they pay all due taxes.

Amid expanding US sanctions, Moscow is putting an emphasis on de-dollarization, Deputy Foreign Minister Alexander Pankin said.

Adoption

Unionbank of the Philippines plans to offer cryptocurrency trading and custodial services, Bloomberg reported.

Unionbank is one of the largest universal banks in the Philippines with over $15 billion in assets under management.

The bank is also one of the first financial institutions in the Philippines to adopt cryptocurrency.

The average Filipino investor currently holds about 1 percent to 2 percent of their personal assets in cryptocurrency, such as bitcoin, Cathy Casas, head of the bank’s blockchain and application programming interface group said.

She added that if the markets were stable, investors would own between 3 percent and 5 percent in five years.

The Unionbank executive estimates that about 5 percent of the local population has dabbled in cryptocurrency. She added that many crypto investors are young people, some of whom earn tokens from play-to-earn virtual games.


Indonesia to develop $4bn polysilicon industry to boost solar panel production

Indonesia to develop $4bn polysilicon industry to boost solar panel production
Image: Shutterstock
Updated 47 min 47 sec ago

Indonesia to develop $4bn polysilicon industry to boost solar panel production

Indonesia to develop $4bn polysilicon industry to boost solar panel production
  • The Asian country also has a wish to generate 5.3 gigawatts by 2030

RIYADH: Indonesia will establish a $4 billion polysilicon industry amid efforts to boost solar panel production.

Polysilicon is a vital material for solar panels,  and prices soared to a 10-year high in 2021, driving local solar firms to boost production of the material. 

Indonesia is seeking to boost industry production in the country at lower levels than prevailing market prices as it seeks a move away from fossil fuels towards green energy instead, Bloomberg reported.

The Asian country also has a wish to generate 5.3 gigawatts by 2030 through vast solar panel installations.

Two plants are already in progress as a result of a collaboration between potential investors and domestic firms, Bloomberg reported, citing Septian Hario Seto, a deputy for mining and investment at the Coordinating Ministry for Maritime Affairs and Investment.

The first plant, worth $800 million, will be located in Batang, Central Java. It is set to open in the third quarter of 2022 and has an estimated production of 40,000 tons of polysilicon in its preliminary phase.

The second plant has an accumulated worth of $3.2 billion and is set to open in North Kalimantan with an estimated production of 160,000 tons of polysilicon.

This is expected to bring about a phase of excess supply in the country soon.