The situation in Russia and Ukraine affects the market! There will be significant concerns about the resumption of international sanctions against Iran on Monday, as well as the suspension of international oil prices. As of the close, WTI crude oil futures closed up 4.41% to US $103.28/barrel; Brent crude oil futures rose 3.44% to $107.53 a barrel.
Putin signed a decree to take retaliatory visa measures against foreign unfriendly acts, and the EU accelerated the formulation of a new round of sanctions against Russia
According to Xinhua news agency, Russian President Vladimir Putin signed a decree on the 4th to take retaliatory visa measures against foreign unfriendly acts. The EU will speed up the formulation of a new round of sanctions against Russia, the EU high representative for foreign and security policy Borrell said on the 4th.
The Russian President’s website reported on the 4th that Putin signed the decree on “retaliatory visa measures against foreign unfriendly acts” on the same day. According to the decree, the Russian Federation suspended the implementation of many provisions of the simplified visa system agreement signed with the European Union, Norway, Iceland, Switzerland and Liechtenstein.
Ukrainian state news agency quoted Ukrainian local military administration as saying that as of the morning of the 4th, conflicts across Ukraine were still continuing, and the situation in Kherson region was deteriorating. Ukrainian Deputy Defense Minister maliar said that the Russian army’s current attack targets are Kharkov, Mariupol and Odessa.
Russian Defense Ministry spokesman Konashenkov reported on the morning of the 4th that since the launch of the special military operation, the Russian army has destroyed 125 Ukrainian fixed wing aircraft, 91 helicopters, 392 UAVs, 226 anti-aircraft missile systems, 1936 tanks and armored vehicles, 211 multi barrel fire and arrow guns, 833 field artillery and mortars, and 1810 special military vehicles.
Peskov, the press secretary of the Russian President, said on the 4th that Russia denies any allegations of “civilian deaths in Bucha City, Ukraine”, and the relevant allegations are “unreliable”. Russian Defense Ministry experts said there were signs of “video fraud and other false information” in the relevant allegations. Russian Foreign Minister Lavrov said on the same day that Ukraine and Western countries use various channels to spread false information for anti Russian purposes, and such provocations are a direct threat to international peace and security.
In an interview with the media on the 3rd, fedoruk, mayor of Bucha, Ukraine, said 280 civilians were killed in a large grave in Bucha.
The EU high representative for foreign and security policy Borrell said in a statement on the 4th that the EU would speed up the formulation of a new round of sanctions against Russia, saying that the EU would continue to firmly support Ukraine and further promote sanctions against Russia.
German Chancellor Scholtz said in a statement on the 3rd that Germany and its allies will reach an agreement on further sanctions against Russia in the next few days. German defense minister Lambrecht called on EU countries to discuss the ban on Russian natural gas on the 3rd.
The Foreign Ministry of Lithuania announced that its Consulate General in the Russian city of pelida would close its diplomatic relations with Russia in the near future. On the same day, Latvian foreign minister linkevicis wrote on social media that Latvia would lower the level of diplomatic relations with Russia. Once the internal procedures are completed, Latin America will announce the specific decision. Russian Foreign Ministry spokesman zaharova told the media on the 4th that Russia will respond to this soon, “response measures will not keep people waiting”.
The League of Arab States (LAS) issued a statement on the 4th, saying that the Arab Ministerial delegation led by the Secretary General of Las Gheit went to Russia on the same day to seek a diplomatic solution to the conflict between Russia and Ukraine. The delegation included representatives of Egypt, Jordan, Algeria, Iraq, the Sudan and the United Arab Emirates. The delegation will meet with Russian Foreign Minister Sergei Lavrov in Moscow on the 4th and meet with Ukrainian foreign minister kuleba in the Polish capital Warsaw on the 5th.
the United States released its crude oil reserves on a large scale, and market participants believed that it was difficult to reverse the tight crude oil supply
Following the sharp drop in international oil prices last week, the international oil prices rose sharply on Monday. Saudi Arabia announced to raise all oil prices for Asian customers in May and raise oil prices for all categories in the United States and Europe, highlighting its optimism about the prospect of oil demand. The news that the United States announced the release of strategic oil reserves (SPR) failed to offset supply concerns caused by the pending Russian Ukrainian negotiations and the Iranian nuclear agreement.
International oil prices have also been supported by the suspension of negotiations to restart Iran’s nuclear agreement, which will allow the lifting of sanctions on Iranian oil. Iran on Monday accused the United States of stalling negotiations. According to CCTV news, on April 4 local time, Iranian foreign minister abdullahiyan said in a telephone call with Omani foreign minister Badr that the United States had extended the Vienna talks due to “excessive demands” and criticized the new sanctions imposed by the United States on Iranian individuals and entities.
The previous week, in order to alleviate the high oil price situation caused by the global shortage of crude oil supply caused by the Russian Ukrainian war, US President Biden announced the release plan of the largest strategic oil reserve (SPR) in the country’s history on March 31. It is expected to release 1 million barrels a day for about six months, with a total release of 180 million barrels. It is reported that the 180 million barrel scale is the centralized implementation of the gradual storage reduction plan originally planned to 2025, which means that this will be the largest strategic crude oil release in history. In addition to the United States, IEA member states also agreed to release a new round of crude oil reserves, but did not specify the amount of reserves that all parties are more concerned about.
In view of the difficult contradiction of crude oil supply, major oil consuming countries such as the United States, the United Kingdom and Germany have repeatedly urged OPEC + to further increase production in recent weeks to stabilize oil prices. However, OPEC member states such as Saudi Arabia and the United Arab Emirates recently reiterated that they will continue to maintain the OPEC + cooperation mechanism. At the 27th ministerial meeting held on March 31, OPEC + resisted the pressure from western countries to increase production and decided to maintain the original moderate production increase plan in May this year and release production capacity at the rate of 432000 barrels / day. For the recent oil price trend, OPEC + member states believe that the sustained oil market fundamentals and consensus on the prospects show that the market is very balanced. The current fluctuations are not caused by fundamentals, but by sustained geopolitical risks. According to the statement, the 28th ministerial meeting between OPEC and non OPEC oil producing countries will be held on May 5.
Market participants said that at present, Biden has two short-term effective tools, one is SPR and the other is Iran. As far as SPR is concerned, its actual effect needs to be tested. We should know that Russia’s export volume is close to 5 million barrels / day, while SPR is only 1 million barrels / day. In addition, the negotiation of Iran’s nuclear agreement still needs time, and the lifting of sanctions is the most realistic bearish factor shrouded in the market. It should be noted that even if an agreement is reached, Iran’s new capacity of 1.5 million barrels / day will take 3-4 months to release, which is a process that must be followed to increase production.
From the perspective of the United States itself, the potential for the release of crude oil production capacity is limited. Market participants said that because many U.S. energy companies continue to be determined to maintain dividend growth, rather than provide funds for additional exploration, but also to obtain more policy support from the Biden government, they refuse the Biden government’s request to increase the number of oil drilling platforms in the short term. The intensified game between the industry and the U.S. government has led to a slight increase in the number of oil drilling platforms, However, the growth space of US crude oil production is relatively limited.
According to the data released by Baker Hughes, an American energy service company, the total number of active oil wells in the United States increased slightly from 2 to 533 on a weekly basis as of the week of April 1. Although North American oil drilling data continued to rise, crude oil production remained stagnant. According to statistics, as of the week of March 25, US crude oil production increased by 100000 barrels to 11.7 million barrels / day, the first increase in production in two months. On the whole, the current recovery of the US shale oil industry is still slow, and the increment of shale oil production is still limited.
In addition, the International Energy Agency (IEA) data show that at present, the SPR of the United States is only 568.3 million barrels of crude oil, which is the lowest level since May 2002. If the 180 million barrels released in this plan are subtracted, there are less than 400 million barrels left in the US SPR, the lowest level since 1984. Relevant reports said that this means that the SPR of the United States no longer has any effective buffer space.
According to the energy and chemical team of Baocheng futures, the US government’s implementation of the largest crude oil reserve dumping plan in history will have an impact on the market in the short term, but it is difficult to completely reverse the tight crude oil supply caused by the conflict between Russia and Ukraine in essence. Recently, the negative factor was basically released after the short-term rapid decline of international oil prices. Later, the specific performance of oil prices will continue to observe the changes of geographical factors such as Russia and Ukraine and the progress of the negotiation of the Iranian nuclear agreement. At the same time, investors also need to pay attention to the specific process of the delivery of U.S. strategic reserve crude oil. Considering the actual delivery link, selling price and downstream receiving willingness and other factors, it needs time to confirm, so whether the United States can achieve such a large-scale delivery remains to be seen.
Some market analysts said that at present, under the background of forced interruption of Russian crude oil supply, it will still take some time for Iranian crude oil to return to the market, OPEC member states led by Saudi Arabia still lack the willingness and ability to increase production, American shale oil is subject to insufficient investment and high cost, it is difficult to increase production, and the global crude oil capital expenditure is insufficient, which leads to the tense situation of medium and long-term crude oil supply side will be maintained.
In the medium and long term, the energy and chemical team of Baocheng futures believes that at present, both commercial crude oil inventory and strategic oil reserves in the United States are at a historical low. If they are fully released, there will be replenishment demand in the future, and the effect of SPR released by the United States in conjunction with the United Kingdom, India, Japan and South Korea is relatively limited. At present, the world is trying to tap other supply potential to fill the lack of supply due to sanctions on Russian energy. Therefore, the supply increase of crude oil producing countries, including OPEC, deserves high attention from the market.
In addition, Baocheng futures energy team also said that the biggest factor affecting the current oil price is the geopolitical conflict. At present, the probability of the geopolitical factor being solved in the short term is small, which means that the oil price may fluctuate sharply at any time due to the impact of emergencies caused by geopolitical conflict. Only after the supply and demand of the crude oil market stabilize and the inventory continues to accumulate can the oil price really usher in the steady downward trend of the price focus.
UK regulators will conduct multi-party review of lunni incident
On April 4, the financial conduct authority (FCA) and the prudential supervision authority (PRA) of the Bank of England issued a joint statement that they planned to review the London Metal Exchange (LME) and the London Clearing House (LCH) to explore what lessons the two institutions could learn in governance, market supervision and risk management.
The statement shows that FCA plans to review LME and pra plans to review LCH At the same time, through their respective regulatory procedures, they will further contact companies that occupy an important position in the market to assess the effectiveness of their risk management and governance during this period.
Under section 166 of the UK financial services and Markets Act 2000, the FCA will appoint “technicians” to assist in this investigation. After the investigation report is submitted, the investigation report will be referred to to determine whether to take further action and announce the next action in due course. At the end of the technician review, FCA can order LME to change the way it conducts its business. However, since this is not a law enforcement action, it will not involve fines and other matters.
FCA said the suspension and resumption of nickel trading highlighted the market’s doubts about the transparency of LME and related markets. The FCA and the Bank of England will consider these reports to decide whether to take further action. Previously, LME set a 15% price rise and fall limit. Now the transaction has resumed. The regulatory authorities are expected to remain vigilant to LME and LCH until the situation is completely resolved.
The London Metal Exchange (LME) then issued an announcement, including the interim trading measures in the nickel market and the planned independent nickel market trading review.
The announcement shows that LME’s temporary trading measures in the nickel market include daily price restrictions and providing LME with off-site position data. In terms of daily price limit, LME introduced a daily upper and lower limit of 15% for all its physically delivered metals (and cobalt settled in cash to ensure the consistency of its two cobalt contracts) to provide additional market stability mechanism; In terms of providing OTC market data, LME believes that the appropriate first step is to extend the provisions of OTC daily position reporting (now implemented for nickel) to other metals. The exchange is currently considering the best form for this purpose, and LME will communicate directly with members on this matter in due course.
Meanwhile, LME announced that in addition to the external review of FCA and the Bank of England, LME will establish an independent review of nickel market events. LME believes that actions to address the nickel market situation must be properly reviewed. In this context, LME welcomes the review of the actions taken by the FCA and the Bank of England on nickel market events to identify lessons to be learned. In addition, LME will commission an independent review of nickel market events, so as to take clear actions to reduce the risk of disorderly market in the future.
LME will hire one or more experienced independent institutions to conduct independent review, and issue an announcement to the market as soon as possible to confirm the appointment of independent parties and the full scope of independent review. The timetable for the independent review will be determined in consultation with the independent party. It said that the scope of the independent review has not been determined, but it will generally promise to conduct a comprehensive forensic review of trading and position activities in the nickel market, including OTC transactions in the relevant period; Evaluate the market reform suggestions put forward by market participants; Assess which volatility control mechanisms should be implemented in the long term; Consider a stricter position management system; Consider other market reform suggestions put forward by market stakeholders.
In addition, in view of the complexity of the situation (especially the OTC part), in order to assist LME in fulfilling its regulatory obligations, the independent review body will be able to access all data related to trading activities and positions during the reporting period. Where appropriate, LME will use the power of its “rule book” to obtain OTC and other data from market participants and provide these data to independent parties who will conduct independent review.
affected by the epidemic and high prices, the nickel spot market was deserted
Looking at the nickel market, Wang Yanqing, a researcher of China Securities Co.Ltd(601066) futures, said that there are still many disturbing factors in the whole nickel industry chain, and the uncertainty remains high. First of all, the residual prestige of the Lun nickel incident still exists, and the nickel price is still likely to fluctuate relatively high. Secondly, the industrial chain has limited acceptance of current high prices, and the upstream and downstream transmission of price pressure is not sufficient. Finally, the demand side was significantly affected by the epidemic, and the operation of the industrial chain slowed down significantly.
From the perspective of nickel ore, the price has maintained an upward trend, and the demand for nickel ore from ferronickel plants is acceptable. Although the rainy season in the Philippines is coming to an end, it is difficult to import in large quantities in the short term, and the supply of nickel ore remains tight. In Indonesia, as the official reference price refers to the LME nickel price, it is difficult for some smelters to accept the pricing results after the sharp rise of Lun nickel, or affect the subsequent NPI supply.
In terms of ferronickel, the price remains strong, but the downstream acceptance of the current high price raw materials has also decreased, and some stainless steel plants have reduced production, which also puts some pressure on the price of ferronickel. From the perspective of price difference, the current ferronickel price is still significantly discounted to the nickel price, and the contradiction in the industrial chain still needs time to be solved. In terms of electrolytic nickel, the industry remains in a cold state, which has both the impact of high prices on demand and the impact of poor supply caused by the epidemic.
Overall, Wang Yanqing said that at present, the contradiction in the nickel industry chain is very significant. Affected by the high nickel price and the epidemic, the industry chain continues to be in a cold state. On the one hand, the price pressure cannot be transmitted smoothly; On the other hand, logistics problems also affect supply. Some nodes of the industrial chain began to reduce production, making it difficult for nickel supply and demand to reach equilibrium in the short term, and the price volatility remains high. In the long run, nickel prices continue to return to fundamentals, and the downward trend of prices is still the general trend. However, in the short term, the uncertainty of nickel price is still strong, and the admission transaction still needs to face greater risks.
zinc is different inside and outside the city, and the pattern of external strength and internal weakness may continue
The inventory released by the London Metal Exchange (LME) on April 4 showed that zinc inventory decreased by 2275 tons, and zinc orders increased by 33%, reaching the highest level since November last year.
Last week, driven by Lun zinc, the price of zinc in Shanghai maintained an upward trend Hubei Mailyard Share Co.Ltd(600107) Futures Research Institute believes that the current zinc fundamentals are still strong outside and weak inside. As far as Shanghai zinc is concerned, it can be described as “moving forward with a heavy load”. On the one hand, the Russian Ukrainian crisis led to a sharp rise in energy prices, the supply of refined zinc in Europe continued to be tight, and there was a great possibility of further shrinkage. Lun zinc rose strongly, followed by Shanghai zinc; On the other hand, China’s consumption continues to be weak, the expected recovery of consumption in the early stage has not come yet, and the inventory has accumulated to a high position. At present, the pricing of zinc in Shanghai is mainly foreign, and Shanghai zinc is close to the high level of 27000 yuan / ton.
SMM said that the unexpected maintenance and shutdown of Chinese smelters led to the decline of output to about 515000 tons in March and April, which became the main driving force for the rise of Shanghai zinc in the week. However, under the current zinc price of 27000 yuan / ton, the smelter has begun to make profits by purchasing 30% imported ore plus 70% domestic ore, which may change the smelter’s strategy of purchasing long-term zinc ore and start to accept the purchase of imported ore, which will also change the expectation of long-term refined zinc supply. Back to the moment, the current situation of weak consumption will still lead to the low price comparison, and the lower export window will become the support of Shanghai zinc, so as to passively follow the rise of Lun zinc. Overall, the pattern of strong external and weak internal zinc prices continued.
SMM data show that the weekly domestic and imported ore processing fees are divided. The domestic ore processing fees are reduced by 100 yuan / ton to 3650 yuan / ton, while the imported ore processing fees are increased by 15 US dollars / ton to 180 US dollars / ton month on month. However, at present, domestic ore is still more cost-effective than imported ore. as a substitute for domestic ore, if the processing fee of imported ore can still maintain the upward trend, it may drive the processing fee of domestic ore to rise.
The zinc smelting end is also different from the inside and outside. Overseas, due to the continuous impact of the Russian Ukrainian crisis, the natural gas and electricity price in Europe have not decreased significantly after the weather gradually warmed up, but have been at an absolute high level, which has significantly restricted the supply of refined zinc to local smelters in Europe, and the supply may shrink further. Looking at China, although the supply of refined zinc has not fully recovered, the output from January to February is still negative year-on-year, but the degree of supply contraction is significantly weaker than overseas.
There are also great differences inside and outside the consumer side. The overseas macro-economy is still expanding at a rapid speed. Lun zinc continues to go to the warehouse. The inventory in Europe is at the lowest point in history, and the inventory of zinc in North America is also low. China’s consumption is relatively weak. With the superposition of the impact of the epidemic, the manufacturing PMI falls below the boom and bust line. China’s Zinc inventory and social inventory in the previous period are on the high side, which has a lot of accumulation pressure.
Looking back at the market, the above institutions believe that the Russian Ukrainian crisis is difficult to solve repeatedly, or high zinc prices are supported for a long time, but China’s supply is better than overseas, superimposed with weak downstream consumption, it still takes time for stable growth to be transmitted from policy to physical goods, and China’s accumulation pressure is not small. Therefore, there is a drag on the continued upward trend of Shanghai zinc in April, and the price increase may be limited.
