Tag: rail freight

Best in Energy – 12 April 2023

India’s railways struggle to move enough coal to industry

EU explores options to end LNG imports from Russia

Steel industry and emissions metrics for decarbonisation

Multilateral development banks and the energy transition

U.S. economy’s twin business and epidemic cycles ($WSJ)

U.S. manufacturing capacity growth is accelerating ($WSJ)

Russia’s crude oil exports close to busting $60 cap ($BBG)

China’s policymakers grapple with pension reforms ($WSJ)

Global energy transition, affordability and reliability ($FA)

NORTHWEST EUROPE’s temperatures were below the long-term seasonal average for much of the first ten days in April, prolonging heating demand and delaying the start of the refill season for gas inventories. Temperatures at Frankfurt in Germany (a proxy for the densely inhabited northwest Europe macro-region) were below normal for seven of the first eight days in April. As a result gas inventories continued to deplete and reached a seasonal low on April 7, which is relatively late. Since 2011, the median date for minimum inventories has been March 30:

Best in Energy – 6 April 2023

Best in Energy will resume after Easter on Wednesday April 12.

OPEC⁺ output cuts set to test $60 cap on Russia’s oil sales

Exxon halts Brazil deepwater exploration project ($WSJ)

Exxon completes start up of new Texas crude refining unit

New Zealand aluminium smelter’s demand response deal

Global oil tanker voyages redrawn by sanctions on Russia

Sweden tries to dampen speculation about Nord Stream

France/China summit given cautious coverage (trans.)

EU/China summit attempts to de-escalate tensions ¹

Iran/Saudi Arabia foreign ministers meet in China

¹ China’s state-controlled media has relatively limited coverage so far of the summit meeting with French President Emmanual Macron, and almost none on the meeting with European Commission President Ursula von der Leyen, implying expectations for a major “reset” or improvement in the relationship are modest.

U.S. RAILROADS hauled 10% fewer shipping containers in the first 13 weeks of 2023 compared with the same period in 2022, according to the latest weekly traffic report from the Association of American Railroads, confirming that a significant cyclical slowdown is underway:

U.S. NON-MANUFACTURING businesses reported a much less widespread expansion in March. The Institute for Supply Management’s purchasing index covering the services, agriculture and mining sectors fell to 51.2 (13th percentile for all months since 1997) in March down from 55.1 (40th percentile) in February. The non-manufacturing index is more volatile and less reliable than its manufacturing counterpart. Nonetheless, it has been trending lower as the non-manufacturing sector follows manufacturers into a significant cyclical slowdown:

Best in Energy – 2 March 2023

Global CO2 emissions hit record high in 2022

India refinery processing hits seasonal record

Latin America accelerates solar deployment

U.S. gas turbines reach record operating rate

Argentina experiences mass blackout

United States explores more China sanctions

Passenger aviation demand stays high ($FT)

U.S. rail freight weakened further in February

China prepares economic team overhaul ($FT)

U.S. MANUFACTURERS reported business activity declined in February for the fourth month running. The ISM composite activity index was 47.7 in February up marginally from 47.4 in January but both readings were in only the 16th percentile for all months since 1980. New orders fell for the sixth month in a row. The new orders sub-index (47.0) was in only the 14th percentile for all months since 1980:

U.S. DISTILLATE inventories were unchanged over the seven days ending on February 24. Stocks were -14 million barrels (-11% or -0.87 standard deviations) below the prior ten-year seasonal average but the deficit has narrowed from -31 million barrels (-22% or -2.5 standard deviations) on October 7:

Best in Energy – 9 December 2022

China’s hesitant exit from coronavirus lockdowns

Germany accelerated floating LNG rollout ($WSJ)

Oil prices fall despite G7 Russia price cap ($FT)

U.S. grid-scale battery storage to triple by 2025

U.S. shale output has delinked from prices

U.S. CONTAINERISED rail freight in October was running at the slowest seasonally adjusted rate since 2013, reflecting weakness in the manufacturing economy and cutting consumption of diesel:

LONDON temperatures were -6°C below the long-term seasonal average on December 8, stretching the transmission system to the limit, as solar generation faded and demand ramped up in an unusually frosty early evening. There were repeated periods of under-frequency on the transmission system in the run up to the evening peak, with load exceeding generation and reserves running low. National demand approached the maximum triad levels set in winter 2021/22, despite extremely high electricity prices, triad avoidance behaviour by major electricity users, and calls for household and commercial conservation:

Best in Energy – 21 September 2022

European energy trading hit by falling liquidity

Small modular reactors – deployment challenges

U.K. government caps energy prices for businesses

Coal miners seek ways to stay in future energy mix

Germany nationalises gas importer Uniper

Hertz orders 175,000 more electric vehicles ($WSJ)

CHINA’s railway hauled a record volume of freight in the first seven months of the year. Freight tonne-kilometres were up +9% compared with the same period in 2021 and +22% compared with before the pandemic in 2019. Coal is by far the largest item on the network. The system is moving record quantities of coal from the northern mining areas in Shanxi, Shaanxi and Inner Mongolia to the major consuming centres in the eastern, central and southern provinces:

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Best in Energy – 11 July 2022

Saudi Arabia’s oil production capacity scrutinised

Canada to return Nord Stream impounded turbine

Ocean carriers likely to revert to slow steaming

India rejects US/EU calls to boycott Russian oil

France plans for complete loss of Russian gas

France prepares to switch from gas to fuel oil

Freight rates start to soften as volume falls ($WSJ)

U.S. central bank tries to avoid stop-go policy ($WSJ)

U.K. businesses prepare for onset of recession ($FT)

China boosts coal by rail deliveries by +9% (trans.)

Texas appeals for electricity conservation on July 11

U.S. BUSINESS inventory ratios have started to climb as sales slow and firms struggle to shift extra items ordered on a precautionary basis at the height of the supply-chain crisis. Manufacturers, wholesalers and retailers held inventories equivalent to 1.29 months worth of sales in April up from a cyclical low of 1.26 months in November. Excess stocks are concentrated at the retail level where the ratio has climbed to 1.18 months up from 1.09 months in October 2021.

U.S. inventory ratios remain low by pre-pandemic standards but will climb quickly if sales slow further in response to rapid inflation and a business cycle downturn. Inventory reduction is likely to weigh on economic growth over the next six months as businesses to limit or reverse overstocking:

TEXAS temperatures have climbed well above the long-term seasonal average since the start of July increasing the strain on the state’s isolated electric grid. Cumulative cooling degree days since the start of the year have been almost +30% higher than the 1981-2010 average:

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Best in Energy – 11 May 2022

India’s railways struggle to transport enough coal

India relaxes coal mine environmental rules ($BBG)

Ukraine cuts Russian pipeline gas flows to Europe

Global mining is central to future energy system

BlackRock updates energy-climate investor principles

Germany plans for disruption of Russian gas supply

U.S. ammonia prices increase with global gas prices

Nigeria subsidises fuel to keep aircraft flying ($BBG)

China forecasts record rain along south coast (trans.)

China issues flood warnings along the Yangtze (trans.)

China hydro generation rises on heavy rains ($BBG)

U.K. threatens energy majors with windfall tax ($FT)

U.S. inflation – how prices are really measured ($WSJ)

CHINA generated a record 221 TWh of hydro electricity in the first three months of the year, up from 196 TWh in the same period in 2021, relieving pressure on coal and gas inventories and prices:

U.S. EQUITY PRICES signal investors expect an imminent business cyclical slowdown – either a mid-cycle soft patch or an end-of-cycle recession. The S&P 500 index is down by almost 5% compared with the end of May 2021 and down by more than 11% in real terms:

Best in Energy – 5 April 2022

Germany takes control of local Gazprom unit

Aramco raises crude prices to refiners in Asia

India faces coal crisis for a second year ($BBG)

U.S. intelligence sharing sets precedent ($WSJ)

China’s rail freight rose +2.8% yoy in Q1 (trans.)

U.S. TREASURY yield curve is now flat between two-year and ten-year maturities, which puts it in the 94th percentile for all months since 1990, and is a strong signal the business cycle is on course for a mid-cycle slowdown or end-of-cycle recession inside the next 12-18 months as the central bank is forced to lift interest rates to bring inflation back under control. Interest rate traders expect the Federal Reserve to boost its target overnight rate to 2.50% by the end of the year up from 0.25-0.50% currently:

BRENT’s calendar spread from Jun 2022 to Dec 2023 has narrowed sharply as the announced crude oil sales from the U.S. strategic petroleum reserve depress nearby prices while the more vague promise to buy back the barrels later helps boost prices in 2023:

U.S. PETROLEUM inventories including the strategic petroleum reserve have depleted by -411 million bbl since the start of July 2020 after increasing by +225 million bbl during the first wave of pandemic and lockdowns. Inventories have fallen in 68 of the last 91 weeks. The drawdown confirms the global market has been persistently under-supplied for almost two years. Historically, market analysis has treated U.S. government-controlled stocks as purely strategic and passive and has therefore focused on inventory changes excluding the SPR. But as the SPR comes to be used more actively to manage prices, the focus will switch to inventories including the SPR as providing the best indicator of the balance between production and consumption:

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