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Italy's Snam cancels German gas contract amid Berlin's concerns about China
Snam, the Italian gas grid operator, announced on Friday that it had scrapped its plans to buy a minority stake of Germany's biggest independent gas transmission company. The German Economy Ministry has resisted. Berlin's concern over the 920 million-euro ($1.1billion) transaction is due to the fact that China's State Grid is an indirect shareholder in Snam. This was reported earlier today, citing sources who are familiar with the issue. The Italian group has signed an agreement in April to purchase a 24.99% share in Open Grid Europe Infinity Investments in Abu Dhabi has acquired the owner of's (OGE), Vier Gas Holding, with the aim to enter Germany's gas market, which is the largest in Europe. Snam, in a press release, said that the German authorities had terminated the agreement after an extensive review of foreign direct investments. They also stated that Snam's proposed solutions to obtain regulatory clearance were deemed inadequate. The company said that this development would not affect its financial forecast for 2025. Since the agreement, Germany's Economy Ministry has been reviewing the contract. The German government's resistance is a reflection of the European governments' tougher stance on Chinese investment in Europe because of security concerns. Agostino Scrnajenchi, CEO of Snam, had previously indicated that the company would not pursue an acquisition "come Hell or High Water" during the lengthy approval process. Germany has blocked China's State Grid from buying a stake in 50Hertz, a power grid operator in 2018.
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CANADA-CRUDE-Discount on Western Canada Select narrows slightly
On Thursday, the discount between West Texas Intermediate and Western Canada Select futures (the North American benchmark) decreased slightly. WCS for Hardisty, Alberta delivery in December settled at $11.65 per barrel, which is $1.65 below the U.S. benchmark WTI. This was down from $11.70 a barrel on Thursday. Michael Berger, Enverus analyst, stated that Canadian crude storage levels are below the average for the past five years. Trans Mountain, the pipeline that exports Canadian crude via the Pacific Coast to U.S. markets and Asian ones, has not been apportioned in November. This is another factor contributing to the narrow differential. The industry uses the term apportionment to describe when demand for space on pipelines exceeds its capacity. Berger says it is more difficult to predict the WCS discount over the long-term because of the possibility that policy and regulatory changes could occur in Canada, which would encourage oil producers to increase their production. * Oil prices in the global market rose by more than 2% on Friday, as Russia's Novorossiisk port halted exports of oil following an attack by a Ukrainian drone that targeted a depot at Russia's energy hub. This sparked supply concerns. (Reporting from Amanda Stephenson, Calgary; Editing and proofreading by Tasim Zaid)
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Cheniere expects US LNG plants to use 40 bcf per day of natural gas in the coming years
Anatol Feyegin, Chief Commercial Officer at Cheniere Energy, said that U.S. LNG plants may be able to take up as much as 40 billion cubic feet of natural gases per day over the next few years. According to LSEG data, U.S. LNG plants are using a record amount of natural gas (18 bcfd) to produce LNG. Feygin, speaking at a Federal Reserve Bank of Kansas City seminar, said that the increased demand for gas liquefaction may lead to higher natural gas prices. Prices have risen by 62% in the last year and could become even more costly towards the end of this decade. "You saw it in 22/23 when COVID came out. LNG returned to full utilization, and then increased. Nymex saw an increase in the single digits. Feygin stated that the supply would respond very quickly, indicating that drillers could increase production to meet increased demand. The executive stated that there is concern about a glut of LNG as more capacity is added. However, he said that Asian countries like Bangladesh and Pakistan may be drawn in by the lower prices to increase demand. Feygin stated that the world will need 30 million metric tonnes of LNG each year to meet the global demand growth. The majority of this new capacity will come from the U.S. He said that rising construction costs were behind some of the final investment decisions made in U.S. LNG. Feygin explained that "more than two-thirds" of the FID in this year were completed because fixed-priced EPC contract expires soon and the rush was on to keep the cost of construction of the LNG plant low. Feygin stated that the U.S. gas sector could produce up to 300 mtpa. However, he acknowledged that this rapid growth could be a challenge for some producers who are not prepared to deal with periods of low prices. He warned that only 17% of new capacity from plants which reached FID in this year had been sold on long-term contracts. Many portfolio players were unprepared. Curtis Williams, Houston (Reporting) and Leslie Adler Nathan Crooks Edmund Klmaann edited the article.
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Republican state AGs express concerns over Union Pacific's deal with Norfolk Southern
Nine Republican attorneys general raised concerns on Friday about Union Pacific's plans to purchase smaller rival Norfolk Southern for $85 billion, creating the first U.S. Coast-to-Coast freight rail operator. In a letter sent to the Surface Transportation Board by Tennessee Attorney-General Jonathan Skrmetti, and Kansas Attorney-General Kris Kobach that was seen by, the officials expressed concern about the deal, which they said would result in "undue market consolidation" and "stifle competition, resulting in higher prices, less reliability and less innovation, at the expense America's producers and consumers." If approved, the tie-up could help reshape U.S. freight railroad industry, streamline operations, and eliminate interchange delays at key hubs such as Chicago. Attorneys general from Ohio, Florida and other states, including North Dakota, South Dakota Mississippi, Montana, and Iowa, said that the merger could lead to high shipping costs, which could "kneecap American manufacturers' ability compete with foreign companies." The group also stated that "the downstream impact of the merger poses a significant risk, not only for our industrial base, but also for our agricultural producers." This merger, in the end, could compromise our national safety. Union Pacific responded on Friday by saying that it is looking forward to submitting their application to the STB to "detail how this combination will be good for America, meet the threshold to advance public interest and increase competition." The railroad said it has won the support of key unions as well as others in order to "ensure that rail is not forgotten." Norfolk Southern has not yet commented. The railroads announced earlier on Friday that over 99% of both companies' shareholders voted for the merger. The STB could take between 12 and 18 months to review the deal. Railroads have been struggling with the volatile nature of freight volumes, increasing labor and fuel prices, and increased pressure from shippers regarding service reliability. After meeting with Union Pacific CEO Jim Vena in September to discuss the largest U.S. railroad merger for decades, Donald Trump stated that the merger "sounds great to me". Union Pacific is the dominant freight rail carrier in Western United States. Norfolk Southern, on the other hand, is the leading carrier in Eastern United States. Together, the two railroads form one of four major U.S. class I railroads along with BNSF Railway, CSX Corp and BNSF Railway.
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White House claims that Alibaba is assisting Chinese military to target US, reports FT
Financial Times reported on Friday that Washington accused the online marketplace Alibaba of providing technology support to Chinese military operations targeting targets in the United States. The memo was cited by the White House. The FT reported that the national security memo contains declassified top-secret intelligence about how the Chinese group provides the People's Liberation Army (PLA) with capabilities the White House believes could threaten U.S. Security. The report didn't specify what capabilities or operations are involved or if the U.S. is trying to respond. Alibaba shares in the U.S. fell 4.2% following the news. Alibaba issued a statement saying that "the assertions and innuendos contained in the article were completely false." "We doubt the motivation behind this anonymous leak which The FT admits they can't verify. This malicious PR campaign clearly came from an rogue voice that was looking to undermine President Trump’s recent trade agreement with China. The Chinese Embassy in Washington has not responded to an immediate request for comment. (Reporting and editing by Susan Heavey, Matthew Lewis, and Jasper Ward from Washington)
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Airlines urge FAA to stop flight cuts because controllers are paid
After the government shutdown ended, major U.S. Airlines are asking the Federal Aviation Administration (FAA) to remove the mandatory 6% domestic flight reductions at 40 major airports. The cuts were imposed in order to address safety concerns regarding air traffic. The FAA's order, which requires far more drastic cuts, is not being followed by most airlines. Cirium, a firm that provides aviation analytics, reported airlines cancelled just 2% of flights on Friday, down from 3.5% Wednesday and Thursday. The FAA and union officials announced that air traffic controllers, and other FAA staff, began receiving their back pay on Friday. This is equal to approximately 70% of the amount they owe, excluding overtime. Officials told that airlines have privately argued to the FAA to stop the cuts, and some plan to cancel few or no flights this Saturday. After Congress voted for reopening the government following a 43-day shut down, FAA decided to reduce those cancellations on Wednesday. The FAA did not increase the cuts to 8% or 10% as announced previously. Instead, they remained at 6%. Transportation Secretary Sean Duffy stated Friday that only a handful of controllers had been absent on Thursday, as operations have improved dramatically. Duffy stated, "We are reviewing the data and working hard to restore the airspace to normal." Separately, on Friday, a group led by Rick Larsen (the ranking member of Transportation and Infrastructure Committee) asked the administration to provide specific safety data and compare it to the previous six months. The Democrats said that it appeared the administration took this decision without consulting key aviation stakeholders. United Airlines announced that it had cancelled 134 flights for the Friday after canceling 222 flights Thursday. There are about 3,500 fewer air traffic controllers than the FAA needs to meet its target staffing levels. Before the shutdown, many had already been working six-day weekends and mandatory overtime. Since October 1, when the 43 day shutdown began, there have been tens or thousands of cancellations and delays in air traffic. (Reporting and editing by David Shepardson, William Maclean.)
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Lukoil Moldova grants free fuel use to the government in spite of US sanctions
The Moldovan energy minister announced on Friday that Lukoil Moldova has agreed to give the government of Moldova free access to its fuel terminal located at the airport in Chisinau. Energy Minister Dorin Junietu stated in a press release that the move was made to ensure stable airport operations when U.S. Sanctions against the Russian owned company come into effect later this month. The U.S. sanctions against Lukoil and Rosneft were linked to the Russian war in Ukraine. The company is the only supplier of fuel to Eugen Doga Airport, Moldova's sole airport. Moldova's pro European authorities announced this week that they have proposed to buy the airport infrastructure of the firm, including storage facilities, in order to guarantee aviation fuel supplies in the country located between Ukraine and Romania. Junghietu said on Friday that the government had reached an agreement to supply fuel at the airport with a Romanian firm in the near future.
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CMA CGM warns of a tough year as the shipping industry faces overcapacity and falling demand
French group CMA CGM warned on Friday that the container shipping industry faces a difficult year, as new vessels increase capacity, while demand is slowing. Early orders for 2025 are being driven by trade tensions. CMA CGM reported core EBITDA of $2.96bn for the third quarter, which is the same as the previous quarter but down 40.5% from a year ago. This was down by 40.5% compared to a year ago, but an increase from the prior quarter as volumes recovered after a stoppage in April of China-U.S. Trade due to a tariff dispute. Ramon Fernandez said that the group, which is controlled by the Saade Family, expects its fourth-quarter results will be below those of the third quarter due to the falling freight rates. This could lead to a difficult shipping environment in 2026, Ramon Fernandez added. He said: "We anticipate that freight rates will continue to normalise as there is less demand, and capacity increases due to new vessels being delivered. There may also be a reopening the Suez route in 2026." Maersk and other rivals have warned about the pressure of falling freight rates. The disruption to shipping in the Red Sea and Suez Canal due to attacks by Houthi Rebels in Yemen has reduced capacity. Ships are now taking a longer journey around southern Africa. The Houthis' claim that they targeted vessels because of a ceasefire in Gaza, a war which the Houthis blamed on the Houthis, has raised hopes for resuming normal traffic. Fernandez stated that CMA CGM will continue to maintain limited transits through Suez as long as security permits. The tensions between Washington, DC and Beijing have also affected the industry. Both sides announced that they would charge port fees for vessels that had ties to the other nation. CMA CGM reorganised their fleet to avoid these fees. Fernandez stated that the company has no plans to change its fleet after the port charges were suspended for one year. Fernandez said that the company had contributed to the rising supply of ships and, based on the current orders, will surpass Maersk by the end 2027 as the second largest container line in the world based upon capacity. CMA CGM, along with the Saade Family, have pursued diversification in logistics, port terminals, and non-transport related activities. This includes the acquisition of Carrefour, Europe's biggest food retailer.
New horizons however usual issues for LME warehousing: Andy Home
The London Metal Exchange ( LME) has actually simply listed the Saudi Arabian port of Jeddah as a good shipment location for copper and zinc.
This addition to the LME's worldwide delivery network, which becomes reliable three months after the approval of the very first warehouse, is the first brand-new listing given that Amsterdam in 2018.
The exchange is likewise checking out the possibility of including Hong Kong to the list, no doubt hoping that its owner Hong Kong Exchanges and Cleaning (HKEx) can assist conquer the Chinese authorities' historical resistance to LME warehouses.
New areas might offer a booster for a storage facility network that has actually seen capacity agreement and the variety of operators decline over the last ten years.
Nevertheless, old issues persist.
There was a 253-day queue to load aluminium out of LME storage facilities in Malaysia's Port Klang at the end of June, the longest waiting time since November 2016.
The LME storage organization likewise stays highly focused with 4 dominant operators, a potential issue when among them is dealing with an unsure future.
DIMINISHING AREA
Total LME signed up storage capability at the end of June was 3.3 million square metres, down from 4.3 million 3 years earlier.
The rate of net shrinking slowed to 44,000 square metres over the last year and the drop reveals indications of bottoming out. The variety of registered warehouses grew by 15 units to 468 after being up to a multi-year low in June 2023.
The three-year decrease in registered capability showed a. period of low exchange stocks as combined required and shadow. off-warrant stock fell listed below one million metric tons over. the second half of 2022.
Stocks have because risen to 2.3 million as of the end of May,. although inflows have actually been firmly concentrated on simply a. handful of locations.
Russian aluminium has actually built up in the South Korean port. of Gwangyang, while non-Russian aluminium has been disposed in. Port Klang. This year's heavy inflows of both lead and zinc have. primarily ended up at Singapore storage facilities.
All three locations have actually bucked the trend of declining. storage capacity over the in 2015 and ISTIM UK Ltd's. additional 11 storage facility units at Port Klang were the single. biggest component of the more comprehensive year-on-year boost.
JOIN THE QUEUE
Rent-sharing is the common measure behind this year's. big shipments of metal into the LME system. Such deals enable. the entity that calls for the metal to earn a piece of the future. rental profits.
The purchaser of that metal may be not surprisingly hesitant to. pay rent to a prospective rival however the only method to get away. the contract is to physically load the metal out and deliver it. to another storage facility business.
The bigger the initial warranting, the higher the. potential for a queue. ISTIM warehouses in Port Klang got. 652,525 lots of aluminium in May. The cancellations started almost. immediately as purchasers aimed to move their metal. ISTIM had. 505,050 loads awaiting physical load-out by the end of June.
It's an echo of the 2010s, when the LME's load-out issues. triggered user outrage and drew the unwelcome attention of U.S. regulators, who wanted to know why it would take 702 days to. take physical shipment from LME warehouses in Detroit.
Subsequent reforms to the LME system indicate that such. self-perpetuating super-queues are no longer possible. What we. get now are what the exchange calls operational queues.
Which might not be much comfort for those late to the. aluminium logjam in Malaysia. They're unlikely to see their. metal till this time next year.
DOMINANT FOUR
ISTIM's ability to attract such huge tonnages to its. storage facilities has made it a dominant presence in the LME shipment. system. The company was keeping 55% of all called for LME stocks. at the end of June.
The other three significant players are Access World, C. Steinweg. and the Pacorini Group. Between them they were saving 92% of. total inventory at the end of June and they currently account. for 344 of the overall 468 units listed worldwide.
This is also a throw-back to the last years, when Metro. International, then owned by Goldman Sachs,. industrialised the queue model and built a dominant LME storage. position in Detroit.
Access World, obtained by Glencore in 2010, did the. same in the Dutch port of Vlissingen, creating a load-out. line of 771 days at one stage.
Smaller operators had a hard time to contend then, and clearly. they still do. Lots of who joined the LME storage facility service in. hope of getting a piece of the line action in the 2010s have. given that withdrawn.
The number of LME-registered warehouse operators has. declined from 36 to 25 over the last 5 years which. includes nine that offer LME services in a single area.
WAREHOUSE FOR (RE) SALE
The uncertain status of Access World highlights the problems. that can be caused when LME stocks are concentrated in such a. small swimming pool of storage facility operators.
Glencore believed it had offered the company to Global Capital. Merchants (GCM), a business registered in the British Virgin. Islands, in 2022.
Nevertheless, Gain access to World is back on the sales block after the. purchasers stopped working to make complete payment and Glencore is supposedly. hunting for new potential owners.
Access World warehouses held nearly 12% of LME on-warrant. stocks at the end of June.
A DECADE OF REFORM
The LME, to its credit, has spent a lot of effort and time. attempting to smooth out the lots of wrinkles in its delivery system,. which - like whatever else on the 147-year-old exchange - is. rather unique from what you would find in any other futures. market.
The lines have actually never truly gone away but multiple tweaks. of the rule-book have at least constrained them and the amount. of money that can be made from them.
The exchange has likewise massively enhanced transparency around. its delivery network. A day-to-day authorized stocks report has actually been. supplemented with regular monthly updates on off-warrant stocks, stocks. by warehouse operator and, of course, line length. This column. has actually drawn greatly on all of them.
Yet, just how much more efficient is the LME's shipment. network after a decade of reform?
A restricted number of operators still appear to dominate the. on-warrant storage business and 253 days is still a long time to. wait to get your metal.
The viewpoints revealed here are those of the author, a. columnist
(source: Reuters)