What to Watch

Trump to Ramp Up Trade Restraints on China

 

Investors are bracing for the second salvo of the White House’s plan to tackle  what it says are unfair Chinese trade practices.

 

President Donald Trump is set to unveil on Thursday a set of procedures that would make it more difficult for Chinese firms to acquire advanced U.S. technology or invest in American companies, writes The Wall Street Journal’s Bob Davis.

 

White House officials have accused Chinese firms of intellectual property theft. Punitive measures aimed at Beijing could include tariffs on imports worth at least $30 billion.

 

The move comes after the Trump administrations slapped steel and aluminum tariffs on a wide array of countries including China, sparking concerns about a global trade war.

 

The measure caused some energy executives to voice concern that  the barriers to trade on steel could hurt the oil industry due to the coming need for the metal to build new pipelines and other infrastructure.

 

Moreover, analysts say the tariffs could rile China, which has become the second-largest customer for oil exported from the U.S.

 

Meanwhile, oil prices continued to rise Wednesday morning after hitting three-week highs the day before, bolstered by renewed geopolitical risk to global supply.

 

Brent crude, the global benchmark, was up 0.89% at $68.02 a barrel on London’s Intercontinental Exchange. On the New York Mercantile Exchange, West Texas Intermediate futures were trading up 0.85% at $64.08 a barrel.

 

 

Energy News

Azerbaijan in Talks to Join OPEC

The Organization of the Petroleum Exporting Countries and Azerbaijan are in talks about the former Soviet republic joining the group, as the cartel looks to bolster its position amid a surge in U.S. shale oil. OPEC already has added two members in recent years, bringing its membership to 14.

A Regulator in Chile May Tip the Scales in the Global Lithium Battery Race

A Chilean regulator is set to decide whether to approve Chinese Tianqi Lithium’s $4 billion bid to buy a stake in SQM, the world’s second biggest lithium producer after U.S.-based Albemarle Corp. If the sale goes through, the two firms would control 70% of the global lithium market, which would distort the sector, said a complaint by Chile’s development agency Corfo. Lithium has become a sought after metal in batteries for electric cars.

 

“I think what the general investor community and even the industry doesn’t really appreciate is we’re at the forefront of the next super-cycle for commodities… it’s come in the form of the electric vehicle and more broadly for grid storage.”

 

– Anthony Milewski, chief executive of Cobalt 27 Capital Corp.

 

Glencore Buys a Rio Tinto Coal Asset

 

Glencore is purchasing an Australian coal mine owned by Rio Tinto for $1.7 billion. The deal cements Glencore’s strategy of buying into coal while other firms are divesting from the fossil fuel.

WSJ Energy In-Depth

 

Noble Group’s Founder Retires, Leaving Behind a Firm in Turmoil

 

Richard Elman, the founder of commodities trading house Noble Group Ltd., is exiting his firm at a low point, writes the WSJ’s Saurabh Chaturvedi.

 

Mr. Elman’s Wednesday resignation as a non-executive director of the Hong-Kong based firm he founded three decades ago comes as Noble, struggling with high debts and a collapse in its share price, faces an existential crisis.

 

He first announced plans to resign as executive chairman in 2016, stepping down from that position the following year and assuming the role of a non-executive director.

 

His final departure now comes after Noble last week inked a debt restructuring agreement with key creditors, with the aim of halving its $3.4 billion of debt.

 

The company now has a market value of around $100 million, compared with over $11 billion at its peak in 2011.

 

“He’s had a good run while it lasted,” Brayan Lai, an analyst at credit research firm Bondcritic, said of Mr. Elman. “To be candid, I think he has made enough money in his tenure. His old company is being dismantled to its former roots and he is 77, he is not going to stick around any longer than he should.”

Big Number

$7 billion

 

Royal Dutch Shell PLC said Wednesday that it has great expectations for its downstream business. The oil giant foresees that organic free-cash-flow in the division will be in a range of between $6 billion and $7 billion by 2020, writes Oliver Griffin for Dow Jones Newswires.

FutureCurve

Today: The U.S. Energy Information Administration releases production figures.

 

April 18–19: IQPC hosts the Oil & Fuel Theft Summit in Geneva. Speakers include Mahmoud Al-Bayati, the director general for counter-terrorism for Iraq, William J. Waggoner, the Chief Executive Officer for the Mexico Petroleum Company and Daniel Gianfalla, a member of the national maritime security advisory committee at the U.S. Department of Homeland Security.

Reporter’s Notebook

The WSJ’s Sarah McFarlane on China’s role in the electric vehicles market. The U.S. and German automotive industries haven’t woken up to China’s future dominance of electric vehicle production, said Ivan Glasenberg, chief executive of Glencore PLC. Speaking at the FT Commodities Global Summit, Mr. Glasenberg said that with China buying up most of the world’s cobalt — a key ingredient in lithium ion batteries — they’re going to sell electric vehicles to the world to the detriment of German and U.S. car makers. “Only now they’re sort of panicking a bit about cobalt,” Mr. Glasenberg said. Glencore, the world’s largest cobalt miner, recently agreed to sell a chunk of its production to Chinese company Gem Co. in a three-year deal. Mr. Glasenberg said that historically the car industry has never had a supply problem. “It’s always been the motor car industry squeezing the supplier… so maybe they didn’t realize this and maybe they are waking up too late because the Chinese are far ahead.”

 

WSJ reporter Rob Taylor on the economics of a hydroelectric project in Australia. A government-funded report into a multibillion-dollar dam proposed for Australia’s northeast has found the project could be economically viable. Supporters of the project near Townsville, first proposed in the 1930s, say it could sustain an expanded beef industry and irrigate sugarcane and sorghum while easing power shortages along Australia’s eastern seaboard. It would have capacity to generate 12,000 megawatts of electricity; the average Australian home uses 7 megawatts a year. The government commissioned a A$2.2 million study in 2017 from a fund set up to accelerate dam-building projects in the underdeveloped north. The report is a precursor to attracting private and public investment for the project.