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Column-China virus outbreak a further risk to iron ore, steel viewpoint

The risk to commodity demand from the spread of a new flu-like virus in China has so far focused on crude oil and related products such as jet fuel, but the iron ore and steel markets will also be keeping a nervous watching brief. The effective quarantining of Wuhan, a city of 11 million people where the new strain of coronavirus emerged, sounds like a major step to combat the virus which has so far killed 17 people and infected several hundred more. That the move comes on the eve of the Lunar New Year holidays, which typically see millions of Chinese travel to visit family and friends, underlines the disease’s danger. It will, however, only become a problem for iron ore and steel demand if it spreads far enough to make an impact on China’s construction season, which tends to start in earnest after the Lunar New Year break. It’s still way too early to make an assessment that construction activity may be crimped by the coronavirus, but it is another risk factor for the outlook for iron ore and steel demand.

New structure offered for N-S Gas Pipeline

Pakistan has told Russia that it will carry out detailed due diligence of the companies included in the new structure that Moscow has provided for the North-South Gas Pipeline. Russia has responded that the companies included in the new structure are the last ones on behalf of Moscow and it will not be able to provide more structure if the newly-provided structure is not cleared, a senior official who was part of the 7th JCC meeting held on Tuesday. Russia’s delegation, headed by Deputy Energy Minister Anatoli Tikhinov, participated in the JCC meeting while Secretary Petroleum headed Pakistan’s delegation in the meeting. In Pakistan’s side, representatives from the Foreign Office, Law Division, Finance, Petroleum division and Inter-State Gas System (ISGS) also gave their inputs in the meeting.

Oil falls nearly 3pc as over-supply concerns weigh

Oil prices fell more than 2 percent on Wednesday as a market surplus forecast by the International Energy Agency (IEA) and demand worries outweighed concern over disruptions to Libya’s crude output. Brent crude was down $1.39, or 2.2 percent, at $63.20 per barrel. U.S. West Texas Intermediate crude fell 2.8 percent to settle at $56.74 per barrel. The head of the IEA, Fatih Birol, said he expects the market to be in surplus by 1 million barrels per day (bpd) in the first half of this year. Oil prices remain heavy on oversupply concerns and after the Saudi Energy Minister Price Abdulaziz did not offer any hints of optimism that the OPEC+ production cuts would be extended beyond March, said Edward Moya. China’s coronavirus will likely see travel restrictions that could end up hurting demand for crude during a peak travel time in China.

 

India: coal production from captive mines raises 24pc output

Coal production from captive mines in the first nine months of the ongoing financial year was up 24 percent year-on-year (y-o-y) at 40.93 million tonne (MT). However, about 53 percent of the output came from coal blocks, which were not cancelled by the Supreme Court in its September 2014 order. The apex court had then cancelled 204 out of 218 captive coal block licences, saying these had been allocated in an illegal and arbitrary manner. After the apex court ruling, 36 captive coal mines have been auctioned so far. Of these, 11 are producing coal at present. Allocations of nine mines have been terminated for various reasons. The Union government has recently issued the Mineral Laws Amendment Ordinance, 2020, which removes end-use restrictions in coal blocks to be put up for auctions, essentially ending the practice of captive mining and allowing coal mine developers to sell the fuel to consumers in the open market.

Gold, silver prices constrained by inferior risk aversion

Gold and silver prices are steady to slightly down in early U.S. futures trading Wednesday. The safe-haven metals continue to be hamstrung by mostly upbeat trader and investor attitudes at mid-week, as evidenced by U.S. stock indexes hitting more record highs overnight. February gold futures were last down $2.00 an ounce at 1,555.80. March Comex silver prices were last up $0.007 at $17.815 an ounce. Asian and European stock markets were mixed overnight. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Focus at mid-week is on the World Economic Forum annual meeting in Davos, Switzerland. President Trump, in an interview with CNBC, said U.S. economic growth has been hamstrung by the Federal Reserve keeping interest rates too high, and by the grounded Boeing jetliner situation. Trump also threatened new trade tariffs on European countries that manufacture automobiles.

Global rice seeds market expected to grow with a CAGR of 8.5pc

The Global Rice Seeds Market accounted for $5.07 billion in 2018 and is expected to reach $10.56 billion by 2027 growing at a CAGR of 8.5 percent. Increase in seed replacement rate and improved varieties of hybrid seeds for rice are likely to boost the growth of the rice seeds market. However, government regulation on genetic modifications is likely to hamper the profit boundaries. As a cereal grain, rice is the most widely consumed staple food in major parts of the world. Major cultivated species of rice are the grass species Oryza sativa (Asian rice) and Oryza glaberrima (African rice). In terms of production, rice is the third highly produced crop after sugarcane and maize. Currently 30-40 percent of the total seed demand in the region is being met by the organized seed production, while the rest is met by farm-saved seed. South America and Africa are the other two regions involved in the rice seed trade. Farmers in these regions need to be motivated to use quality seeds obtained from the organized seed production, instead of farm-saved seeds.

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