Archives for October 2018

“I think, it is possible to use other currencies in Africa,” Mazepin, who is also a co-owner of Russia’s largest fertilizer manufacturers, Uralchem and Russian fertilizer group Uralkali, told journalists.

“We know that VTB is planning to extend its activity in the region. So, we could switch to settlements in the currencies that are more convenient to the lender.”

Dollar demise? China Japan ink bilateral currency swap deal worth up to $30bn

Earlier this month, the Russian authorities announced plans to take all necessary steps towards de-dollarization of the country’s economy. The key point of the ambitious plan is to make it more profitable for key Russian exporters to use rubles instead of dollars.

The measure is reportedly aimed at protecting the country’s economy against imminent US sanctions that threaten to ban investing in Russia’s sovereign bonds, as well as to cut the country off from dollar transactions.

The official said that Russian companies still face some difficulties doing business in Africa, with logistics being one of the more challenging problems.

“Not all the African countries have access to sea or ocean. Not all the territories have rail roads,” Mazepin said, stressing that Russian firms have to arrange difficult logistic chains to set up supplies.

Financial guarantees are seen as another vital issue, according to the businessman.

“It’s important to settle the way of payment, as most of the countries are very unstable from financial point of view,” he said, adding the problem could be solved ether by using banking mechanisms or supplies on a deferred-payment basis.

“However, using the second option we assume some risks,” Mazepin said.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/442513-russia-africa-dollar-away/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“In January-August 2018, Russian-German trade increased by 24 percent (adding $7.5 billion) compared with the same period in 2017,” the document says, detailing that “Russian exports to Germany rose by 35 percent to $22.1 billion, while imports grew by 12 percent to $16.9 billion.”

Russia-Germany business ties remain solid despite sanctions – German trade lobby

The official numbers show that last year, trade turnover between the two countries was $50 billion.

German firms continue investing in the Russian economy despite facing barriers from economic sanctions against Russia. The total amount of accumulated German investments in Russia currently exceeds $18 billion, while Russian investments in Germany stand at $8.1 billion.

According to the chairman of the German-Russian Chamber of Commerce, Matthias Schepp, “the foundations of German and Russian economic relations are solid even in the time of sanctions.” He told RT at the St. Petersburg Economic Forum in May that not only car manufacturers invest heavily in Russia but also medium-sized businesses.

Sanctions against Moscow were introduced by Brussels in 2014 over Russia’s alleged involvement in the conflict in eastern Ukraine. The punitive measures targeted Russia’s financial, energy, and defense sectors; along with some government officials, businessmen, and public figures.

The Kremlin responded by imposing an embargo on agricultural produce, food, and raw materials from countries that joined the sanctions on Russia. Since then, both sides have been extending the measures.

Germany’s business lobby has criticized EU sanctions against Russia, arguing that German companies will end up the losers, since Moscow can’t be fully isolated.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/442512-russia-germany-trade-growth/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The train is loaded with goods including auto parts, baby food, pharmaceuticals and steel products for import stores in central China. It will travel 12 days across the continent via Russia before arriving in Zhengzhou. The trip is to cover more than 11,000km.

The train service is scheduled to run once a week initially, with the frequency to rise in the future.

“We have every interest in turning to China and having close, strong relationships, and we must see this as an opportunity and a necessity,” said Pierre-Yves Jeholet, vice president of Wallonia.

READ MORE: China unveils huge plans for the Arctic, with ‘Polar Silk Road’ on the way

He explained that Wallonia is encouraging the region’s large exporters and small- and medium-sized enterprises alike to export more products to China.

“This railway link is proof that together we are able to make such projects,” he said.

The Zhengzhou-Liege cargo train route is the third of its kind connecting the two countries. The first route was launched in June last year, linking China’s Daqing City to Zeebrugge Port. This year, the countries opened the second route, which connects north China’s Tangshan City to Antwerp Port.

READ MORE: China’s New Silk Road to significantly boost global trade

Focused on trade-boosting infrastructure projects along the path of the ancient Silk Road, the One Belt One Road Initiative aims to connect China to Europe, the Middle East and beyond.

Experts predict that China’s ambitious multi-trillion-dollar project will significantly increase global trade, cutting costs by half for the countries involved.

Since the launch of freight trains between China and Europe in 2014, nearly 11,000 trains have moved between European and Chinese cities.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/442466-china-belgium-cargo-route/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Stocks have been in hot water over the last three weeks amid investors’ concerns about the US budget deficit, growing interest rates, and the trade wars launched by the US across the world.

In October, the Dow tumbled over seven percent, the SP is in correction territory down over 10 percent from its September record, while the Nasdaq has shed more than 12 percent.

US economy about to collapse, taking down dollar American standard of living – Peter Schiff

For common top-performers, including technology giants and consumer-focused corporations, it’s been even worse. This week, five of the six most valuable US firms have suffered a correction. Amazon, Microsoft, Alphabet, Berkshire Hathaway and Facebook all sharply declined from their recent highs.

According to Peter Schiff, the US dollar is going to become one of the casualties of a coming crash. The veteran stock broker says, the greenback will lose the recently picked up gains as soon as people understand that the US economy isn’t nearly as strong as they used to believe.

“Of course, that is the real reason that the markets continue to fall… the Fed is continuing to threaten the markets with higher interest rates,” the strategist said, as quoted by Seeking Alpha.

“When you’re in a bear market, and I think there’s a very good chance we are in a bear market, you don’t need an excuse for the market to go down. The market just goes down,” Schiff said. “If you don’t know you’re in a bubble, you don’t see the pins. I’ve been calling this bubble for a long time and finally, it’s pin, pin, pin, right? And nobody sees it.”

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/442465-peter-schiff-pins-bubble/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

The country’s spike in LNG usage comes as Beijing pushes forward with its plan to offset coal usage of both industrial and residential end users in an effort to curb rampant air pollution, particularly in its major urban centers. Beijing has mandated that natural gas make up at least 10 percent of its power generation energy mix by 2020, with further earmarks set for 2030.

China’s increased LNG usage is already transforming global markets for the super-cooled fuel and will likely shorten the LNG supply glut by several years from a previously projected time frame of around 2023. The country’s LNG demand is also prompting companies to rethink LNG export project proposals long idled amid the downturn in both global oil and LNG markets from 2015 to 2017.

China unveils huge plans for the Arctic, with ‘Polar Silk Road’ on the way

The final investment decision (FID) reached by project partners in the Canada LNG project in early October is the first major greenfield project to move ahead since 2015. However, more projects are likely to follow given both the rise of LNG demand in Asia, which currently represents 72 percent of global LNG demand. The Wood Mackenzie report added that 2019 could be the largest year for LNG FIDs ever with projects in Russia, Qatar, Mozambique and the US expected to be sanctioned.

However, the growing trade war between Washington and Beijing will also see Chinese companies continue to make a pivot away from US sourced LNG deals, both long-term and spot purchases, to more LNG deals with Russia. Not only will Sino-Russian energy cooperation increase amid President Donald Trump’s hard line over US-China trade differences and his more muscular approach with Beijing over South China Sea differences and increased US support for Taiwan, but these differences will solidify an already growing alliance between Chinese President Xi Jinping and his Russia counterpart Vladimir Putin.

Landmark gas deals

Energy deals will likely follow a similar trajectory to recent agreements between the two sides. In 2014, Russia and China signed a landmark gas deal, with both Xi and Putin in attendance, after a decade of negotiations over import prices and the supply route. Chinese state owned CNPC agreed to purchase 1.3 tcf/y of pipeline gas from Russian state-owned Gazprom for $400 billion over a 30-year period. The now almost completed Power of Siberia pipeline, spanning 4000 km (2500 miles), will connect Russia’s eastern Siberian gas fields to northeastern China. CNPC also signed an agreement with Gazprom in November 2014 to import 1.1 bcf/y from western Siberian gas fields.

China plans to create a $78bn natural gas giant

China is also keen on importing more Russian LNG. Currently, Russia operates two LNG export facilities, including the recently commissioned Yamal LNG project in the Russian Arctic. Yamal LNG effectively doubled Russian LNG output to just over 20 mtpa, making the country the fifth largest LNG exporter in the world. CNPC holds a 20 percent stake in the Yamal project and has a contracted off-take volume of 3 million tons of LNG per year. China’s Silk Fund holds a 9.9 percent stake in the project.

China is interested in becoming a major investor in other Russian LNG projects, including Novatek’s massive 19.8 mtpa Arctic LNG 2 project in northern Siberia which is slated to come on-stream in 2023. Last month, Novatek confirmed that it was considering CNPC as a potential shareholder in the project. Chinese firms will also likely reach agreements with other Russian LNG projects in the future, thereby helping Vladimir Putin’s ambition to compete with Qatar, Australia and the US as the world’s top LNG exporter.

Arctic and military cooperation

Russia and China are also increasing their mutual aims of Arctic development. In 2015, the two sides issued a joint statement committing to work together to turn the Northern Sea Route along the Russian Arctic coast into a competitive commercial sea lane. China’s State Council Information Office issued a paper on January 26, 2016 that claimed China as a “near-Arctic state,” adding that the country was interested in encouraging joint efforts to build a joint Silk Polar Road, linking the country with Europe.

All roads lead to China: Russian gas from Arctic Siberia to flow east at full capacity

Sino-Russian bilateral relations and military collaboration is also deepening as both countries square off against what they see as increased US hegemony, particularly under the Trump administration. Joint Russia-Chinese naval exercises have already been held several times in the East China Sea – an area claimed by both China and Japan that has seen years of military activity by both countries’ naval and air forces.

READ MORE: Energy-hungry China to ramp up imports of Russian natural gas

Additionally, a Russian-Chinese land based military partnership is intensifying. Last month, China participated in the Vostok 2018 war games, Russia’s largest since 1981 during the Soviet era. The games included more than 300,000 troops – including 3,200 from China and a contingent from Mongolia. After the massive war games concluded, the Washington-based Jamestown Foundation noted that Russian and Western militaries are now training to deploy against each other.

A recent paper “A Wary Embrace” by the Lowy Institute for International Policy asked whether Russia and China would “define the rules of global politics” in the 21st century. The paper said that as Western democracies turn increasingly inward under a backlash against globalization, the notion of a rising Sino-Russian partnership has garnered greater attention.

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/442457-china-lng-growth-russia/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

“…Recent strong corporate profits quite naturally can result in repatriation of profits by foreign investors. Also, the cleanup that the CBR (Central Bank of Russia) has done in the banking system has significantly reduced capital flight,” said Lindow, Moody’s leading analyst on Russia’s sovereign rating.

Russia makes top 5 of Europe’s most attractive destinations for foreign investments

There are many factors contributing to capital inflows and outflows, according to the analyst. She stressed that not all of the factors leading to capital outflow are negative.

“What we are seeing now is rather normal market factors than capital flight. On the other hand, I think the uncertainty created by the threat of additional US sanctions could continue to deter capital inflows,” she said.

READ MORE: St. Petersburg claims ‘Europe’s leading cruise destination’ title

The new set of US sanctions is unlikely to lead to the country’s sovereign rating decline, Lindow added.

Recent data from professional services firm EY showed Russia made a top 5 list of Europe’s most attractive destinations for foreign investments. Last year, foreign investors put up capital in a record number of projects in Russia, according to the company.

For more stories on economy finance visit RT’s business section

Article source: https://www.rt.com/business/442432-moodys-russia-foreign-investments/?utm_source=rss&utm_medium=rss&utm_campaign=RSS

Trade wars, weakening emerging markets and currencies, and the strengthening US dollar began to overshadow market fears that OPEC leader Saudi Arabia, non-OPEC leader Russia, and their partners in the production cut deal may not be able to offset the loss of Iranian barrels and continuously falling production in Venezuela.

US market meltdown wipes out 2018 gains as Trump trade wars take toll on stocks

Then the market had to digest the latest geopolitical flare-up with the killing of a Saudi journalist critical of the Kingdom, the international outcry over the incident, and an initial veiled Saudi threat that it could retaliate to any potential sanctions over the death of Jamal Khashoggi.

Saudi Arabia admitted late last week that the journalist was killed in what it described as a “brawl” in the Saudi consulate in Istanbul.

While the market was weighing this development, oil prices were trending down and plunged on Tuesday to a two-month low, with both WTI Crude and Brent Crude slumping by four percent—the worst one-day drop since July.

The plunge was the result of several factors.

First, Saudi Energy Minister Khalid al-Falih stepped up rhetoric this week about how reliable Saudi Arabia is as a supplier, how it is ready to meet all customer demand there is, and how the Kingdom won’t weaponize oil and has no intention of repeating the 1973 oil embargo due to the Khashoggi case.

Next, the market has started paying more attention to the demand side of the equation, as concerns creep into the market about an imminent slowdown in global oil demand growth due to the high oil prices and strong dollar that weigh on emerging markets’ oil import bills, and looming global economic growth slowdown amid trade wars and tariffs.

Read more on Oilprice.com: Why US shale may fall short of expectations

Then, hedge funds and other money managers continued to liquidate long positions and take profits last week, building short positions in Brent and WTI.

The equity sell-off on Tuesday and the American Petroleum Institute (API) reporting a huge build of 9.88 million barrels in US inventories further dampened the mood on the oil market.

Earlier on Tuesday, market participants seemed to buy al-Falih’s latest assertion that “We will meet any demand that materializes” and that OPEC and allies are in a “produce as much you can mode.”

At the Saudi conference dubbed ‘Davos in the Desert’—largely shunned by many because of the Khashoggi case—Saudi Aramco’s CEO Amin Nasser reaffirmed that Saudi Arabia’s 12 million bpd oil capacity “can be sustained for a long time, backed by among the largest reserves in the world, with the highest quality and the lowest cost of production.”

“While geopolitical factors raise the risk that Saudi Arabia backtracks on its supply commitments to offset Iranian sanctions, we do not expect production cuts given the resulting loss of market share to US shale and other oil producers,” JP Morgan said in a note on Monday, as carried by CNBC.

Read more on Oilprice.com: The world’s next offshore oil hotspot

Even before Tuesday’s oil price plunge, money managers, who had already started to liquidate long positions, continued to cut bullish bets last week.

The net long position—the difference between bullish and bearish bets—in WTI dropped 14 percent in the week to October 16, Bloomberg calculations of US Commodity Futures Trading Commission data show. Longs declined 7.1 percent, but shorts surged 38 percent to the highest number since November last year. The net long position in Brent also dropped 14 percent in the week to October 16.

Earlier fears of Iranian supply losses have been slowly turning into fears about the rate of growth in global economy and oil demand going forward, amid unstable emerging markets and currencies, rising dollar, trade wars, and tariffs all weighing on oil demand growth expectations. Rising US inventories have also added to the more bearish sentiment.

“While the negative impact of rising crude oil prices has yet to affect the 2019 demand outlook, there is no doubt that it will have an impact sooner rather than later,” Ole Hansen, head of commodity strategy at Saxo Bank, wrote in the bank’s recently published Q4 2018 Quarterly Outlook.

While lower supply from Iran and Venezuela and a thinning global spare capacity can be price-positive in the short term, “given the negative impact of the current dollar strength, rising US interest rates and trade wars, we believe that the global economy is not able to cope with runaway oil prices,” Hansen says.

Yet, Hansen notes, Saxo Bank understands the recent bullishness “as the oil market reacts first and asks questions only later.”

This article was originally published on Oilprice.com

Article source: https://www.rt.com/business/442412-latest-oil-price-plunge-why/?utm_source=rss&utm_medium=rss&utm_campaign=RSS