EURUSD hovers around Parity

The EURUSD has dropped from a relative high of 1.13 in Feb 2022 to near parity on 23 August 2022.

$6m worth of tokens stolen relating to Solana Blockchain

The Zug-based Solana Foundation which advocates a blockchain built for speed, is blaming the developers of the Slope wallet. 

Elliott Management Sues LME Over Nickel Trade Cancellations

Elliott Management, the hedge fund founded by Paul Singer (ex DLJ attorney, JD Harvard Law School 1969) with over $51bn in assets under management, and that pursues commodities trading as one of its strategies, is suing the LME for $456m over mass cancellation of nickel trades. 

The assertion is that the cancellation was "unlawful on public law grounds". The cancellation occurred on March 8th following volatility that saw prices doubling to over $100k a tonne in a matter of hours. HKEX, the parent company of the LME, dismissed the claim as "without merit".

LME Nickel is now trading (both cash and 3m contract) under $30K a tonne. Nickel is used in alloying to give steel (stainless steel) its corrosion resistant properties. LME Physical futures on nickel trade in 6 tonne lots with the nickel presented required to be Primary Nickel.

Germany Banning Russian Oil Imports by End 2022

Germany has announced a ban on Russian oil imports, halving demand by summer and going to zero by winter.  

One quarter of Germany's oil imports currently come from Russia.  

Natural gas (40% of Germany's needs come from Russia) will be phased out post the oil ban. The 9.5 billion euro pipeline, Nord Stream 2, between Russia and Germany, will now no longer be used having been suspended 2 days before the Russian invastion of Ukraine on February 24th, by German Chancellor Olaf Scholz (successor of Angela Merkel). 

Importing LNG is one option but has been tricky due to the lack of regasification facilities in Germany. The leasing of FSRUs in the short term (Floating Storage and Regasification Units) is one option being explored, and Wilhelmshaven, coastal town facing the North Sea, has been identified as one location.

Employers and unions have resisted an immediate energy import ban due to loss of jobs. The UK will also phase out Russian oil imports by the end of 2022. 

Separately, the EU announced a ban on Russian coal imports on 7 April which will take effect in August (Russia is Europe's largest supplier of thermal coal - which is used in coal-fired power stations).

Bill Ackman's Pershing Square Stumbles on Netflix Bet

New York based Bill Ackman's Pershing Square (the company he founded in 2004 with $54m)  reversed a $1bn position in Netflix (purchased in January) after the streaming media firm announced an outflow of 200,00 subscribers (partly due to its exit from Russia) generating a 35% drop in share price.  

This exit resulted in a $400m loss for Pershing investors. 

Bill imparted the need to act quickly and pointed to Netflix's "enormous operating leverage" as the reason why future subscriber growth revisions would have an "outsized impact on (his) estimate of intrinsic value". This is not Bill's biggest lost - he had earlier lost $4bn in his stake in pharma firm, Valeant Pharmaceuticals (now renamed to Bausch Health).

In closing, Bill also expressed optimism about the "opportunity rich" environment and confidence in putting the Netflix sale proceeds to good use.

Pershing Square also has a UK closed-end fund, Pershing Square Holdings (PSH), launched in October 2014 on the London Stock Exchange, and whose legal entity is incorporated in Guernsey.

Car Manufacturers In Deals with Electronics Firms

As tech firms invest in semiconductor production to meet demand, automotive manufacturers are tying up with tech firms to secure supply.  An example is BMW who signed a supply deal with Inova Semiconductors and Global Foundries in December 2021. Other companies have been ramping down production, with Ford closing factories in 2021. Jaguar Land Rover (JLR) sales dropped 1.2% in 2021 attributed to the semiconductor shortage (order books remain healthy). Nissan CEO Makoto Uchida said while production was on track, "day by day we're in close discussion with suppliers". Tesla has managed supply well, though has reportedly omitted electronic control units in steering racks for some models, according to CNBC. Porsche has been unusual in predicting record sales despite shortages.

US Natural Gas Exporters to Meet German Buyers

Meetings will take place in Berlin as Europe attempts to wean itself off Russian gas. Germany in particular depends on Russia for about 50% of its gas supplies making the American option important. LNG terminal developers in Germany are hoping this will help accelerate planning approvals.

LME Resumes Nickel Trading after One Week Halt

The LME (an HKEX company) suspended nickel trading for a week after a price surge caused by a short squeeze on Tsingshan Holding Group, the world's largest nickel producer, resulted in "disorderly conditions". Trading resumed on Wednesday 16 March 2022 at 8am.

The Russian invasion of Ukraine has put nickel prices in a tailspin following sanctions of the world's largest exporter of refined nickel and concomitant concerns on global supply.

Nickel demand is driven by stainless steel and battery pack demand in electric vehicles.

Distillate Prices Coming Down after Rising Faster than Crude

ICE Gasoil prices which started rising aggressively at the back-end of February 2022, have started to loosen up, with a 6% drop in the front month April (J22) contract (representing 100 metric tonnes of low sulphur gasoil for physical delivery) and a 5.5% drop in the adjacent contract, May (K22).

Volumes for April are just over 30K and for May just under 20K.

Over the last two years we have been used to seeing Gasoil front month futures trade at around the 500 to 800 mark, with recent events pushing it to a peak of 1522 USD per metric tonne. This has led to a daily 25% drop in the front month contract on 10 March 2022 as the market struggles to sustain such aggressive gains.

As might be expected, similar to the crude curve, the gasoil futures curve is backwardated. The spread between adjacent contracts in the first three futures months is about $40 per metric tonne.

The Rise of Brent Crude's K22 Contract

Front-month Brent futures, represented by the May 2022 contract (K22) peaked at $128 a barrel on Tuesday March 8 2022. 

It crossed to over $100 a barrel at the start of March following Russia's invasion of Ukraine on 24 February. K22 is currently trading at $116 a a a barrel with 102K contracts traded with an intraday rise of 4.7%.

The Brent curve is in backwardation with the June 2022 (M22) contract trading at $112 (rounded to the nearest dollar), with the front month trading at $4 per barrel premium, with a similar premium for July (N22) trading at $108 per barrel.

Not until the October 2022 (V22) contract do we see oil dipping below $100 a barrel.

We see similar backwardation and spreads in future pricing on the NYMEX WTI Curve. With WTI all the volume is on the front month with 104K contracts (and counting) traded on 10 March 2022. Comparing front month contracts. Brent is at a $3 premium to WTI.

S&P Global Swallows IHS Markit Whole

S&P Global (NYSE: SPGI) announced completion of its $140bn merger with IHS, uniting "highly complementary assets". Douglas L Peterson, President and CEO of S&P Global, praised the "innovate assets" as well as the "technology capabilities" of the two "world-class organizations".