Yesterday, the U.S. dollar index strengthened, mainly due to high-level China-U.S. economic and trade consultations. White House economic adviser Kudlow said on Monday that trade negotiators could make progress when they meet in Washington this week, and also said that delisting Chinese companies listed in the U.S. was "not on the table." Both sides sent optimistic signals, easing tensions over this week's trade talks. According to CME FedWatch, the probability of a 25 basis point rate cut to 1.50%-1.75% in October is 74.3%, while the probability of holding rates steady is 25.7%; for December, the probability of a 25 basis point cut to 1.50%-1.75% is 36.2%, a 50 basis point cut is 50.6%, and holding rates steady is 13.2%. The dollar index closed at 98.986, up 0.15%. Metals were mixed, with LME aluminum up nearly 1.5%, LME copper and lead up nearly 0.6%, LME nickel down nearly 0.1%, LME tin down nearly 0.2%, and LME zinc down nearly 0.9%. Due to optimistic trade news and a stronger dollar, positive remarks on trade talks had boosted hopes that the two sides would reach a trade deal, which weakened gold's safe-haven demand and pushed gold prices lower. In oil, WTI crude surged and then pulled back. A new survey showed analysts expected U.S. crude inventories to rise last week. The preliminary survey indicated that U.S. crude stockpiles likely rose for a fourth consecutive week, estimated to have increased by 2.6 million barrels.
[SMM Commentary: Review of Copper Market During Holiday and Post-Holiday Outlook] SMM expects that after the National Day holiday, there will be more negative macro news, which will continue to pressure copper prices. The fundamental boost from the "golden September and silver October" peak season is limited. Downstream spot trading activity before the holiday was not optimistic. The high premium pattern quickly faded after a brief appearance, with premiums falling from a peak average of 260 yuan to around 50 yuan. Market willingness to take delivery weakened, and the recent shift in the SHFE copper contract structure from Back to Contango amid low inventories also confirms this. Therefore, post-holiday market sentiment is expected to be bearish, awaiting guidance from the new round of China-U.S. negotiations.
[SMM Commentary: Review of Aluminum Market During Holiday and Post-Holiday Forecast] It is expected that after the holiday, for LME aluminum, although the U.S. dollar index has retreated, it remains above 98, so upward momentum for LME aluminum is still relatively limited, and it is expected to fluctuate below the 10-day moving average. On the domestic front, affected by LME aluminum's breakdown decline, the 14,000 yuan/ton integer mark will gradually turn into resistance. Meanwhile, due to downstream restocking demand, social aluminum ingot inventories are likely to continue falling in the first week after the holiday. SHFE aluminum is expected to dip first and then recover within the week, with the trading center continuing to move lower, and the main contract trading mainly in the 13,800-14,000 yuan/ton range. Attention should still be paid to the sustainability of downstream consumption recovery and the pace of resumed production capacity release.
[SMM Commentary: Review of Lead Market During Holiday and Post-Holiday Forecast] SMM expects that for LME lead after the holiday, attention should continue to focus on whether LME lead inventories will extend their decline, which would provide momentum for LME lead to break through the previous high of $2,179.5/ton. For SHFE lead, boosted by LME lead's performance, there may be a catch-up rally at the start of the post-holiday period, but whether the main SHFE lead contract 1911 can successfully stand above the 17,000 mark (20-day moving average) will depend on the extent of social inventory accumulation after the holiday. Considering that before the National Day holiday, lead smelters in Hebei, Henan and other regions faced production restrictions due to heavy pollution weather, the lead ingot inventory accumulation during the National Day period is expected to be lower than in the same period last year.
[Review and Forecast of Zinc Market During Holiday: Mixed Macro Data During Holiday, LME Zinc Down 2.26%] SMM judges that the environmental production restrictions related to the National Day military parade have a relatively limited impact on galvanizing plants in North China, while downstream sectors in South and East China, such as die-casting zinc alloy, brass, and zinc oxide, show signs of order improvements. Overall, consumption is showing a recovery trend. On the smelting side, production remains at full capacity, with no increase in maintenance schedules for now. Except for some smelters that have not yet resumed normal production, which affects part of the increment, overall output may still increase slightly. From a fundamental perspective, the upward momentum for SHFE zinc is not strong enough. Recently, the progress of China-U.S. trade talks may have a stronger influence on SHFE zinc futures than fundamentals. Attention should be paid to macro guidance going forward.
[SMM Commentary: Review of Tin Market During Holiday and Post-Holiday Outlook] SMM expects that after the holiday, the key focus will be on whether LME tin can effectively stand above the 40-day moving average near $16,700/ton. For SHFE tin, affected by LME tin's rise, the short-term trading center may move higher after the holiday. Support for SHFE tin is seen near the round-number level of 134,000 yuan/ton, with resistance near the 10-day moving average at 136,500 yuan/ton. On the spot front, due to the National Day holiday, it may take some time for upstream operations and downstream demand to recover after the holiday. Spot market transactions are expected to remain generally weak in the short term.
[Review and Forecast of Nickel Market During Holiday: LME Nickel Inventories Plunge 15.7%, Longs Support LME Nickel's Strength] Nickel market assessment: Before the National Day holiday, there was no significant change in nickel market fundamentals. The fierce long-short battle in the overseas market could not produce a clear direction. Considering that domestic stainless steel plants with 300-series non-integrated capacity and no self-owned nickel pig iron may have production cut plans under loss pressure, fundamentals are more supportive of a short-term correction in nickel prices. During the holiday, the squeeze in LME nickel showed that longs are still active. This struggle that diverges from fundamentals cannot be ruled out as a bull-trap strategy. Overall, we still expect wide-range fluctuations in the post-holiday market. After all, with the huge Back structure, LME nickel's upside is limited, and SHFE nickel may not see a large catch-up gain after opening.
[SMM Quarterly Outlook: Joint Production Cuts Help SHFE Tin Recover Lost Ground — What's Next for Tin with Rising Supply and Weak Demand?] On September 30, under pressure from short sellers and LME tin's downward movement, SHFE tin fell again, hitting a low of 133,260 yuan/ton before shorts covered positions to lock in profits, leading to a rebound in SHFE tin. In the spot market, as it was the last trading day before the National Day holiday, trading was quiet. SMM believes that as downstream demand gradually recovers and demand for tin ingots increases, SHFE tin prices are expected to recover slowly.
[SMM Commentary: Review of Cobalt and Lithium Markets During Holiday and Post-Holiday Forecast] SMM expects that cobalt sulfate will continue to trade at a discount to cobalt chloride after the holiday. On cobalt raw materials, smelters currently have high profit margins, and intermediate product producers are offering at strong prices, so intermediate product prices may continue to rise. On lithium, cathode demand is currently relatively steady, and the downside for lithium salt prices is limited. In the short term, attention should be paid to producers' willingness to ship; in the long term, price trends still depend on inventory consumption and demand growth.
Today's Focus [Liu He invited to visit US for new round of China-US high-level economic and trade consultations] The Ministry of Commerce said that at the invitation of the US side, Liu He, Member of the Political Bureau of the CPC Central Committee, Vice Premier of the State Council and Chinese lead for the China-US Comprehensive Economic Dialogue, will lead a delegation to Washington from Oct 10 to 11 for a new round of China-US high-level economic and trade consultations with US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin. The main members of the Chinese delegation include Minister of Commerce Zhong Shan, Governor of the People's Bank of China Yi Gang, Vice Chairman of the National Development and Reform Commission Ning Jizhe, Deputy Director of the Central Financial and Economic Affairs Commission and Vice Minister of Finance Liao Min, Vice Foreign Minister Zheng Zeguang, Vice Minister of Industry and Information Technology Wang Zhijun, Deputy Director of the Central Agricultural Affairs Office and Vice Minister of Agriculture and Rural Affairs Han Jun, and Vice Minister of Commerce and Deputy International Trade Negotiation Representative Wang Shouwen.
[US to impose 25% tariffs on some EU goods; EU: Europe will counter!] The Office of the United States Trade Representative said the US would formally impose 25% tariffs on the goods on the list from Oct 18. It was reported that the US announcement to impose tariffs on EU goods came after the WTO ruled that the EU had illegally subsidized Airbus. USTR said it will continue to evaluate these tariff measures in light of consultations with the EU. In response to the US tariff measures, European Commission President Jean-Claude Juncker said the same day that if the US imposes tariffs on EU goods, the EU will respond in the same way.
[LME inventories during National Day] During the National Day holiday from Sep 30 to Oct 7, among LME metal inventories, aluminum stocks rose by 36,750 tonnes to 964,225 tonnes, and nickel stocks fell by 32,298 tonnes to 125,688 tonnes. >View all metal inventories< The Notice of Tangshan City on Lifting the Level II Emergency Response for Heavy Pollution Weather shows that after a decision by the heavy-pollution-weather response headquarters, starting from 20:00 on Oct 2, all relevant industries were required to implement emission-reduction measures under the orange warning; among them, iron and steel enterprises were allowed to operate sintering machines, pelletizing equipment and lime kilns at 50% capacity. From 8:00 on Oct 4, the city lifted the Level II emergency response for heavy pollution weather. In addition, various regions across the country lifted emergency responses during the holiday.
[Pan Asia's 21 tonnes of cobalt have been settled, ultimately won by Shanghai Sanqian New Energy] On Sep 19, the Kunming Intermediate People's Court of Yunnan Province announced that the metal cobalt involved in the Pan Asia case would be auctioned from 10:00 on Oct 5, 2019 to 10:00 on Oct 6, 2019. As of now, the auction for the 21 tonnes of cobalt involved in the Pan Asia case has ended. After 143 rounds of bidding, Shanghai Sanqian New Energy Materials Co., Ltd. finally won all 21 tonnes of cobalt at a transaction price of RMB 5,906,500.
Metal and industry news [Codelco maintains 2020 copper premium for European buyers unchanged at $98/tonne] Industry sources said on Oct 4 that Codelco, the world's largest copper producer, has agreed to keep the 2020 spot copper premium for European buyers at $98 per tonne, unchanged from the 2019 level. Sources said Codelco managed to maintain the premium at $98 per tonne even though copper premiums faced downward pressure this year, as customers prefer the high-quality cathode copper produced by the company. Codelco also seeks to maintain its copper premium for Chinese buyers at $88 per tonne.
[Chile's August copper output up 11% to 517,902 tonnes] Data released by the Chilean government on Oct 1 showed Chile's copper and lithium output jumped in August, despite manufacturing output falling 1.5% year-on-year. INE said Chile's August copper output rose 11% from a year earlier to 517,902 tonnes.
[Japan's Pan Pacific Copper plans to increase copper output by 1.9% in the second half of the fiscal year] On Oct 4, Japan's largest copper smelter, Pan Pacific Copper (PPC), said it plans to produce 302,000 tonnes of copper in the October-March second half of the fiscal year, up 1.9% from the corresponding period of the previous year.
[Chile's Antofagasta hopes to avoid a strike at the smaller Antucoya mine] On Oct 3, Antofagasta, one of the world's largest copper miners, held talks with workers on Thursday in hopes of avoiding a strike at its smaller Antucoya mine, but union leaders said little progress was made. After the union decided to reject the company's final contract offer, government-mediated negotiations are set to intervene, raising the possibility of a strike.
[US cathode copper imports and exports both fell in August] Data released by the US Department of Commerce on Friday, Oct 4, showed US cathode copper exports in August were 6,965,795 kg, down from 8,842,152 kg in July, for a cumulative total of 58,377,694 kg in the first eight months of this year. US cathode copper imports in August were 50,653,456 kg, down from 67,827,173 kg in July, for a cumulative total of 422,181,993 kg in the first eight months of this year.
[US aluminum exports in August nearly halved from the previous month] Data released by the US Department of Commerce on Friday, Oct 4, showed US exports of unwrought, unalloyed aluminum in August were 3,571,109 kg, almost half of July's 6,245,366 kg, bringing cumulative exports in the first eight months to 38,092,055 kg. US aluminum imports from January to August totaled 738,123,553 kg.
[EGA's Al Taweelah refinery has produced 600,000 tonnes of alumina, aiming to achieve full capacity within one year] Emirates Global Aluminium (EGA) recently said its Al Taweelah refinery has produced 600,000 tonnes of alumina since production started in April. The refinery expects alumina output to exceed 1 million tonnes by the end of the year. The plant plans to reach full nameplate capacity within the next year. Indonesian state-owned tin miner PT Timah will reduce tin exports by 2,000-2,500 tonnes per month.
[Jinchuan Indonesia laterite nickel project's smelter Line 2 put into production] At 16:19 local Indonesian time on Sep 29, another success was reported from Jinchuan Group's overseas project construction. Line 2 of the smelter at the Indonesia Jinchuan WP&RKA laterite nickel project successfully produced its first heat of ferronickel, as a tribute to the 70th anniversary of the founding of New China and the 60th anniversary of the founding of Jinchuan Group.
[CISA: Steel output in first eight months grew by 55.51 million tons, all to meet domestic demand] On October 7, He Wenbo, Party Secretary and Executive Vice President of the China Iron and Steel Association (CISA), said that driven by domestic demand, steel production has grown rapidly this year. According to statistics, steel output in the first eight months rose by 55.51 million tons, while net exports fell by 952,000 tons, meaning that the increase was entirely used to meet domestic steel demand, with two-thirds of the increase serving demand from the construction sector. Meanwhile, demand-side support remains sustainable.
[GEM signs strategic long-term cobalt raw material procurement deal; Glencore to supply no less than 61,200 tons of cobalt metal] GEM Co., Ltd. and its wholly-owned subsidiaries – Jingmen GEM New Materials Co., Ltd., GEM (Jiangsu) Cobalt Industry Co., Ltd., Kailike (Hong Kong) Co., Ltd., and GEM (Wuxi) Energy Materials Co., Ltd. – recently signed a strategic procurement agreement with Glencore International AG ("Glencore") regarding the purchase of crude cobalt hydroxide intermediate, a raw material for power batteries, and long-term cooperation between the two parties. Glencore will supply no less than 61,200 tons of cobalt metal. >> View details Brazil’s Ministry of Trade released its September commodity export report on October 1, showing that Brazil’s iron ore exports in September were 27.14 million tons, down from 33.9 million tons a year earlier. The Indonesian government has asked state-owned mining company Inalum to take over assets divested by PT Vale Indonesia.
[Holiday gold market consumption rational; market still favors Q4 performance] While the domestic market was closed for the holiday, international gold prices stopped falling and rebounded. Reporters learned from several gold shops in Chongqing and Shanghai that gold market consumption during the holiday was rational and unaffected by rising prices. Many consumers still expected to "buy after prices fall." Analysts said gold market speculators are waiting for further information to drive prices up, as shown by a moderation in the pace and scale of position increases compared with earlier periods, while total holdings remain high.
[Spot gold rises; PBoC increases gold holdings for 10 straight months] Spot gold rose as much as 0.4% on Monday to $1,511.31 per ounce, and was last quoted at $1,508.59 in Asian trading. Although gold prices fell 3.2% in September, they are still up nearly 18% so far this year. Central banks, especially those in emerging markets, have been the main buyers this year. Data showed China’s gold reserves stood at 62.64 million ounces at the end of September, up 190,000 ounces from 62.45 million ounces at the end of August, marking the 10th consecutive month of gold purchases by the People’s Bank of China.
Macro Focus China [China’s end-September forex reserves at $3.09 trillion vs. $3.11 trillion estimate] As of the end of September 2019, China’s foreign exchange reserves stood at $3.0924 trillion, up $19.7 billion from the beginning of the year, an increase of 0.6%. In September, supply and demand in China’s foreign exchange market remained broadly balanced. Affected by global economic growth, monetary policies of major central banks, global trade tensions, geopolitical factors and other influences, the US dollar index rose and bond prices in major countries fell. Exchange rate translation and asset price changes had a combined effect on the scale of foreign exchange reserves.
[September manufacturing PMI below boom-bust line; overall sentiment improved from the previous month] China’s official manufacturing PMI was 49.8 in September, compared with expectations of 49.6 and a prior reading of 49.5. The Caixin China General Manufacturing PMI final reading was 51.4 in September, rising for three consecutive months and reaching the highest level since March 2018, indicating continued improvement in the manufacturing sector, mainly driven by a marked rebound in the new orders index and the production index. According to the National Bureau of Statistics, the manufacturing PMI rebounded in September. In terms of production, the production sub-indices of large, medium and small enterprises all rose month on month, and all were in expansion territory in September; high-tech manufacturing continued to expand. The non-manufacturing business activity index edged lower, services activity was stable with a slight uptick, and construction activity fell somewhat. The composite PMI output index expanded steadily.
Overseas [US ISM manufacturing PMI hits new low in September] The US ISM Manufacturing Index fell to 47.8 in September, the lowest since June 2009. The new export orders, inventories and production sub-indices fell from 43.3%, 49.9% and 49.5% to 41.0%, 46.9% and 47.3%, respectively, which were the main drags weighing on the manufacturing PMI to a new low. The negative impact of trade frictions on the US economy is accelerating.
[US trade deficit in August rose instead of fell; latest data "slaps" Trump policy] Foreign media cited the US Commerce Department as saying on October 4 that the goods and services trade deficit rose 1.6% from the previous month to $54.9 billion on a seasonally adjusted basis. The US trade deficit widened in August as American consumers bought more mobile phones and other goods from abroad, while companies exported more oil and autos. Analysts said the increasing trade deficit would slightly dampen US economic growth in the third quarter. Jim O’Sullivan, chief US economist at High Frequency Economics, estimated that trade would reduce the annualized growth rate by 0.2 percentage point over the July-September period.
[US non-manufacturing index hits three-year low in September] The US ISM Non-Manufacturing PMI came in at 52.6 in September, versus an expected 55 and a prior reading of 56.4. The Dow fell more than 200 points, the Nasdaq fell 0.4%, and the S&P 500 fell 0.38%. Spot gold rose over 0.8%, hitting a daily high above $1,512 per ounce, with a short-term gain of about $10.
[Fed Chair Powell: US economy still solid; maintaining 2% inflation target] On October 4 local time, Federal Reserve Chairman Jerome Powell made brief remarks in Washington. Powell said the US economy remains robust. Powell did not provide clear guidance on the future path of interest rates in his remarks, noting that the Fed is studying strategies to help achieve its 2% inflation target. Before Powell’s remarks, a number of US economic data releases earlier in the week had been disappointing. Some analyst institutions project about an 80% probability that the Fed will cut interest rates later this month.
[New York Fed announces additional overnight and term repo operations]The New York Fed will extend overnight repo operations until November 4. The size of the repo operations will be no less than $75 billion. Starting the week of October 7, the New York Fed will also conduct term repo operations until October 29. The term repo operations on October 8, 10 and 11 will be no less than $45 billion, and those on October 15, 17, 22, 24 and 29 will be no less than $35 billion. Most term repos will have a term of 14 days, but there will also be one batch of 15-day repos and one batch of 6-day repos. According to CME's FedWatch, the probability of the Fed cutting rates by 25 basis points to 1.50%-1.75% in October is 78%, while the probability of holding rates unchanged is 22%; the probability of a 25 bp rate cut in December to 1.50%-1.75% is 49.1%, a 50 bp cut is 40.3%, and holding rates unchanged is 10.6%.
[US economic data show weakness, Fed may be forced to cut rates for a third time]After manufacturing and employment data declined this week, the market now sees a 75% probability of a 25 bp rate cut at the October 29-30 meeting, up from 40% on Monday. With recession worries growing, U.S. stocks fell to their lowest since August.
[UK submits new Brexit agreement to EU]On October 2, the British government formally submitted a new version of the Brexit agreement to the EU. At the Conservative Party annual conference that day, Prime Minister Johnson said the new agreement represented a compromise by the British government, and that if the EU continued to refuse to make concessions, Britain would leave the EU without a deal on October 31. On the EU side, European Council President Tusk said the EU remained open to the UK proposal but was not fully convinced; European Commission President Juncker said the new Brexit plan still has many problems.
[Japan raises consumption tax to 10%]The Japanese government formally raised the consumption tax to 10% on October 1, the first tax increase in five years since Japan raised the tax from 5% to 8% in 2014. After the hike, prices of most goods and services in Japan will rise, including public utility prices such as water, electricity and gas. According to estimates, if the tax increase applies to all goods and services, the Japanese government could increase tax revenue by 5.7 trillion yen (about 108 yen per U.S. dollar) per year.
[Australia's central bank cuts benchmark rate by 25 bp to record low of 0.75%]The Reserve Bank of Australia cut its benchmark interest rate by 25 basis points to a record low of 0.75%, the third rate cut this year (the RBA previously cut rates by 25 bp in both June and July).
[China's infrastructure investment up 4.2% YoY in first eight months, growth rebounds]According to the National Bureau of Statistics, infrastructure investment rose 4.2% year on year in January-August, 0.4 percentage points faster than in January-July. Within infrastructure investment, investment in ecological protection and environmental treatment rose 42.2%, with growth accelerating by 1.2 percentage points from the first seven months and 7.3 percentage points from the same period last year.
[Tesla Q3 deliveries miss expectations, Shanghai plant accelerates production ramp-up]Tesla's goal of delivering 400,000 vehicles for the full year looks difficult to achieve. But if its Gigafactory in Lingang, Shanghai can achieve volume production this year, it could help the company reach that goal. Tesla released its latest delivery data on Wednesday local time, showing third-quarter electric vehicle deliveries of 97,000 units, including 79,600 Model 3s and 17,400 Model S and Model X. Model S and Model X accounted for less than 18% of deliveries, well below last year's 33%, while Model 3 accounted for more than 82%.
[Financing costs for property developers keep rising; overseas bond financing above 10% no longer an exceptional case]According to a report released by CRIC Research, the total financing of 95 typical property developers in September was 112.448 billion yuan, up 45.3% month on month and 17.2% year on year. In the first nine months, the average financing cost of new bond issuance by property developers was 7.03%, up 0.50 percentage points from the full year 2018. Overseas bond financing costs reached 8.08%, up 0.86 percentage points from 2018. At present, with both domestic and overseas financing environments tightening comprehensively, both large and small developers face financing difficulties and continuously rising financing costs, and overseas bond financing exceeding 10% is no longer an exception in the industry.
[Charging services market may exceed 20 billion yuan in 2020]According to a research report released by iResearch, China's public charging service industry market size may exceed 15 billion yuan by the end of 2019, and is expected to exceed 20 billion yuan by 2020, indicating huge market potential. According to the report, as of June 2019, the number of charging piles in operation nationwide exceeded 1 million, including 412,000 public charging piles and about 590,000 private charging piles.
[Chinese company-built Argentina's largest photovoltaic power project completed]The mechanical completion ceremony of the Cauchari 300 MW photovoltaic power project in Argentina, undertaken by a Chinese company, was held on October 1 at the project site in Jujuy Province. Once put into operation, the project will become Argentina's largest photovoltaic power project. Located in the Cauchari area of Jujuy Province, the project site has an altitude of more than 4,000 meters.
[Follow the moves of foreign capital: giants eye semiconductors and other sectors]Data shows that global institutions such as Morgan Stanley, Fidelity Investments, BlackRock, Neuberger Berman and the Abu Dhabi Investment Authority surveyed a number of A-share listed companies in September. In terms of style and industry, these companies are mainly small/mid-cap and ChiNext-listed companies, mainly involving semiconductors, electronic components, computer applications, machinery manufacturing and other industries. Several industry insiders said that historically, foreign capital's judgment on A-shares has often been leading, and it has achieved significant excess returns over the past few years. Therefore, whether in sector allocation or individual stock selection, investors should pay attention to foreign capital's moves.
[Unigroup Guoxin: no current plans to enter memory chip manufacturing or integrate Yangtze Memory]According to news on October 5, Unigroup Guoxin responded to investor questions on its interactive platform, saying that when Yangtze Memory Technologies was established, to avoid potential horizontal competition, Unigroup Group committed that in the future, if the company plans to develop memory chip manufacturing business, it has the right to conduct industrial integration of Yangtze Memory. In view of Unigroup Group's strategic layout in the memory field, the company currently has no plans to enter memory chip manufacturing business, nor does it have plans to integrate Yangtze Memory.
Related Markets [This year's local government bond issuance exceeds 4 trillion yuan; future infrastructure special bond quota may exceed 50%] As of September 22, a total of 1,003 local government bonds had been issued by 37 provinces, municipalities, autonomous regions and cities with independent planning status, with total bond value reaching 4.021094 trillion yuan. Among them, new special bond issuance reached 2.033594 trillion yuan, approaching the annual cap of 2.15 trillion yuan. Li Qichun, senior researcher at the Modern Research Institute, said in an interview: "According to the government's new requirements, the 1.29 trillion yuan early issuance quota is expected to flow into infrastructure. This also means that funds for infrastructure projects will far exceed previous levels. A rough estimate suggests that the proportion of special bond quotas for infrastructure next year may exceed 50%." [Crude Oil] Russian Energy Minister Novak: Russia believes that $50 per barrel is a fair price in the medium term, and everyone has forgotten that prices were once $100 per barrel. Russia should lower taxes on the oil industry. Without tax changes, Russian output will decline in the coming years. The new tax measures will increase oil profits by $3-5 per barrel and make Russia's oil industry more competitive.
[Saudi Arabia Fully Restores Crude Oil Output] Saudi Arabia's Energy Minister Abdulaziz bin Salman confirmed on October 3 that the country's crude oil output has fully recovered to pre-attack levels, and it will focus on advancing the initial public offering (IPO) of oil and gas giant Aramco. Speaking at an energy conference in Moscow, the Russian capital, Abdulaziz said Saudi crude oil production capacity has recovered to 11.3 million barrels per day. "We have stabilized production capacity... We still have the equipment and tools to overcome all future challenges." Two Saudi facilities belonging to Aramco were attacked by drones on September 14, cutting daily crude oil output by about half.
[Baker Hughes: U.S. Active Oil Rig Count Falls to Nearly Two-and-a-Half-Year Low Last Week] According to data released by U.S. oilfield services company Baker Hughes on October 4, the number of active U.S. oil rigs was 710 for the week ending October 4, down 3 from the previous week, marking the 13th decline in the past 14 weeks and the lowest level since May 5, 2017. Natural gas rigs decreased by 2 to 144. The total rig count fell by 5 to 855.
[National Energy Administration: Coal Power Industry Plans to Eliminate 8.664 Million Kilowatts of Outdated Capacity This Year] The National Energy Administration issued the "Notice on Assigning the 2019 Targets and Tasks for Eliminating Outdated Coal Power Capacity", stating that in order to continue deepening supply-side structural reform and promote high-quality development of the coal power industry, this year's target for eliminating outdated production capacity in the industry is 8.664 million kilowatts. The reporter noted that the planned capacity for eliminating outdated coal power capacity this year has been reduced compared with last year.