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Market Movers Europe


Market Movers Europe, Feb 5-9: It’s results season for big oil; Groningen natural gas output in the balance

With Henry Edwardes-Evans, Editor, Power in Europe

February 05, 2018 09:49:21 EST (4:19)

All eyes will be on major oil companies’ 2017 results and their plans for the year ahead. Statements from BP, Statoil, and Total are all due this week.


In steel, workers at Germany’s ThyssenKrupp could pave the way for the creation of Europe’s second largest steel producer today by allowing a merger with India-based Tata Steel.


In the coal market, labor issues will also loom large, with a potential strike at one of the world’s largest mines.


Meanwhile, tight supply will be an issue for the European petrochemicals market with polypropylene prices expected to increase this month.


In technology, a clutch of live blockchain-based power and gas trades will be demonstrated this week at the annual E-World event in Essen, Germany.


And finally, the fate of the Groningen gas field in the Netherlands hangs by a thread, with the market primed for a government decision in the days ahead.


Our social media question for this week: Is blockchain technology being over-hyped, or is it a real threat to established trading services? Tweet us your thoughts with the hashtag #PlattsMM.

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Video Transcript


In this week's highlights: Labor unions will decide whether or not to support the creation of a European steel giant; the coal sector eyes the prospect of a strike at one of the world’s largest mines; and the fate of the Groningen gas field hangs in the balance.


But first, all eyes will be on major oil companies’ 2017 results and their plans for the year ahead. Statements from BP, Statoil, and Total are all due this week. The results should give an indication of the effect of falls in investment on companies’ oil reserves and production forecasts. Market participants will also keep a keen eye on capital spending plans. Executives have said they will keep a tight rein on investment to reduce debt despite the rebound in crude prices.


Staying in the corporate world, steel workers at Germany’s ThyssenKrupp could pave the way for the creation of Europe’s second largest steel producer today by allowing a merger with India-based Tata Steel. Union members are expected to approve a collective agreement on the merger conditions. Union support would remove a major road block to the deal. Under the proposed agreement, all units of ThyssenKrupp's steel division would continue to operate until 2021 with no job cuts.


In the coal market, labor issues will also loom large, with a potential strike at one of the world’s largest mines. Union members at the Cerrejon facility in Colombia have until Friday to stage a walkout. Should the strike go ahead and last for more than a week, it could hit supplies to Turkey. The union is asking for an 8% pay rise, but the mine owners, including BP, Anglo American and Glencore, are only offering 5.5%. Some sources say that at $87 a metric ton, FOB Colombia coal prices are already factoring in a brief strike.


Tight supply will also be an issue for the European petrochemicals market. Prices of polypropylene, a polymer used to make everything from DVD boxes to car bumpers, are expected to increase this month. Prices have already been rising since the beginning of the year.


Expectations of even higher prices are based on declarations of force majeure at two of Total’s production sites in France and Belgium. The two sites account for nearly 8% of European polypropylene capacity. Total says both are suffering from unforeseen technical problems.


Speaking of technology, a clutch of live blockchain-based power and gas trades will be demonstrated this week at the annual E-World event in Essen, Germany. Expect a lot of interest in these peer-to-peer transactions. Some 39 European utilities have been participating in the development of the Enerchain platform that will host the trades. IT developer Ponton thinks that number will hit 50 by the summer, when it expects to offer a live product.


That takes us to our social media question: Is blockchain technology being over-hyped, or is it a real threat to established trading services? Tweet us your thoughts with the hashtag #PlattsMM.


And finally, the fate of the Groningen gas field in the Netherlands hangs by a thread, with the market primed for a government decision in the days ahead. Groningen accounts for around a quarter of EU gas production.


The state regulator has recommended slashing annual output to 12 billion from 22 billion cubic meters as soon as possible. Field operator NAM has already shut in sites at the field which produced 1 billion cubic meters of gas last year. The final say lies with economy minister Eric Wiebes, who has suggested a reduction of 2 billion cubic meters this year. Grid operator Gasunie says a cut of that size will not hit security of supply.


Thanks for kicking off your Monday with us, and have a great week ahead.





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