Chevron Workers in Australia Set Date for Work Bans, Stoppages -- Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is up 0.7% at $84.47 a barrel

--European benchmark gas is 5% lower at EUR36.40 a megawatt hour

--Gold futures are up 0.1% at $1,949 a troy ounce

--LME three-month copper futures are up 0.8% at $8,422 a metric ton

--Wheat futures are down 0.15 at $6.16 a bushel

TOP STORY:

Chevron Workers in Australia Set Date for Work Bans, Stoppages

Workers at two giant natural-gas operations run by Chevron in Australia plan to begin rolling stoppages and some work bans next month, raising the specter of disruptions to global gas supplies ahead of the Northern Hemisphere winter.

Labor disputes between energy companies in Australia and their employees have jolted gas markets worldwide in recent weeks, with the threat of walkouts fueling concerns of a sudden drop in liquefied natural gas exports from Australia, which rivals Qatar as the largest exporter of the supercooled fuel.

Offshore Alliance, a partnership between two local unions, said its lawyers notified Chevron late Monday of plans for protected industrial action starting Sep. 7.

Union members at Chevron's Gorgon and Wheatstone LNG facilities--which account for roughly 5% of global LNG supply--intend to take part in rolling stoppages as well as bans and limitations on some work, Offshore Alliance said. The action will escalate each week until an agreement can be reached, it said.

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OTHER STORIES:

Manufacturers Leaving China Find a Home With Indian Startups

In early 2020, as the pandemic was shutting down global commerce, a Pennsylvania company was having trouble getting its usual steel parts out of China. It stumbled on another possible option, in India.

Zetwerk, a two-year-old startup connecting customers and manufacturers within the country, had never handled a U.S. order, but tapped its network of suppliers and delivered the parts. It is now a provider of everything from nail clippers to steel frames for U.S. customers, and is valued at $2.7 billion, with funding from Greenoaks Capital, Lightspeed India, Peak XV Partners and others.

India has been trying to lure some of the world's biggest companies to set up new factories after repeated lockdowns under Beijing's zero-Covid-19 policy and rising geopolitical tensions with the West prompted many firms to look for alternatives to China, in a strategy referred to as "China plus one."

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U.S. Steel Can Ride the Coattails of a U.S. Manufacturing Boom

United States Steel, the third-largest steel producer in the U.S., has several things going for it--and at least one big vulnerability.

At 11.8 times the next 12 months' expected earnings according to FactSet, the stock remains cheap by U.S. equity standards, and a $35 a share offer from a big suitor waiting in the wings represents a roughly 17% premium to current prices. The U.S. residential construction sector, although it has cooled, is holding up surprisingly well--in part because of low inventories of homes on the market. And a big structural tailwind for steel demand is building in the form of massive investments in manufacturing and green power triggered by the Inflation Reduction Act, America's new climate-focused industrial-policy law.

After a surprise offer from fellow steelmaker Cleveland-Cliffs, which became public in early August, shares of U.S. Steel are up by about a third. U.S. Steel rejected that initial offer and has said it is considering multiple offers for part or all of its business. After the steelworkers union put its support behind Cleveland-Cliffs, the industrial conglomerate Esmark withdrew its rival bid.

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MARKET TALKS:

Palm Oil Rises, Tracking Soybean Oil Strength

1005 GMT - Palm oil prices closed higher in Asia, tracking gains in soybean oil futures on the Chicago Board of Trade. Soybean oil futures have been supported by falling crop production and export activity, said analysts, noting that palm oil and soybean oil often trade in tandem due to their use in similar products. U.S. soybean production could total 4.110 billion bushels in 2023, advisory service Pro Farmer said last Friday, below the 4.205 billion bushels forecast by the U.S. Department of Agriculture, notes Phillip Capital in an email. The Bursa Malaysia Derivatives contract for November delivery closed MYR20 higher at MYR3,930 a ton. ([e-mail])

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Sugar Prices Begin to Steady After Report of Looming India Export Ban

0827 GMT - Sugar prices are starting to steady after a spike toward the end of last week amid a report from Reuters, who cited unnamed government sources, that India is set to implement an export ban on sugar. Raw sugar prices are down 0.2% Tuesday at $0.26 a pound, but are up from $0.22 a pound on Aug. 22, up 5.9% this month and are 27% higher year to date. India recently hiked export duties on onions and could add further measures for rice exports, S&P Global says in a note. "The latest moves follow an acceleration in domestic food price inflation," S&P says, adding that "further policy actions cannot therefore be ruled out." ([e-mail])

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Oil Pauses as Demand Outlook Appears Uncertain

0749 GMT - Crude oil prices are steady as traders await fresh clues on the outlook for demand and supply. Brent crude is flat at $83.90 a barrel and WTI is also unchanged at $80.11 a barrel. The market is waiting to see if anything comes from speculation that the U.S. is considering easing sanctions against Venezuela and Iran, which could open the door to more crude-oil exports. Meanwhile, weakness in China's economy and concerns the Federal Reserve could yet still raise interest rates are hanging over oil's demand prospects. "The demand outlook in the coming months remains clouded with uncertainty and will in our opinion cap the upside potential," Saxo says in a note. ([e-mail])

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Metals Rise as China Looks to Boost Economic Support

0736 GMT - Metal prices are rising after China looked to add more economic support measures for domestic infrastructure projects. Three-month copper and aluminum are both up 0.7% to $8,419.50 a metric ton and $2,167 a ton, respectively. Gold meanwhile is up 0.2% to $1,950 a troy ounce. ING highlighted that China introduced support measures on Monday for transport, property and other infrastructure projects. "These measures have helped broader sentiment in financial markets," the bank's analysts said in a note. They added that gold has also gained after the Federal Reserve indicated rates would hold steady in September. "However, we will need to keep a close eye on U.S. data releases in the coming weeks, which could shed more light on what the Fed may do." ([e-mail])

(END) Dow Jones Newswires

August 29, 2023 07:07 ET (11:07 GMT)

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