David Fuller and Eoin Treacy's Comment of the Day
Category - Energy

    NIO, BYD Shares Hit Record on Wall Street Vote of Confidence

    This article by Esha Dey for Bloomberg may be of interest to subscribers. Here is a section:

    Chinese electric carmaker NIO Inc. received confidence votes from at least two Wall Street analysts on Wednesday, after JPMorgan and Citi both upgraded their ratings on the stock.

    While JPMorgan’s action was based on the expectation that the use of new-energy vehicles in China will quadruple by 2025 from last year’s levels, Citi pointed to multiple factors, including a very strong order backlog during the country’s Golden Week national holiday, an increase in NIO’s market share and a drop in battery costs.

    JPMorgan analyst Nick Lai expects the penetration of new- energy vehicles in China to accelerate, jumping to 20% of the market by 2025 from less than 5% in 2019. Shifting customer preferences will help drive the trend, along with an expected drop in the cost of electric-car and battery production, the
    analyst wrote in a note.

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    Tesla Lithium Foray Is Sign of Robust Demand, Top Producer Says

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    Rather than a threat to existing producers, Tesla Inc.’s push into lithium mining is a sign of future demand strength, according to the largest producer of the key ingredient in batteries for electric vehicles.

    “They’re kicking the industry in the pants,” Eric Norris, head of lithium at Albemarle Corp., said in an interview. “The market interpreted it as a strong signal of value erosion, but I view it differently. It’s a sign of what needs to come to drive the vision they have for 2030.”

    Tesla’s foray into mining is at the center of the carmaker’s plan to cut battery costs and deliver on a promise to bring a $25,000 electric vehicle to market. Elon Musk told investors last month that Tesla has secured access to 10,000 acres of lithium-rich clay deposits in Nevada and planned to use a new, “very sustainable way” of extracting the metal. That news helped send lithium-producer shares tumbling, with Albemarle falling 16%, the the most on record.

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    U.S. Boosts Crude Sales to China, Forcing Saudis to Find Other Markets

    This article from Dow Jones Newswire may be of interest to subscribers. Here is a section:

    Earlier this year, China agreed to buy U.S. crude as part of a broader deal meant to ease rising trade tensions between the two world powers. The Trump administration agreed to cut some tariffs on Chinese goods in exchange for purchases of American farm, energy and manufacturing exports. ~

    China's buying so far is a long way from fulfilling commitments made in that deal, and to some extent it is simply restoring crude flows that were cut off amid the earlier U.S.-China trade tensions. As part of a deal, Beijing agreed in January to buy $52.4 billion worth of oil and liquefied-natural-gas from the U.S. by the end of 2021. The buying was delayed by the outbreak of the Covid-19 pandemic, but has ratcheted up more recently.

    “The Chinese had to catch up," said Petro-Logistics Chief Executive Daniel Gerber. That is now upending traditional oil-trade routes world-wide and further depressing some prices. Global prices have been hammered by falling demand caused by the pandemic.

    Amid the new U.S. shipments to China, Saudi Arabia recently cut prices for its crude for buyers in Asia, a move that could make that oil more attractive to other regional buyers. It is also now resorting to storing unsold oil at home and overseas, including at depots in Egypt, Singapore and China. Saudi Arabia's domestic crude-oil inventories rose 7% to 81 million barrels in the two weeks to Sept. 20, a level not seen since June, said Paris-based commodities-analysis company Kayrros.

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    Oil Drops in Wake of Stimulus Uncertainty and OPEC Supply Fears

    This article by Andres Guerra Luz and Alex Longley for Bloomberg may be of interest to subscribers. Here is a section:

    Oil slid to a two-week low as conflicting signals over the prospect of U.S. fiscal relief added to concerns over rising supply from major global producers.

    Futures in New York tumbled as much as 6.5% on Thursday as the dollar moved off session lows. The U.S. benchmark fell below its 100-day moving average and if futures close below the key technical level, it will signal further selling pressure ahead.

    Chances for a much needed boost for demand remains uncertain, with U.S. House Speaker Nancy Pelosi saying there are still major differences to be bridged in the negotiations over a fiscal stimulus package. Meanwhile, investors are also concerned with the unexpected return of Libyan output and higher oil exports from Saudi Arabia and Iraq. Russian exports are also expected to increase.

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    After underperforming the stock market for years, alternative energy is red hot

    This article by Debbie Carlson for Market Watch may be of interest to subscribers. Here is a section:

    Energy-market watchers say what makes today different than 10 years ago, when interest in clean tech also was hot, is that these power sources are now economically viable as subsidies fall away.

    Peter McNally, global lead for industrials, materials and energy at research firm Third Bridge, says aggressive investment by utilities in renewable energy has lowered the cost of clean tech and showed it was viable at scale. Just as utilities invested in natural gas 20 years ago at the expense of coal, they are now doing the same with alternative energy.

    "Clean-tech businesses are starting to stand on their own, and I think they got a big boost from the utilities," he says.

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    Tesla unveils battery puzzle pieces of smart material science, design, and manufacturing innovation

    This article by Fred Lambert may be of interest to subscribers. Here is a section:

    “Over the last few years, Tesla has been making a lot of moves related to batteries.

    We are talking about buying companies like Maxwell and Hibar, and applying for patents on new technology, like a tabless battery cell and a cell to pack design.

    While all these moves were mostly evaluated on their own merits, it wasn’t clear how all those things would fit together.

    That’s exactly what Tesla demonstrated at its Battery Day.

    Tesla explained how they have made major improvements in five key aspects of batteries:

    Cell design, specifically form factor.
    Battery cell factory design with manufacturing innovations
    New anode materials
    New cathode materials
    New battery pack design

    And then, by combining all these things together, Tesla achieves a battery cost breakthrough with a 56% reduction in cost per kWh:

    What is most impressive is how all those innovations work together. Each result in an incremental improvement to battery technology, but if you combine them together, you get breakthrough-level performance and cost:

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    Australia Unemployment Drops as Half of Jobs Lost Recovered

    This article by Michael Heath may be of interest to subscribers. Here is a section:

    The data’s strength was surprising because the period spanned Melbourne’s shift to Stage 4 restrictions and a curfew to contain a rapidly spreading outbreak, as well as nervousness in neighboring New South Wales that it was headed down the same path. The labor market’s ability to absorb this weakness and maintain its recovery is testament to the government’s signature JobKeeper employment subsidy -- that will extend into 2021 -- and central bank stimulus.

    Self-employed workers drove the monthly jobs increase. As part-time jobs returned at twice the pace of full-time, the ubiquitous food delivery services, with its riders pedaling the streets of Australia’s cities, are expected to be responsible for much of this rise.

    “The upshot is that the unemployment rate is now unlikely to climb to 8.5% over the coming months as we had anticipated, let alone the 10% predicted by the RBA and the Treasury,” said Marcel Thieliant, senior economist for Australia at Capital Economics. “Indeed, with restrictions in Victoria set to be loosened toward year-end, employment should continue to rise.”

    The Reserve Bank of Australia, which has kept its benchmark interest rate near zero since March, when it began buying government bonds to ensure the yield on three-year remained around 0.25%, had predicted the jobless rate would climb to around 10% later this year.

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    12 frightful slides before Halloween: Stocks boil and bubble, investors toil and trouble

    Thanks to a subscriber for this report from Stifel which contains a number of insightful charts and may be of interest. Here is a section:

    Bull Case for Chinese Commodities Enhanced by Stronger Yuan

    This article from Bloomberg may be of interest to subscribers. Here is a section:

    Elsewhere, Shanghai is taking steps to promote hydrogen vehicles, with a plan to get 10,000 cars on the road by 2023. Just this week, Sinopec has flagged its intention to include hydrogen in retail fuel stations, while top vehicle-maker SAIC Motor said it’s accelerating its push into the alternative energy source.

    And also in the news, Cargill has bought a new soy-processing plant in China as the nation’s pig herd recovers from the ravages of swine fever. Hog numbers expanded for the seventh consecutive month in August, signaling growing confidence among breeders, according to the farm ministry.

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