On Monday, as the Sino-US trade war intensified, China responded with copper prices falling to a 15-week low. In afternoon trading, copper delivered in July hit $2.709 per pound ($5,972 per ton), down 2.4% from Friday’s closing price.

China will impose a 25% tariff on $60 billion in imports from the United States, including diamonds, rubies and emeralds, iron ore, nickel, zinc and titanium. Lithium is exempted and will continue to be subject to a 5% tariff.

Last Friday, the United States imposed tariffs on $200 billion worth of Chinese imports, with nearly 6,000 products currently subject to 25% tariffs, up from 10% before. The United States imports about $540 billion worth of goods from China every year, while China imports $120 billion worth of goods every year.

China imports nearly half of the world’s copper. Until trade disputes begin to affect the prospects of industrial metals, China’s economic growth has been slowing.

Automobile and Electronic Products

China has also imposed higher tariffs on a range of electronic products and household appliances, including television cameras, telecommunications equipment and microwave ovens.

In a report last week, Capital Economics pointed out that some metals are “more vulnerable than others to trade disruptions between the United States and China”. Given that electronics account for about 30% of U.S. imports from China, the price of metals (especially tin) widely used in the electronics industry seems particularly at risk, the research company said.

With the exception of aluminium, prices of basic metals fell across the board on Monday, and lead prices fell to their lowest levels in nearly three years. Equally frustrating is the data showing that China’s car sales fell by nearly 14.6% in April from a year earlier, the 10th consecutive month of year-on-year decline.

Passenger car sales were hit harder, with sales of 1.54 million vehicles last month, down 16.6% year-on-year, the 11th consecutive month of decline. Domestic sales of battery-powered and hybrid vehicles were 91,000, down 17% from March, but up 28.4% from the same period in 2018.

Price Trend

MTBE prices were 5440 yuan/ton this weekend, down 1.09% from the previous week, according to business association data.

II. Market Analysis

Products: Influenced by the decline in gasoline market prices, domestic MTBE prices fell slightly in this cycle.

Industry Chain: This week’s broad fluctuation of international oil prices slightly declined, which affected the trading atmosphere of the gasoline market weakened. This week’s gasoline terminal demand performance was normal. After MTBE’s weakening and the end of the holiday, gasoline shipments remained very light, middlemen’s inventory pressure increased, and MTBE prices entered the downward channel again.

3. Future Market Forecast

Analysts of MTBE products of Business Society Energy Branch believe that optimism about the future price of international crude oil market will be maintained, and the warming weather will drive up the demand for gasoline, which will stimulate the price of MTBE market to a certain extent. MTBE market is expected to pick up next week.

Shale oil exploitation has given the U.S. oil and gas industry a boom in the past few years. However, in the eyes of some market participants, the boom brought about by shale oil may soon come to an end.

Nick Cunningham, columnist of Oil Price, a website that focuses on oil and gas market information in the United States, argues that over-exploitation by oil and gas companies accelerates the cycle of shale oil industry from prosperity to depression. Cunningham said that over the years, oil and gas companies have improved their technology to get more oil and gas. These companies have improved technology in all aspects of mining, but these technologies have pushed the productivity of every drill to its limit. He believes that today’s high production of shale oil has led many people to overlook that this may be an increase in production from the increase in the number of drilling wells, rather than an increase in production per well.

In fact, according to a new report by Post Carbon Institute, the average lateral length of each well has increased by 44% since 2012, by more than 7,000 feet, and by more than 250% in drilling water consumption. Overall, longer horizontal and greater use of water and sand means that the number of wells drilled in 2018 will be 2.6 times the number drilled in 2012, the report said.

In this report, geoscientist J. David Hughes warned that innovations in drilling technology have reduced costs and allowed resources to be extracted from fewer wells, but did not significantly increase the ultimate recoverable resources. Technological improvements will not change the basic characteristics of shale production, they will only accelerate the life cycle of prosperity to depression.

Once, there were enough shale fields in the United States to achieve rapid production growth, but the boom will eventually end. Cunningham observed that in shale oil and gas producing areas, there has been a trend of improvement in drilling technology but diminishing returns. Nowadays, the distance between drilling wells is getting closer and closer, and the drilling wells will interfere with each other, even the total production will be reduced.

In addition, technological improvements have ceiling limitations. Last year, EQT, the major shale gas producer, drilled a mining section of more than 18,000 feet. The company boasts that it will continue to increase its length to 20,000 feet. But EQT soon found that when the mining section exceeded 15,000 feet, it would face difficult problems to solve. The Wall Street Journal earlier this year called EQT a “huge mistake costing hundreds of millions of dollars”.

Ultimately, the steeply declining production rate means that oil and gas companies need a lot of capital expenditure to maintain production. According to Hughes, the industry spent $70 billion on 9,975 wells in 2018, of which $54 billion was for oil drilling, 70% of which was for maintaining existing production and only 30% for increasing production.

Today, oil wells that are easy to exploit and have high production have basically been exploited, and the whole industry has to face the problems of production decline and rising costs. Hughes said: It is wrong to think that shale oil production will always rise with technological improvements. Shale oil production ultimately depends on its reserves and geological conditions.

On May 9, the hydrofluoric acid commodity index was 98.17, up 0.26 points from yesterday, down 30.09% from the peak of 140.43 points in the cycle (2018-02-21), and up 83.19% from the low of 53.59 points on November 30, 2016. (Note: Period refers to 2011-09-01 to date)

According to statistics, the domestic market price of hydrofluoric acid rose on the 8th. Up to now, the domestic market price of hydrofluoric acid is 10 818.88 yuan/ton, and the domestic start-up rate of hydrofluoric acid is less than 60%. Enterprises reflect that the supply of hydrofluoric acid on the spot is tight at present. The recent market situation is general. Due to the high raw material fluorite, some hydrofluoric acid manufacturers limit production and guarantee prices, the market price trend of hydrofluoric acid is small. Rise. At present, the mainstream of hydrofluoric acid negotiations in the southern region is about 10500-11000 yuan/ton, while the price of hydrofluoric acid in the northern market is about 10500-11000 yuan/ton. Domestic hydrofluoric acid market prices increased, spot supply decreased slightly, but demand was not actually good, hydrofluoric acid market prices rose slightly.

Recent downstream refrigerant products start at a low level, the upstream fluorite and hydrofluoric acid demand is general, the recent downstream refrigerant trading market is general, hydrofluoric acid product price shocks. Recent downstream refrigerant market transactions are cool, R22 refrigerant plant surface starts at 60%, R22 market device start-up rate is temporarily stable, the main production enterprise bulk water factory offer price is between 18,000-18,800 yuan/ton, but the production enterprise does not have bulk water spot, mainly a small number of cylinders shipment. In addition, the actual demand side of the market has not changed much, and the delivery market has increased. The domestic market price trend of R134a is not good, the start-up rate of production enterprises remains low, the refrigerant market demand is general, and the manufacturers mainly export their products. However, the on-site transaction price does not change much. Businessmen buy on demand. Recently, due to the poor condition of goods, the price trend of hydrofluoric acid market is shaking.

Refrigerant on-site transactions are general, refrigerant industry equipment start-up rate remains low, for upstream hydrofluoric acid market demand is normal, but the spot supply of hydrofluoric acid has decreased, Business Analyst Chen Ling believes that the hydrofluoric acid market may rise slightly.

At a time when the United States is cancelling Iran’s crude oil export exemption, many European countries have jointly issued a strongly worded statement vowing to continue to push for legitimate trade with Iran.

May 4, the European Union High Representative, French Foreign minister, German Foreign Minister and British Foreign Minister on the Comprehensive Agreement on the Iranian nuclear issue joint statement, said that the Iran nuclear deal is the key to increase stability and security in the Middle East region, the United States in the withdrawal of the Iraq nuclear deal after the re-implementation of sanctions deeply regret.

In this joint statement, the European Union and other parties declared that the remaining participating States of the Iran nuclear deal are determined to work with third countries interested in supporting the agreement to maintain and maintain Iran’s financial channels and exports: We are determined to work with other European partners to allow the legal trade with Iran to continue, including through the operationalization of the special purpose carrier of “INSTEX”. In this regard, shareholders are committed to significantly increasing their financial contribution to the INSTEX operating budget.

We encourage all countries, including Russia and China, as participants in the comprehensive Agreement, to do their utmost, through concrete steps, to promote the legitimate trade permitted by the agreement.

Financial blogger ZeroHedge commented that the joint statement could be intended to stabilize the global crude oil market and also suggest that Trump’s decision to re-impose sanctions on Iran’s oil exports could bring a showdown between the United States and its European allies. Damien Courvalin, an analyst at Goldman Sachs, said in the May 6 report that Brent crude was expected to rebound in the near future in light of rising supply risks and improved demand, which in turn led to lower margins in the EU.

Goldman Sachs expects Iran’s crude oil production to be reduced by 900,000 barrels a daily as a result of U.S. sanctions. Brent crude hit 75.33 of dollars/barrels in April 25, a new high since November 2018, amid a sudden tightening of U.S. sanctions exemptions on Iran and other factors.

The price of cloth oil has now receded, but it is still above 70 dollars.

With the US demanding that Europe abandon the Iran nuclear deal, the EU, France, Germany and the UK have set up a special purpose agency aimed at boosting legitimate business deals with Iran.

According to Bloomberg, in Tuesday, representatives of the European Union, France, Germany, the United Kingdom and Iran will meet in Brussels to discuss how to work together to trade with Iran through INSTEX, a special purpose agency set up in Europe.

But media POLITICO said most experts believe it will be difficult to overcome U.S. sanctions because many companies are too scared of Washington’s punishment to maintain business ties with Iran. In April of this year, the White House officially issued a statement saying Trump had decided not to update Iran’s crude oil exemption policy, which expires in May, with the aim of reducing Iran’s crude oil exports to zero. The United States has demanded that all Iranian oil buyers must stop importing by May 1 or face sanctions. The White House aims to cut off the lifeline of Iran’s annual oil revenue of $50 billion to pressure Tehran to limit its nuclear and ballistic missile tests and stop its support for the Assad government in Syria and the Houthi forces in Yemen.