Energy & Commodities

Tilbury LNG plant expansion moves to environmental assessment phase

The FortisBC Tilbury natural gas plant has moved ahead another step towards expansion.

Both the federal and provincial governments decided last week to move forward with environmental assessments of the proposed project to build a new storage facility and expand natural gas liquefaction capacity at the Delta plant, located on the Fraser River.

But a group opposing the expansion said the plans are “out of line” with the province’s targets for the oil and gas sector.

“We think the minister of environment should have terminated the proposal because of (climate change) and its poor location for an LNG facility right off the bat,” said Peter McCartney, who belongs to Friends of Tilbury and is also a climate campaigner for the Wilderness Committee.

FortisBC wants to start expanding the storage capacity of the Tilbury facility by 2023 – with a goal of finishing by 2026 – and start expanding its liquefaction capability in 2028…read more.

Fruit and veggie outages in Canada get worse with trucker shortages

Extreme weather and supply-chain snarls are among the reasons for shortages in grocery stores. Here’s another: Unvaccinated truck drivers.

In Canada, where as much as 90% of the country’s fruits and vegetables come from the US during the winter, a vaccine mandate for truckers is slowing down food shipments. Drivers who aren’t fully vaccinated against covid-19 have to quarantine for two weeks after entering Canada. Just about half of US truckers are vaccinated, according to industry estimates.

Vaccination rates among Canadian truckers are roughly in line with the national average, which is in the 83% to 87% range, according to the Canadian Trucker Alliance.

The mandate adds to the already strained supply chains in Canada, which have been subject to worker shortages, transportation bottlenecks, and recent storms. These factors are pushing up food prices globally.

The price to bring food across the border has doubled on some routes due to the scarcity of available truckers, Alex Crane, an operations manager at Paige Logistics, a freight broker in British Columbia, told Bloomberg. As a result, some shipments are just sitting in warehouses.

The US is set to impose similar rules on Jan. 22, which could worsen the cross-border food trade…read more.

Goldman Sachs Calls 10-Year Commodity Supercycle

While the markets digest the inflation numbers on Wednesday, all eyes will be focussed on the Federal Reserve’s reaction to the inflation data. Many economists expected the 7% gain in the Consumer Price Index, marking a 39-year high. Many markets, including stocks and bitcoin, have come under pressure this year on expectations that the Federal Reserve will likely raise interest rates sooner and more frequently than earlier anticipated.

Experts consider rising inflation one of the biggest market risks this year because runaway inflation could corrode asset values, limit buying power and eat away at corporate margins. In a research note, Goldman Sachs’ Jan Hatzius has warned that rapid progress in the U.S. labor market and hawkish signals in minutes from the Dec. 14-15 Federal Open Market Committee suggest faster normalization, with the central bank now likely to raise interest rates four times this year and start its balance sheet runoff process in July, if not earlier.

But the commodities sector is a different beast altogether.

Commodities outperformed other asset classes in 2021 and are widely expected to remain competitive in 2022.

Indeed, Goldman Sachs global head of commodities research Jeffrey Currie has reiterated his earlier call saying we are merely at the first innings of a decade-long commodity supercycle…read more.

Natural gas surges 13% as cold snap ahead is expected to boost demand

U.S. natural gas futures surged more than 13% on Wednesday as temperatures drop and forecasts call for more winter weather ahead.

The contract for February delivery advanced 13.3% to $4.818 per million British thermal units, the highest level since November.

“The heating demand outlook for [the] eastern-third of the U.S. has strengthened materially for this weekend and for the last week of January,” said Again Capital’s John Kilduff, noting that this Saturday could see record natural gas demand due to a cold blast forecast for Friday.

“The weather has gone from being a non-factor or bearish factor all season to being meaningful, again, for prices and demand,” he added.

After surging for much of 2021, natural gas prices dropped 36% during the fourth quarter following warm temperatures and as the omicron variant sent jitters through the market.

Still, the contract posted a 47% gain for 2021, and is already up nearly 30% for 2022…read more.

Could A Graphite Shortage Derail The $3 Trillion EV Boom?

The $3-trillion EV market needs batteries that are 20-30% graphite–a material the U.S. currently doesn’t produce at all.

That makes graphite a matter of national security in the global energy race.

Each EV battery requires not only lithium–a metal that investors are very interested in–but even more graphite, the metal that prevents the lithium batteries from breaking down.

Yet, the U.S. hasn’t produced any graphite for decades.

Now, with the EV market starting to explode, and automakers and battery manufacturers expected to consume far more than ever, we’re looking at a nightmarish graphite supply chain that is mostly dependent on China–but not necessarily on the Chinese.

Currently, China is one of the few countries with graphite processing facilities, but one of the leading producers in the world is an international company with both a North American technology and production arm and wholly owned Chinese subsidiaries and expert team operating since 2008. And it’s parked right next to the largest graphite mine in the world, in China allowing it to secure this critical supply today while growing with the explosive demand of tomorrow…read more.