🔹US 🇺🇸natural gas prices rise to 14 year highs 📈 as concerns that increasing domestic and European demand for the fuel will result in tighter US supplies ahead of the winter season. Texas' Freeport LNG 🔥is expected to roar back online in October, which will divert more available natural gas supply towards LNG exports, keeping balances tight for the winter season.

🔹The US 🇺🇸 added only 18 billion cubic feet into its natural gas inventories for the week ending August 12. Heading into the fall and winter, this is a comparatively low injection rate. During the same week last year, the inventories gained 46 Bcf. U.S. supplies are still more than 10% below normal levels 📉 for this time of year.

🔹Germany's 🇩🇪 producer price inflation accelerated unexpectedly to a new record high 📈 in July. Producer prices grew 37.2% year-over-year in July, well above the 32.7 percent surge in June. Among other components of the producer price index, prices of intermediate goods increased 19.1% and those for capital goods grew 8.3%.

🔹Evonik Industries AG, the world’s second-largest chemical producer with plants in 27 countries, is substituting as much as 40% of its German gas volumes with LPG and coal, 🔥 and passing some higher costs on to customers. Europe’s largest copper producer, Hamburg-based Aurubis AG, aims to minimize gas use and pass on power costs to customers.

Background:

💠 Low water levels 💧affects trade along Rhine river.

💠 German electricity💡up almost 500% from 1 year ago.

💠 Farmers 🚜 protest climate change policy by German politicians.

💠 German gov't introduces new tax💰on gas users in October.

💠 German politicians continue to play sanction games with Russia's 🇷🇺 gas turbines.

🔹An 8-day strike at the UK's 🇬🇧 largest container port, Felixstowe, could see Britain lose out on nearly £700m ($824m) in trade and "severely disrupt" the supply chain. Maersk, the world’s second-largest container shipping firm, 🚢 said it would avoid the port and instead deliver UK-bound goods to other ports.

🔹Around 1,900 members of the Unite union based at the Port of Felixstowe in Suffolk walked out yesterday in an ongoing dispute over pay. The industrial action is the first of its kind at the port since 1989. Union members which include crane drivers 🏗 and machine operators ⚙️voted by more than 9-1 in favour of strikes.

🔹“Plus all of the products that are on the sea 🚢 which are perishable, which won't be delivered, which will all be waste. Felixstowe, on the Suffolk coast, handles the equivalent of 4m 20-ft shipping containers 🚢 every year.

🔹Norwegian 🇳🇴 owned Norsk Hydro is planning to shutter a 175,000-ton annual capacity aluminum smelter 🔥 in Slovakia. High electricity prices 🔋 is a major factor.

🔹The co. is also facing a workers strike at the largest and most modern aluminium plant in Europe located in Sunndal, Norway. 🇳🇴 The strike will initially lead to a gradual shut-down of 20% of production and a halt in the shipment of products to customers.

🔹The Budel zinc smelter in the Netherlands 🇳🇱, controlled by Trafigura Group’s Nyrstar -- will be placed on care and maintenance from Sept. 1 indefinitely.

💠Europe has lost about half of its zinc and aluminum smelting capacity 🔥within the past year.

💠Europe’s largest copper producer, Hamburg-based Aurubis AG, aims to minimize gas 📉 use.

💠Each ton of aluminum takes about 14 megawatt-hours 💡of power to produce, enough to run an average UK home for more than three years. Zinc requires about 4 megawatt-hours of power per ton.

🔹Lithium carbonate, used for the production of the batteries used in EV's, has risen in the last few months. Lithium mining results in environmental pollution. Improperly disposed lithium batteries can cause landfill fires 🔥. The resultant toxic ☠️chemicals released into the air can impact air quality.

🔹Australia 🇦🇺 and Chile 🇨🇱 are the countries best positioned to capitalize on the lithium rush. Lithium producers in the Sichuan province of China, 🇨🇳 home to factories of some of the world’s biggest companies and the producer of about half the country’s lithium, have either suspended production or lowered their operating rates in response to a electricity crunch.

Recent lithium news:
💠 European Commission 🇪🇺 (EC) may classify lithium as a Category 1A reproductive toxin. Zimbabwe 🇿🇼 lithium reserves & China investment.

💠 Tesla 🚗 and automakers affected by high lithium prices.

💠 EV's face increase costs due to rising commodity prices 📈 of essential materials for EV production.

🔹Europe- New crop report forecasts corn 🌽 yields will drop 16% below the five-year average. That compares with a July forecast of an 8% decline. 📉 It will boost feed costs for livestock herds, adding to even more woes for farmers who are plagued with elevated diesel and fertilizer prices.

🔹US- 🇺🇸 Crop tours show much of the Western crop belt is plagued with drought conditions, especially in parts of Nebraska and South Dakota. South Dakota corn yield potential was estimated at 118.6 bushels per acre, well below the three-year average of 161.8 bushels.

🔹 Chicago 🇺🇸 grains futures extended gains today, with corn reaching its highest in nearly two months. Indiana corn 🌽 yield prospects are lower than last year and below the three-year average.

🔹Indonesia 🇮🇩 has the potential to export 🚢 corn on account of a production surplus reaching three million tons.

🔹The outlook for cotton production in Texas, 🇺🇸 the nation’s largest producer, took a turn for the worse . Only 11% of Texas crops were rated good-to-excellent in the week to Aug. 21, down from 14% a week earlier, matching the lowest since 2011.

🔹USDA 🇺🇸 projected Arkansas' state average yield to be the second highest on record at 1,195 pounds per acre. “Those who started irrigation on time have a good crop. Those who started late cut their effective bloom 🌱 period short with an early cutout. This will impact our yield average,” he said.

🔹India 🇮🇳 is responsible for over 40% percent of the world's total production of cotton, and is now India is dealing with flash floods 🌧 as well as a pest infestation that has caused severe damage to crops. India had to resort to importing supplies.

🔹Since late 2020, the US 🇺🇸 has been experiencing unusually hot and dry ☀️weather. The extreme circumstances have spurred demand for water and cooling, leaving reservoirs emptier than usual. While it has risen this high before, it rarely stayed there for so long. During the drought of 2018, it exceeded the threshold for only five weeks.

🔹Whiting, Vermont 🇺🇸- Beef cattle 🐂 pasture not growing back due to drought. Cattle feed quality and volume are both down about 50% from a normal year. Their corn crop is also taking a hit.

🔹At the Colorado River Basin, the Gila River Indian Community is protecting their own water resources. The tribe—located just south of Phoenix—would stop voluntarily contributing water 💧 to an important state reservoir.

Recently:
💠Arizona and Nevada 🇺🇸 face deeper cuts on the amount of water they can draw from the Colorado River.

💠The water levels in Lake Mead & Lake Powell are at their lowest ever, affecting 💡hydroelectric power stations.

🔹India 🇮🇳 cuts U.S. crude imports by 50% as it buys Urals crude from Russia 🇷🇺 which have been offered at record discounts.

🔹U.S. 🇺🇸crude oil inventories, excluding those in the SPR, were at only 425 million barrels, or 6% below the five year average. The SPR is expected to shrink to a 40-year low by the end of October, with inventories then at 358 million barrels, 🛢 compared to 621 million barrels a year ago.

🔹Iran 🇮🇷 Nuke Deal possibility - Iran’s state oil producer will try to win back customers in Europe, in the event sanctions against Iran is lifted. The idea of a production cut appears to be gaining momentum in Azerbaijan, Libya, Algeria, and Congo.

🔹Saudi Arabia 🇸🇦 suggested that OPEC+ could look at making production adjustments due to the disconnect between the physical and paper 🛢 crude markets.

🔹India 🇮🇳has approved a policy of restricting wheat 🌾 flour exports, in a bid to bring down prices on the domestic market.

🔹Ukraine’s 🇺🇦 crucial grain has been leaving its ports again since recent Black Sea deal. Farmers 🚜 may cut plantings further if sales remain slow. Domestic prices are slowly improving. Most of Ukraine’s wheat consists of winter varieties, which are sown from now and then lie dormant during the coldest months, before resuming growth in spring.

🔹USA 🇺🇸 - Southern, eastern Idaho wheat expectations tempered by crop quality problems associated with kernels accumulating starch amid excessive heat, compounded by untimely rains and hail late in the season.

🔹Romania 🇷🇴 has reaped 9 million tonnes of wheat 🌾 this year, as weather & higher production costs caused crops to fall by roughly a fifth from last year.

🔹Importers in China 🇨🇳bought several cargoes 🚢 of French wheat last week, the 2nd time this summer that Chinese buyers have taken advantage of a price drop.

🔹USA - 🇺🇸 Shortage of transformers is jamming up home building and threatening to cause other problems. In some cases, wait times for the parts are over a year, while costs have spiraled up by over 500%. 📈

🔹American Public Power 🔋Association - says roughly 80% of its members reported earlier this year they had less equipment on hand than in 2018, before the pandemic interrupted supply chains. (Investor-owned utilities 🔌 have also reported similar shortages.)

Background:
💠 U.S.A. 🇺🇸- A surge in decommissioning fossil fuel power plants 🏭 has outpaced new clean energy generation 🔌 capacity.

💠 US- Utilities are warning of supply constraints for equipment, which could hamper efforts to restore power during outages🔋.

💠 The North American Electric Reliability Corporation 💡 (NERC) report from June warning of unreliable sections of electricity grid.

🔹 Canada's 🇨🇦 FM said Canada will ship the five gas turbines belonging to Gazprom 🇷🇺 from Montreal back to Germany 🇩🇪, despite demands from Ukrainian 🇺🇦 ambassador in Ottawa to hold onto them. Joly revealed that the decision was made after a request from German Chancellor Olaf Scholz.

🔹Six Siemens turbines ⚙️ were in Montreal for maintenance when Canada announced an embargo against Russia. At Germany’s request, Ottawa announced an exemption for the turbines in July, and sent one of them over, but Gazprom declined delivery, citing irregularities in documentation.

Background:

💠 German Chancellor claims one turbine is ready to be shipped to Russia from Germany.

💠 Gazprom claims declare 'force-majeure' on Nord Stream 1 now at 20% capacity. 🔥

💠 Gazprom 🇷🇺 stopped the operation of a second Siemens turbine for servicing.

💠 Gazprom 🇷🇺 is awaiting the full volumes of function testing/safety/legal documents 📂.

💠 Western sanctions 🇨🇦 have been stalling the return of the turbine.

🔹Google searches for 'Brennholz' (firewood 🔥) in Germany 🇩🇪 have exploded over the last couple of months.

🔹Some members of Poland's 🇵🇱 ruling party irritate their supporters by advising Poles to stock up on firewood in the forests for heating.

🔹A rush has resulted in Belgium 🇧🇪 for some firewood suppliers working with waiting lists, and others only serving regular customers.

🔹UK 🇬🇧 log sellers report sales jump of 60%. One company that produces 16,000 tonnes of kiln dried firewood each year said a large portion of the firewood imported is from Russia and Belarus, which has since faced UK sanctions.

🔹Hungary 🇭🇺 has imposed an export ban on fuels to ensure domestic supply needs and recently loosened logging regulations to meet increased demand for firewood.

🔹Firewood seller in Småland, Sweden 🇸🇪 says demand has increased by 20%.

🔹Estonia 🇪🇪 -The price of wood pellets used for heating has tripled on year.

🔹A 'gas levy' plan by the German 🇩🇪 government to add to consumers’ tax burden in order to shield gas importers from excessive prices prompted backlash. The levy, which is scheduled to take effect in October, was set at 0.024 euros per kilowatt-hour 💰. Since its announcement, a dozen utilities have filed applications for financial aid to the tune of 34 billion euros.

🔹Natural gas prices in the US 🇺🇸 hit the highest in 14 years this week, with the Henry Hub benchmark temporarily topping $10 per million BTU 🔥. U.S. producers’ now has new central role as biggest suppliers to Europe. This means domestic U.S. gas prices will remain under upward pressure, too, and that will last for a while as well.

🔹The UK’s 🇬🇧 North Sea produced 26% more natural gas in the first half of this year than it did this time last year. The decrease in shutdown activity was made possible in part by the flurry of maintenance it completed in the year prior.

🔹French 🇫🇷 electricity for next year soared past 1,000 euros ($1,000) today, the futures contract gained more than 10X in the past year. In France, only 24 of EDF's 56 nuclear reactors 🏭 are operating at the moment, due to a corrosion problem.

🔹The German 🇩🇪 equivalent also gained to a record, rising as high as 920 euros a megawatt-hour 💡for a gain of more than 64% this week. Nordic power for next year jumped 11% to a record 277 euros a megawatt-hour.

🔹 Energy executives in the UK 🇬🇧 have warned the gov't that the country faces the prospect of mass civil unrest due to higher heating and electricity 🔌 bills this winter. In Northern Ireland gas prices will rise by 28.3% & electricity 🔌 prices will go up by 35.4% from 1 October.

🔹 On Monday, Norway's 🇳🇴 NO2 electricity 🔋 region (covering southern Vestland, Rogaland, Agder, Telemark and old Vestfold) saw a daily record price of 5.35 kroner per kWh.

🔹China- 🇨🇳Local gov't issued an urgent joint emergency notice, warning that the autumn harvest was under “severe threat”, urging “every unit of water … be used carefully”. A record-breaking heatwave ☀️ combined with a months-long drought during the usual flood season has wreaked havoc across China’s usually water-rich south.

🔹China, consumes ten billion barrels of water per day (approximately 700x its daily oil consumption). 19% of China's surface water 💧 is not fit for human consumption according to China’s Ministry of Environment. Roughly 7% was deemed unfit for any use at all.

🔹60% of China's wheat,🌾 45% of its corn, 🌽35% of its cotton and 64% of its peanuts come from the at-risk North China Plain - where, in the example of wheat, their annual production of more than 80 million tons is on par with Russia's 🇷🇺 annual output, while their 125 million tons of corn is nearly 3x Ukraine's 🇺🇦 prewar production.

🔹A question was asked by subscriber AZPat, pertaining to whether China's 🇨🇳 usage statistic of "10 billion barrels per day" in the above post includes agriculture & industry.
That stat equates approx. to 7 barrels per day per capita.

🔹Water 💧footprint calculator- China uses approx. 25 barrels of water for industry & food per day per capita (2017).

🔹Statista - 1 barrel (drinking water) per day per capita for households in urban areas. (2019) A national consumption for 2020 equates to approx. 10 barrels per capita per day.

🔹Our world in data (photo) - China's 🇨🇳 annual freshwater withdrawals (Withdrawals for agriculture 🌱+ industry 🏭 + municipal 🏙 + water from desalination plants) equates to approx. 10 barrels per day per capita (2017) vs the US 🇺🇸 of 30 barrels per day per capita.

🔹In China, only 14% of water usage goes to the basic needs of hydration, sanitation, hygiene, and cooking. 62% of China's water is used in agriculture 🚜 and 22% in industry & power generation. 🔌 (2021).

🔹The 🇺🇸 Biden administration lacks the political will to simply mine the needed rare earth elements domestically. “In 2010, Japan and China 🇨🇳actually had a conflict over rare earths,”. “China responded by cutting off Japan’s access to the rare earths which really had an impact on Japan’s manufacturing capabilities.

🔹One of the world’s few rare earths processors (🇨🇦Toronto-based Neo Performance Materials) outside China has bought exploration rights to mine in Greenland 🇬🇱.

🔹Australia's 🇦🇺 Lynas Rare Earths posted a record more than three-fold jump in annual profit last week. Demand for neodymium and praseodymium (NdPr), widely used to make magnets 🧲 that power electric vehicle motors, remained strong.

Background:

💠 US 🇺🇸 express concerns over a potential export ban by China for rare earth elements. Recognises need for US domestic investment in rare earth elements.

💠 The U.S. military 🇺🇸 depends almost completely on China 🇨🇳 for the hard to mine 'metalloid element' antimony.

USA 🇺🇸- Update to last week's fire 🔥 at BP's Oil Refinery (6th largest in the US) in Indiana:

🔹On August 24th, BP's Whiting, Indiana Refinery was shut down after a fire. About 2% of nationwide refining 🛢 capacity and over 10% of Midwest capacity is temporarily offline. The refinery has a 435,000 bbl/day capacity and is the largest in the Midwest and BP's largest in the world.

🔹BP plans to restore power 🔋 to a repaired electrical system at the refinery within two to three days. The company "has deployed all available resources to restore production as soon as possible."

🔹The Environmental Protection Agency temporarily lifted a federal rule for fuel ⛽️ sales in four states (Indiana, Illinois, Michigan and Wisconsin) in response to the fire as it could affect prices and supply. The waiver lifts a Clear Air Act requirement that lower-volatility gasoline be sold in the states during summer months to limit ozone pollution. It is in effect until Sept. 15.

🔹The EU 🇪🇺 is preparing to intervene in into energy markets, to dampen soaring power costs 📈 and eventually seeking to break the link between gas and electricity prices. Markets already reacted today, with prices for German & French electricity dropping 20%. (Photo)

🔹More and more member states are calling for a price cap. The exact makeup of an EU 🇪🇺 intervention plan is still being developed. Germany's, Habeck suggested a short-term tax 💰on excessive profits by energy companies as part of the transition.

Background:
💠 French 🇫🇷 electricity futures contracts for next year soared past 1,000 euros per MW/hr up 10X in the past year.

💠 Backlash follows a 'natural gas levy' plan by the German 🇩🇪 government to add to consumers’ tax burden.

💠 Waiting lists, sky rocketing prices and export bans on firewood 🪵across European countries.

💠 No confirmation from Germany 🇩🇪 / Canada 🇨🇦 to exempt Russia's 🇷🇺Gazprom gas turbines for servicing by Germany's Siemens for Nord Stream 1.

🔹Russia's 🇷🇺 Gazprom announced that gas flows via the Nord Stream 1 pipeline will be stopped from August 31 until September 3 due to maintenance. Maintenance is on the only gas compressor unit remaining in operation. Upon completion, gas transportation will be restored to the level of 33 million cubic meters per day, or 20% of the pipeline’s maximum capacity.

🔹Gazprom confirmed it had cut off off gas supplies to French 🇫🇷 utilities company Engie that has failed to pay for July gas deliveries in full. Engie maintained it “had already secured the volumes necessary to meet its commitments towards its customers and its own requirements.

🔹Gazprom made a record 2.5 trillion roubles ($41.75 billion) in net profit 💰in the first half of 2022 and its board recommended paying interim dividends.

Background:
💠 Ongoing problems for servicing Gazprom's gas turbines for Nord Stream 1 by Germany's 🇩🇪 Siemens.

💠 Electricity 💡and natural gas 🔥futures contracts in Europe trade at record highs.