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Watch: Market Movers Europe, Jan 7-11: Survey to shed light on OPEC cuts

In this week's Market Movers: European emitters will need to brace themselves for volatility in carbon allowances; and the impact of tariffs and duties will be felt from steel to petrochemicals.

But first, S&P Global Platts publishes its monthly survey of OPEC production this week; providing early insight into the impact of last month's "OPEC-plus" cut agreement with Russia, which is now in force.

Meanwhile, supply cuts set for Europe's emissions market could lead to further price volatility, with the impact likely to be felt by power generators and industrial emitters.

And talking of low-emissions power, in France, nuclear power supply will be in the spotlight. National grid operator RTE has warned of tight supply during the winter.

Elsewhere, trade protection is likely to be a recurring theme in 2019. This week, the European Commission will be holding a market consultation on proposed import quotas for steel products.

In petrochemicals, Europe's polystyrene producers will be looking to Turkey with interest this week, after the country introduced antidumping duties on imports from Iran.

Finally, low water levels on the German section of the Rhine, which sparked volatility in the prices of biofuels, petrochemicals, oil products, and coal among other commodities last year, could continue in 2019.

Join our conversations on Twitter - use #PlattsMM and connect with us.

View Full Transcript

In this week's highlights: European emitters will need to brace themselves for volatility in carbon allowances; and the impact of tariffs and duties will be felt from steel to petrochemicals.

But first, S&P Global Platts publishes its monthly survey of OPEC production this week. It will provide early insight into the impact of last month's "OPEC-plus” cut agreement with Russia, which came into force at the New Year.

On the supply side, Saudi Arabia's early implementation of production cuts is supporting prices, as are problems at Libya's Sharara field and Venezuela's ongoing decline. But fresh signs of global economic weakness are complicating matters.

Meanwhile, Russian oil production and Iraq's oil exports are thought to have hit all-time highs in December, and the Russian weather means it is not expected to implement its cuts fully until the end of the first quarter.

Supply cuts are also in store for Europe's emissions market. That could lead to further price volatility, with the impact likely to be felt by power generators and industrial emitters.

The EU's much-anticipated Market Stability Reserve will begin reducing daily auction supply by about 40% this week, with the aim of bolstering prices.

In 2018, the price of European carbon tripled to about 25 euros a metric ton, as you can see on your screen. By restricting supply, the Market Stability Reserve is expected to have a bullish impact. But the market could also be exposed to downside risk if the soaring price of emissions -- combined with lower gas prices -- makes cleaner gas more profitable than coal in the year ahead.

And talking of low-emissions power, in France, nuclear power supply will be in the spotlight. National grid operator RTE has warned of tight supply during the winter.

The first two of the country's reactors are due to come offline for extended 10-year reviews this week. The outages will remove about 2.6 gigawatts from the grid until the end of June.

On the opposite side of the equation, three reactors that were expected to return late last year are now scheduled for a restart.

In its winter outlook, RTE warned of tight nuclear supply from mid-January to the end of February, particularly if this coincides with colder temperatures.

Elsewhere, trade protection is likely to be a recurring theme in 2019. This week, the European Commission will be holding a market consultation on proposed import quotas for steel products.

The quotas were introduced last July to prevent cheap imports being redirected into the EU after the US imposed higher tariffs.

The import quotas the Commission is proposing would come into force no later than February 4th and last until the end of June 2021.

The system imposes country-specific quotas for most products, except hot-rolled coil which is subject to a global quota. Market sources say this could favor bigger steel-rolling companies which may be able to bring in large volumes of HRC from lower-cost suppliers to be processed within the EU.

Member states will vote in mid-January on the Commission's proposals.

Staying with trade barriers, Europe's polystyrene producers will be looking to Turkey with interest this week, after the country introduced antidumping duties on imports from Iran.

Iran is a major supplier of polystyrene to Turkey, so a significant opportunity will open up for European sellers as Iranian material increases in price.

Finally, in 2018, low water levels on the German section of the Rhine sparked volatility in the prices of biofuels, petrochemicals, oil products, and coal among other commodities. There are signs this could continue in 2019.

Despite higher rainfall in the week before Christmas, which caused water levels rise to nearly 400 centimeters at Kaub, a key chokepoint, the river has once again started falling.

Markets had been confident that logistical issues would be resolved. But only a week later measurements have fallen to 180 centimeters, that's ominously close to the 150 centimeters below which barges cannot be fully loaded. Weather developments this week will be critical.

Thanks for kicking off 2019 with us, and have a great week ahead.