Europe’s 🇪🇺 energy 'independence' push and sanctions against Russia weigh on the steel industry. Reports of decreasing retail steel sales is preventing any expected price increases due to drop in production. Steelmakers rely on natural gas for ironmaking in blast furnaces as well as for steelmaking in electric arc furnaces.

📊 Traders -“Energy costs are hitting people hard. There are more defaults on energy bills.” "Summer holidays in the Northern Hemisphere will also mean lower building activity and lower demand. This is sure to put further downward pressure on steel.

🇨🇳 Chinese iron ore port inventories registered their sharpest decline of the past 12 months. This is with rebar production well off last year levels. (Photo)

🇮🇳 India imposed an export tax of 15% on some steel products last weekend, at a time steelmakers are looking to make up for tepid local demand. The taxes were part of a series of measures India has taken to rein in retail inflation.

💰Natural gas futures spiked to $9.40 per million Btu earlier today, the highest since the huge twin spikes between 2005 and 2008. Price have have tripled from a year ago, when it was $2.98, and have more than tripled from the $2-3 that predominated from 2011 through the spring of 2021.

🇬🇧 U.K. Treasury Chief today outlined a new 25% tax on the profits of oil-and-gas companies and will be used to fund subsidies for households.

🇧🇴 🇧🇷 Bolivia said it is seeking higher prices for natural gas sold to Brazil's state-run Petrobras. Bolivia's energy ministry said Petrobras pays between $6 and $7 per million BTU for Bolivian natural gas, while alternative private buyers in Brazil are willing to pay between $15-$18 per million BTU.

California adopted an emergency water conservation regulation to “ensure more aggressive conservation by local water agencies across the state”. Commercial, industrial and institutional properties cannot water their turf with few exceptions. Major water reservoirs have been largely used with capacities well below their historical averages. The most intense week of drought in the past 22 years was in late July 2014.

"Exchange contract" is pitting California farmers against each other. This legal agreement never mattered much during wet years, but during droughts it allows a small group of Central Valley farmers to claim enormous amounts of water while their neighbors make deep cuts. Officially, water rights in the U.S. operate on a principle of seniority.

Fire demolished a grain storage facility in Prosser, Benton County, Washington USA, and left one person with burns. M & E Seed and Grain Co. owned the property. A smoldering pile of twisted metal and charred lumber was all that remained. About 22 fire units from various fire agencies through the valley were called out to the old feed store and grain elevator where flames could be seen shooting into the air.

❗️💢❕🛑 Oil Tanker Piracy/Robbery has begun on the high seas between Greece (following US orders) and Iran retaliating!

🇺🇸 The United States has confiscated Iranian oil 🇮🇷 held on a Russian-operated 🇷🇺 ship. The ship🚢 formerly named Pegas, (renamed Lana on March 1st using the same IMO 9256860) is near Greece 🇬🇷 and will send the cargo to the United States aboard another vessel.

🇮🇷 Iran responds in kind - Two Greek 🇬🇷 oil tankers have been boarded by Iranian military personnel while navigating through the Middle East Gulf. 🚢 🚢The vessels had loaded at Basrah, Iraq, and is carrying an oil cargo for the US. Western outlets say 'international waters'. Iran's media says the Delta Poseidon was seized in front of Asalouyeh port, while Prudent Warrior was seized in front of Bandar Lengeh port both in Iran's territorial waters).

Wheat - South America has hurdles to boost wheat production. 🌾

Brazil 🇧🇷 is due to increase its wheat crop production. Brazil is the world's 8th largest importer of wheat, most of which (87%) comes from Argentina.
🇦🇷 Argentina's water reserves are very low, so the producers don't want to risk planting wheat amid soaring fertilizer prices. 🇵🇾 Paraguay and 🇺🇾 Uruguay enjoy good wheat yields -- but they have a much smaller global impact.

🇦🇺 After harvesting back-to-back bumper crops, Australia is poised to become the world’s third-largest wheat exporter this year.

🇮🇶 Iraqi farmers say they are paying the price for a government decision to irrigate only 50% of agricultural lands, due to low water levels, strain on wheat harvest.

🇮🇳 India- Wheat export ban to ensure adequate supply at home.

🇺🇸 US Michigan Farm Bureau- The same uncertainty that has produced higher wheat prices has also hit energy costs, leading to higher fertilizer costs and higher gasoline prices.

Oil rallied today to its highest levels since March, hitting $120 USD/per barrel, on news of the EU 🇪🇺 in a sanctions crunch and 🇨🇳 China eased covid restrictions. Diplomats failed to break through Hungary's opposition to a Russian oil embargo. The European Union looks set to agree on an oil embargo against 🇷🇺 Russia but would exempt pipeline exports. Despite a strong USD which inversely moves with the oil price, crude oil has been defying this historic correlation.

🇷🇺 Russia’s Rosneft proposes record dividend on soaring oil prices. Will benefit Russian state the most. Foreign investors in the Russian oil and gas giants may find it difficult to actually receive the dividends because of financial sanctions.

🇮🇷 Iran said its export revenues from oil and gas have jumped 60% year-on-year. Despite the tough sanctions on the country, Iran has generated $2.45 billion from exports in the first two months of the year.

Russia 🇷🇺 cuts off gas to Netherlands 🇳🇱after Dutch state energy company GasTerra failed to make a required payment in rubles.

🔥 GasTerra earlier said it had taken measures to make up for the gas shortfall.
“The cessation of supply by Gazprom means that until October 1, 2022, the date on which the contract ends, approximately 2 bcm of contracted gas will not be supplied.

The EU 🇪🇺 will not discuss a ban on Russian natural gas imports as part of the next round of Ukraine-related sanctions against Moscow, 🇦🇹 Austrian Chancellor Karl Nehammer disclosed. “The gas embargo will not be a topic, [German Chancellor] 🇩🇪 Olaf Scholz has made this clear as well,”. Estonia 🇪🇪 and Belgium 🇧🇪 both share Austria’s view on a potential embargo of Russian gas deliveries to the bloc.

Countries cut off from Russian 🇷🇺 gas for failure to pay in rubles so far:
❌ Bulgaria 🇧🇬
❌ Poland 🇵🇱
❌ Finland 🇫🇮
❌ The Netherlands 🇳🇱
Will Denmark be next?

German inflation 🇩🇪 nears 50-year high. Annual inflation in Europe’s top economy has reached 7.9%, the highest level since the 1973 oil crisis. Energy prices reportedly rose 38.3% in May year-on-year, while food prices posted an 11.1% leap.

Euro zone 🇪🇺 inflation came in at 8.1% for the month, up from April’s record high of 7.4%. French inflation also surpassed expectations in May to a notch record 5.8%, up from 5.4% in April, while harmonized Spanish consumer prices jumped by an annual 8.5% in May.

UK 🇬🇧 consumers face additional hikes in shop prices after retail inflation is up again. Shop price annual inflation accelerated to 2.8% in May, up from 2.7% the month before — the highest rate since July 2011. Food inflation increased to 4.3% from 3.5% the month prior, the highest since April 2012.

Rising inflation 📈 also pushed people to borrow more on credit, with credit card borrowing rising at the fastest rate since 2005.

Rising costs 💷 have created a “ticking timebomb” for UK small business owners, with almost half a million firms at risk of going bust within weeks without a fresh wave of government support.

Russia cuts off gas to Denmark after Denmark’s largest power company and Shell Energy in Germany refused to pay for supplies in rubles. “As of the end of the business day on May 31, Gazprom Export had not received payment for gas supplies in April from Orsted Salg & Service,”.

In 2021, Gazprom Export supplied the Danish company with 1.97 bcm of gas, which amounted to about two thirds of total gas consumption in Denmark. Danish Energy Agency says, Denmark losing its supply would not have immediate consequences.

Countries cut off from Russian 🇷🇺 gas for failure to pay in rubles so far:
❌ Bulgaria 🇧🇬
❌ Poland 🇵🇱
❌ Finland 🇫🇮
❌ The Netherlands 🇳🇱
❌ Denmark 🇩🇰

Russian 🇷🇺 grain exports 🌾 can’t get to Europe because the sanctions imposed by the EU on Moscow effectively block supplies. The EU banned Russian vessels 🚢 from entering its ports as part of the fifth package of sanctions adopted in April.

“Although Western countries keep saying that grain has not been sanctioned, they for some reason fail to mention that the ships that transport Russian grain are in fact under sanctions. European ports do not allow them in, there’s no insurance available and in general Western sanctions have disrupted the logistical and financial infrastructure that Russia uses to export its own grain.

UN says reintegration of Russian food/fertilizer exports into global markets can prevent food crisis.

US rivals shunning dollar lifts yuan-ruble trading by 1,067% to almost $4 billion since the end of February. “The main players in the yuan-ruble market are corporations and banks, but there is also a growing interest from retail investors,”.

Volume in the dollar-ruble pair sank to the lowest level in a decade, based on its 20-day moving average. The ruble rallied 118% against the USD between early March and late May.

Russia's central bank could impose negative interest rates on certain dollar and euro deposits to encourage the use of other currencies, especially China's yuan. China's trade with Russia rose 12% in March year-on-year.

Comex copper up +5.2% to $4.556/lb in today's trading, as 🇨🇳 China's lockdowns appear to be on the wane and China's cabinet announced a package of fiscal, financial, investment and industrial policies to revive its economy. 🇨🇱 Chile - which accounts for more than 25% of the world's mined copper - reported a nearly 10% Y/Y decline in production in April.

Chile’s crown as the world’s largest producer of copper is at risk as the country’s output continues to be lower than expected despite the billions of dollars invested in new projects in the past 18 years. Lower ore quality, water scarcity and other transitory near-term issues were the reasons given for the sharp drop. production in neighboring 🇵🇪 Peru - the world's no. 2 copper producer - has been disrupted by increasingly violent community protests against mining. Two fires broke out at two key copper projects this week.

Fuel rationing may be coming to 🇪🇺 Europe – IEA. The fallout from sanctions/supply chains/war is likely to make the current energy crisis worse than the crises of the 1970s. “Back then it was all about oil. Now we have an oil, gas and electricity crisis.

UN Secretary-General called on the world’s advanced economies to eliminate coal infrastructure, 🏭 citing environmental issues. He also asked all financial institutions to move away from fossil fuel financing.

Finland 🇫🇮 has continued importing Russian 🇷🇺 LNG after being cut off by Moscow from its natural gas supply over its refusal to pay in rubles. Finnish Gasum has two different contracts to receive Russian gas. One of them entails pipeline supplies through the Imatra entry point and the other is for liquefied natural gas (LNG) transported by tankers.

Austria’s 🇦🇹 oil and gas conglomerate OMV has said its recent payment for Russian gas under the new ruble settlement mechanism was successful.

Neon, a critical gas in semiconductor manufacturing, fall to worryingly low levels in the midst of an ongoing chip shortage. Neon is required for the lasers that are used in a chip production process known as lithography, where machines carve patterns onto tiny pieces of silicon.

A major portion of the world’s exported neon is purified by a handful of Ukrainian/Russian companies. Neon is a by-product of large-scale Russian 🇷🇺 steel manufacturing which a portion is then transported to Ukraine to be purified. Russia has restricted the export of noble gases, including neon.

The chip shortage has brought car production 🚗 to a standstill and delayed consumer electronics 📱 product launches.

Crypto/Digital payments update:
❗️The White House 🇺🇸 is drafting policy to address bitcoin mining as it seeks to lessen energy consumption and emissions.

❗️Crypto investors 💰hope that the interest from Rockefellers, Rothschilds & Soros will help to take the heat off the market from global financial watchdogs. Up until now, financial regulators across the world have taken a tough stance toward cryptocurrencies.

❗️Major crypto firms 📉 reportedly cut up to 10% of staff amid bear market.

❗️New York Fed president 🇺🇸 urges colleagues to prepare for coming digital payment transformation, pushing CBDC's & stablecoins. Meanwhile, NY pursues efforts to ban proof-of-work (PoW) crypto mining, the attorney general reminded investors of the risks associated with investing in crypto.

❗️A top Russian central bank 🇷🇺 official said that the monetary authority will re-think previous ban so as to permit foreign trade with crypto.

❗️Bermuda's regulators 🇧🇲 aim to combine their international business expertise and a trained local workforce to become a digital-assets hub. Hopes to attract more cryptocurrency projects and firms.

👉 Iran 🇮🇷 proposed a new currency for trade with China, Russia, India, Pakistan, and other members of the Shanghai Cooperation Organization (SCO- Picture shows participating states). This could help circumvent illegal Western sanctions and weaken US dollar hegemony.

👉 Russia 🇷🇺 says it will use an arrangement similar to that used for payments for its gas supplies to pay its dollar-denominated foreign bonds after being cut off from paying through SWIFT/American Banks.

👉 Yuan-ruble 🇨🇳 🇷🇺 trading up by 1,067% in past 3 months. Volumes between Russian, Chinese currencies near $4 billion.

👉 Last available report- A total of 20 European 🇪🇺 companies have opened ruble accounts, with another 14 clients asking for the paperwork needed to set them up.

CBDC update:
📌 The United States Federal Reserve 🇺🇸 released a study on the possible effects of a retail central bank digital currency (CBDC) on U.S. monetary policy implementation. The paper considered four scenarios that illustrate the potential effects of a retail CBDC from the perspective of the Fed, commercial banks and U.S. households.

📌 Thai 🇹🇭 Central Bank Governor @WEF in Davos - A retail CBDC will probably replace cash but not other means of payment out there. Thai CBDC pilot delayed to Q4 2022.

📌 Mastercard CEO & PayPal VP 💳 @ WEF in Davos in support of future with CBDC's and possibility of integrating crypto/private digital currencies.

📌 The central bank of India, 🇮🇳 (RBI), reveals report on a plan to launch a CBDC due to disruption of technology with the advent of Fintech.

Slovnaft, a Slovak oil refinery built in Bratislava, said a new package of sanctions against Russia would jeopardize the plant's supplies to the Central European market. The plant mainly refines Russian oil and exports most of its products. the plant mainly refines Russian oil and exports most of its products. The temporary exemption championed by Hungary's PM Victor Orban, allows for imports delivered by the Russian Druzhba pipeline to certain landlocked countries like Hungary and Slovakia.

A ban on oil imports from Russia by sea, will be supplemented "in the near future" by a ban on oil imports from Russia via pipeline. Exemption to Slovnaft would create rift between Slovakia and other European competitors because cheap Russian oil would allow Slovnaft to have higher profit margins and large amounts of diesel production.

❗️This post is not intended as fear-porn but people need to wake up to consequences of a power grid failure. 💡Electricity blackouts are becoming a real possibility in the near future and not only from a cyberattack. The North American Electric Reliability Corporation (NERC) warned that two-thirds of the U.S. 🇺🇸 could experience blackouts this summer as stated in their report. There are also concerns in Europe 🇪🇺 too, since last year.

❌ Midcontinent ISO 🇺🇸 (MISO) faces a capacity shortfall in its North and Central areas, resulting in high risk of energy emergencies during peak 🌞 summer conditions.
❌ At the start of the summer, a key transmission line connecting MISO’s northern and southern areas will be out of service.

❌ Anticipated resource capacity in Saskatchewan 🇨🇦 will be strained to meet peak demand projections, which have risen by over 7.5% since 2021.
❌ Energy output from hydro generators ⚡️ throughout most of the Western United States is being affected by widespread drought and below-normal snowpack⛄️.

❌ Extreme drought ☀️ across much of Texas can produce weather conditions that are favorable to prolonged, wide-area heat events and extreme peak electricity demand.
❌ As drought conditions continue over the Missouri River Basin, output from thermal generators that use the Missouri River 💦 for cooling in Southwest Power Pool (SPP) may be affected in summer months.

❌ Supply chain 🚛 issues and commissioning challenges on new resource and transmission projects are a concern in areas where completion is needed for reliability during summer peak periods.
❌ Coal-fired 🏭 GOs are having difficulty obtaining fuel and non-fuel consumables as supply chains are stressed.

👉 Climate change policies are making the grid more vulnerable to vacillations in supply and demand. The forced transition to green energy is distorting energy markets and destabilizing the grid. Solar and wind are rapidly increasing, but they’re as erratic as the weather and can’t be commanded to ramp up when electricity 🔋demand surges.

👉 Subsidies enable wind and solar generators 🔌 to turn a profit even when the supply of electricity exceeds demand. Coal and nuclear plants, on the other hand, can’t make money running only some of the time, so many have shut down. Natural-gas-fired plants can help pick up the slack, but there aren’t enough of them to back up all of the renewables coming onto the grid.

🤔 What no one is talking about also, in the nuclear power generation arena is sanctions against Russia. 🇷🇺 Russian uranium exports and nuclear technology are used all over the world for power generation.

Please share this post to get more people thinking and preparing for such a situation.👍