Day: June 16, 2022

The highest electricity price rate for one megawatt-hour on Türkiye’s day-ahead spot market for Friday will be 2,800 Turkish liras at 15.00 local time (1200 GMT), according to official figures on Thursday.

The lowest rate is determined as 1,950 liras at 07.00 local time (0400 GMT), the figures showed.

The Energy Exchange Istanbul (EXIST) data for the trade volume on Thursday’s electricity market showed an increase of 7.5% to 1.37 billion liras compared to Wednesday.

The arithmetical and weighted average prices of electricity on the day-ahead spot market are calculated as liras 2,395.44 and 2,408.05 liras, respectively.

The highest electricity price rate for one megawatt-hour for Thursday was set as 2,640 Turkish liras at 20.00 local time (1700 GMT) while the lowest rate was determined as 1,749.99 liras at 12.00 local time (0900 GMT), the figures showed.

Source: Anadolu Agency

More interest rate increases are quickly coming from the Federal Reserve in the next months, according to Mark Zandi, chief economist at Moody’s Analytics.

“Bond investors expect another half point hike at the Fed’s June and September meetings, and several quarter point rate hikes are expected after that. This would put the funds rate at 3.5% by this time next year,” Zandi told Anadolu Agency via email.

The Fed raised its benchmark interest rate by 75 basis points on Wednesday, marking its biggest hike in 28 years, carrying the target range for the federal funds rate up to 1.5%-1.75% range.

The central bank also said in its projections that it anticipates the benchmark interest rate to end this year at 3.4%, an upward revision of 1.5 percentage points from the March estimate of 1.9%, according to the “dot plot” of the Federal Open Market Committee (FOMC) members’ expectations.

“The Fed is scrambling to get interest rates back up to something more consistent with an economy that is near full-employment and grappling with painfully high inflation,” said Zandi.

Annual consumer inflation in the US climbed to 8.6% in May, the highest level in more than 40 years. The Fed is moving aggressively in its monetary tightening to move the inflation down rapidly to its 2% target.

“The Fed’s highly aggressive rate hikes has had the benefit of bringing down the inflation expectations of global bond investors, who think the Fed will succeed in getting inflation back down to its target over the next couple of years, one way or another,” said Zandi.

The economist said as inflation expectations are anchored, it means that it is more likely the Fed will succeed in getting inflation down without pushing the economy into a recession.

“Indeed, as indicated by the shape of the Treasury yield curve – the difference between 10-year and 2-year Treasury yields – investors believe the economy will slow sharply in coming months but will not suffer a recession. Of course, there is a lot of economic script to be written,” he said.

On Monday, 2-year and 10-year Treasury yield curves briefly inverted for the first time since April — a sign to investors of a recession.

Fed Chair Jerome Powell and some officials, in recent months, have repeatedly said they are hoping for a soft landing – where the central bank raises rates leading to an economic slowdown but avoiding a recession.

On Wednesday, Powell said the pace of the rate hikes will depend on the incoming macroeconomic data and the ongoing outlook of the economy, but emphasized that the FOMC will make its interest rate decisions meeting by meeting.

Although the Fed chair admitted that the latest 75 basis points rate hike is “an unusually large one,” he did not rule out another 75 basis points increase at the Fed’s July meeting.

“It is disquieting that it appears the Fed is ad-libbing monetary policy, as it only in the past few days leaked its intention to raise rates by three quarters of a percentage point,” said Zandi.

“This suggests policymakers don’t have a clear strategy for quelling inflation and keeping out the economy out of recession,” he said, stressing that risks of an ensuing recession are “uncomfortably high and rising.”

Source: Anadolu Agency

Oil prices increased on Thursday as data showed a rise of 2 million barrels in US crude oil inventories for the week ending June 10.

International benchmark Brent crude was trading at $118.89 per barrel at 0600GMT, a 0.32% jump from the previous session’s close of $118.51.

American benchmark West Texas Intermediate (WTI) was at $115.86 per barrel for a 0.48% gain after ending the previous session at $115.31.

The rise in oil prices is driven by tight global supply amid a surge in demand for fuel, especially in the US as it enters its peak travel months.

Demand in China is also expected to pick up as it eases COVID-19 restrictions.

US commercial crude oil inventories reached 418.7 million barrels, according to the Energy Information Administration’s Wednesday data.

Inventories increased by 2 million barrels, while the market expectation was a drop of 1.2 million barrels.

Source: Anadolu Agency

The Turkish private sector’s outstanding foreign loans totaled $163.7 billion as of April, down $5.3 billion compared to the end of 2021, the Central Bank said on Thursday.

Short-term loans, excluding trade credits, received from abroad amounted to $7.7 billion, an increase of $218 million over the same period.

Liabilities of financial institutions made up 81.4% of all short-term loans, the bank said.

Broken down by currency, 37.2% of the Turkish private sector’s short-term credit was in US dollars, 40.3% in euros, 18.7% in Turkish liras, and 3.8% in other currencies.

The sector’s long-term foreign debt decreased by $5.5 billion to $156 billion.

Most of the long-term loans, 63.8%, were in US dollars, followed by 32.7% in euros, 1.7% in Turkish liras, and 1.8% in other currencies.

The private sector’s total outstanding loans received from abroad, based on a remaining maturity basis, point to principal repayments of $45.9 billion for the next 12 months by the end of April, the bank said.

Source: Anadolu Agency

Japan’s trade deficit soared to 2.4 trillion yen ($18 billion) in May compared to the same month last year, as energy prices continue to rise amid the Russia-Ukraine war.

It is the biggest trade deficit the country has seen since January 2014.

Imports surged 48.9% to 9.6 trillion yen in the year to May, while exports were up 15.8% to 7.2 trillion yen, official data released by the country’s Finance Ministry indicated on Thursday.

High energy prices and a weak yen contributed to a surge in imports.

Source: Anadolu Agency

Dmitry Konov, the former chief executive officer of Russian petrochemicals manufacturer Sibur, said the European Union’s personal sanctions against him have “no factual or legal basis.”

“My lawyers have filed ‘observations’ with the Council of the European Union, asking it to reassess its position,” Konov told Anadolu Agency in an exclusive interview.

“They have also appealed as well the personal sanctions against me in the EU General Court in Luxembourg as having ‘no factual or legal basis,'” he said.

“Sibur is a private company, and the arguments of the European Commission about me having been employed by the company, which is providing a substantial source of revenue to the (Russian) government and thus is responsible for the destabilization of Ukraine, are not valid,” he added.

Noting that Sibur’s taxes are paid mostly in the regions where the Russian petrochemicals company operates, he said he hopes the Council will reconsider its position and his rights will be protected by European law.

Konov said he does not “own much” in Europe, adding: “It’s a matter of principle. It’s not fair.”

He also said the sanctions against him are “emotionally difficult” for him since he has been educated and worked for some time in Europe.

“I don’t feel the grounds justifying inclusion on the list, to be fair,” he said.

‘Strange way to appreciate all my efforts’

Reiterating that it is unfair to be “punished” for doing his managerial job “in the right way,” Konov said: “I have always behaved in a loyal and honorable manner while leading Sibur.”

“I was awarded the Order of the Star of Italy (Ordine della Stella d’Italia) for my participation in developing the business dialogue between Sibur and its Italian partners,” he said.

“I have made Sibur a company that complies with international standards, especially in terms of environmental and social norms. Sibur’s products satisfy the demand of customers, especially those in the European Union.”

Konov said he has been one of the governors of the World Economic Forum’s Committee for Chemistry and Advanced Materials since 2016.

“It’s a strange way to appreciate all my efforts to make the world a better place!” he said.

Asked about his opinion on the recent sanctions against Russia as a whole over the war in Ukraine and whether it could be an aim to create unfair market competition, Konov said: “Overall, sanctions are a doubtful instrument.”

Victim of EU trade restrictions

The “biggest problem” has been that the EU sanctions banned European companies from supplying technological equipment to Russia and European funding, Konov said, regarding the company’s estimated loss.

“Most of Sibur’s products exports to Europe fell victim to EU trade restrictions with Russia,” he said.

“It is reasonable to assume that the company shall be in search of alternative export destinations, while Sibur’s European customers — although very satisfied with Sibur’s products in terms of price and quality — will suffer from the current situation.”

“Still, neither Sibur nor the European companies should reproach themselves for this,” he added.

Noting that EU trade restrictions forced Sibur to cut exports to Europe, which accounted for 23% of the company’s revenue, he said the sanctions have pushed the company to redirect sales volumes to other regions.

Asked whether Türkiye is one of the markets that the company focused on after the restrictions, he said: “Türkiye has already been a significant market for Sibur, accounting for 6% of its sales.”

“The importance of the Turkish market may increase, backed by growing demand for plastics, which are widely used in packaging to car-making, and maleic anhydride (MAN), ? raw material for films, synthetic fibers and detergents,” he added.

Source: Anadolu Agency

Given the challenging ultra-deep water terrain of Türkiye’s Sakarya gas field and the fact that the project is a greenfield, producing gas within two years of discovery seems impressive, said Rami Khrais, an oil and gas analyst at the data analytics and consulting company GlobalData.

Khrais told Anadolu Agency that Türkiye’s largest offshore discovery could be transformational for the country in supporting its growing gas demand.

“The fast development of Sakarya’s reservoir reflects Türkiye’s desperate need to diversify its energy sources specially after the global energy crisis resulting from the Ukraine war,” he said.

He said that the current under-construction gas processing plant in Filyos can only handle 350 million cubic feet per day.

“Additional onshore gas processing plants are therefore required to handle the output increases during the second phase of the project,” he added.

Khrais said that Türkiye imports almost its entire gas needs from abroad, with Russia meeting 40% of the country’s total gas demand.

“The startup of Sakarya Phase-2, which is expected to produce 1.4 billion cubic feet per day around the end of the current decade, is set to help Turkey mitigate its extreme reliance on external suppliers for natural gas. It will also help alleviate the mounting pressure on the local customers suffering from increasing inflation,” he explained.

Khrais underlined that the discovery of Sakarya in the Black Sea might pave the way for new finds in Türkiye’s deep waters.

“The exploration campaign in the area has resulted on June 2021 the discovery of a northern extension of Sakarya, known as ‘Sakarya North’, with estimated reserves of 4.8 trillion cubic feet,” he added.

Welcome news for energy decision-makers

The intention to begin production of the Sakarya field by early 2023 will presumably be welcome news for Turkish energy decision-makers, according to Jonathan Elkind, a senior research scholar at Columbia University’s Center for Global Energy Policy and a former energy official in the Clinton and Obama administrations.

“It’s reported initial production (10 million cubic meters per day, 3.65 billion cubic meters per year) will represent a solid, but incremental, addition to Turkey’s natural gas supply,” he said.

Elkind said that this is especially important in a period when the country’s gas demand is projected to grow and “when global gas markets are tight in the wake of Russia’s attack on a peaceful neighbor, Ukraine.”

Source: Anadolu Agency