ADB: Mongolia showing a good example in the world www.montsame.mn

April could be WORST MONTH EVER for oil www.rt.com

Oil producers are facing their worst crisis in history, but the market is not at a bottom yet, according to several analysts.
The millions of barrels of additional supply promised by Saudi Arabia will take time to reach their destination. On the demand side, major economies have only begun to slow down, and the gaping hole where the economy once stood is expected to widen. A growing number of analysts say that the global economy is already in a recession.

“Even just a week ago, it was difficult to imagine how oil market conditions could become significantly weaker,” Standard Chartered wrote in a note. “However, over the past week the restrictions placed on mobility by European and North American governments as part of their coronavirus response have significantly magnified the negative demand shock.”

Analysts say that the month of April could see the largest supply overhang in the history of the oil market.

“We now expect the y/y demand loss to peak in April at 10.4 million barrels per day (mb/d), and annual demand to fall by a record 3.39mb/d in 2020,” Standard Chartered wrote in a note.

In the short run, the oil market surplus could reach a peak of 13.7 mb/d in April, Standard Chartered said, with an average surplus of 12.9 mb/d for the second quarter. The inventory buildup could reach a gargantuan 2.1 billion barrels by the end of the year, “stretching the midstream of the industry to its limits,” the bank wrote. That figure represents an upward revision of 50 percent from the 1.4-billion-barrel inventory surplus the bank predicted…just a week ago.

Other analysts have even more dramatic scenarios. Eurasia Group says demand could fall by as much as 25 mb/d in the next few weeks and months. The historic glut means that the world could run out of storage space. “The combination of weakening demand and excess supply is hardly going to be accommodated by onshore storage,” Giovanni Serio, head of analysis at Vitol, told the FT. “At a certain point…we will need to fill all the boats.”

The downturn could lead to more than 200 bankruptcies just in the European oilfield services sector, according to Rystad Energy, or 20 percent of total firms in the sector.

Goldman Sachs said WTI could fall to shut-in price levels at between $23 and $26 per barrel, and in fact, the bank cut its forecasted second quarter price for Brent to $20 per barrel, down from $30 previously. In early trading on Wednesday, WTI plunged 11 percent to around $24 per barrel and prices collapsed during the day, falling 25 percent before recovering some lost ground.

“As front-end prices weaken under the weight of the accumulated surplus oil stockpile, we expect the contraction of activity in the US shale oil industry to accelerate,” Standard Chartered said. The bank forecasts US oil production at 11.87 mb/d in December 2020, down 1.1 mb/d from current levels. In 2021, Standard Chartered said the US may average 11.2 mb/d, exiting the year in December 2021 at 10.69 mb/d.

On Wednesday, Halliburton said it was going to furlough 3,500 workers in what will surely be the first in many, many cuts to payrolls.

Up until only recently, most analysts assumed the global pandemic would be a short-term affair. Many lockdown procedures have been billed as temporary closures, typically in the range of two to four weeks. But the pandemic may last much longer – some scientists suggest social distancing may be imperative for more than a year – and some of the economic scars could be permanent.

The US Congress is preparing helicopter money in an effort to tide millions of people over for the next few weeks, but that too will not be enough.

While April may see the worst of oil demand destruction, Standard Chartered says year-on-year demand could fall by 8.8 mb/d in May and 7.4 mb/d in June. And even after the pandemic passes, there will be an “element of persistent demand loss…driven by permanent changes in air travel behaviour and the demand implications of businesses unable to recover from the initial shock.”

Almost 1000 Mongolians evacuated from Covid-19 hit countries www.news.mn

China reports no new locally transmitted cases for a second day. But it found 39 new imported cases www.cnn.com

Mainland China reported 39 new cases of coronavirus -- all imported from overseas -- and three new deaths as of end of day Thursday, according to the country's National Health Commission.

Copper price surges over 10% after touching 2009 lows www.mining.com

Copper dropped sharply again in overnight trade on Thursday, coming close to levels last seen during the global financial crisis amid mounting uncertainty about the extent the global pandemic could hit demand and supply of the bellwether metal.

Copper trading in New York fell by more than 8% to $1.9725 a pound ($4,350 a tonne), the weakest level since early January 2016, when it traded below $2.00 for only a week. The last time it traded for a sustained period below this level was in 2008 and 2009.

In New York trade the metal fought back, rallying by 11.6% with May delivery contracts exchanging hands for $2.1990 in the mid-afternoon session. Year to date copper is still in bear territory with a 21% decline.

“In terms of understanding the short-term supply-demand dynamics, uncertainty is the highest I can recall,” Mark Hansen, chief executive officer of metals trading house Concord Resources, told Bloomberg from London.

“China responded more forcefully to the economic downturn in 2015-16 than it has now, which is both curious but also should give hope to resource demand possibly returning strongly, at some point.”

Global recession
Thanks to its widespread use in industry, transportation, construction and power grids, copper is vulnerable to slowdown in the broader economy.

Tommy Wu, lead economist, Oxford Economics
A panel of 80 economists polled by FocusEconomics, a Barcelona-based research firm, have become markedly more pessimistic about the global impact of the pandemic.

Almost two-thirds of panelists now expect a global recession in the next 12 months, up from 43% in last week’s poll, and despite the slew of fiscal and monetary stimulus measures announced in recent days says FocusEconomics.

One panelist, Tommy Wu, lead economist at Oxford Economics, said the Covid-19 crisis is unlike any other modern-day economic shock:

“The fact that the coronavirus pandemic is an exogeneously caused simultaneous supply and demand shock on the real economy leading to financial market shocks, and not initially financial market shocks spreading into the economy like in 2008, makes it unique in recent history.

“It can only be compared to wartime downturns in the twentieth century.”

South American supply
Producers across South America, where the bulk of the world’s copper is produced, have halted or cut back operations and slowed construction projects.

Hong Kong-listed MMG said on Thursday that operations at its Las Bambas mine with expected production in the 360kt range for this year had been reduced temporarily after Peru declared a state of emergency.

Anglo American earlier this week said it will slow the building of its $5 billion Quellaveco project in Peru and on Thursday the miner said it is scaling down operations at its Los Bronces copper mine in Chile.

The world’s no 2 copper producer, Chile’s state-owned Codelco, said on Wednesday it planned to reduce its operations while the world’s top miner of the metal, BHP said so far the pandemic has not affected output.

Reuters reports unionized workers at the Escondida mine in Chile operated by BHP requested on Wednesday a halt to operations unless management begins to implement stricter health and safety measures. Escondida is the largest copper mine in the world by a wide measure and was projected to produce some 1.2 million tonnes this year.

Phoenix, Arizona-based Freeport-McMoRan said this week it is suspending operations at its 350kt per year Cerro Verde mine in Peru for at least 15 days.

Hakuho chasing Japanese sumo record www.news.mn

Yokozuna Hakuho bounced back from his first loss and collected his 10th win of the Spring Grand Sumo Tournament on Wednesday to remain in a two-way tie for the lead with rank-and-filer Aoiyama.

The Chinggis Khaan Museum – the richest collection in the world www.news.mn

In 2019, the Mongolian Cabinet decided to establish a museum for the legendary conqueror Chinggis Khaan, famed for establishing the largest land empire in history. The museum will be built on the site of the current natural history museum, located in the heart of Ulaanbaatar just to the north-west of the State Palace. The nine-story modern museum with 15 exhibition halls will cover an area of 20,500 square meters. Over 90 percent of MNT 53 billion construction cost is to be funded from the 2020 State Budget. The museum is expected to open in 2021.

'Orano Mining' Company donates MNT 1 billion to Mongolia www.montsame.mn

Expect more global mining disruptions – report www.mining.com

Development Bank of Mongolia to support cashmere buyers with low-interest loans www.montsame.mn

Ulaanbaatar /MONTSAME/. In aims of defining the solutions to increase the production of cashmere and gold as well as the amount of foreign exchange reserves, Speaker G.Zandanshatar received representatives of the aforementioned sectors on March 18.

Head of the Parliamentary Standing Committee on Economy J.Ganbaatar, Governor of the Bank of Mongolia B.Lkhagvasuren, Head of the Financial Regulatory Committee D.Bayarsaikhan, Head of the Geology and Mining Policy Coordination Department at the Ministry of Mining and Heavy Industry B.Munkhtur, First Deputy Chief Executive Officer of the Development Bank of Mongolia Ch.Enkhbat, Director of the Mongolian Commodity Exchange Kh.Baatar, and executives of the Mongolian National Chamber of Commerce and Industry (MNCCI), as well as wool and cashmere associations, attended the meeting.

At the start of the meeting, Speaker G.Zandanshatar said, “The COVID-19 infection has a large negative impact on the economy. Thus, the State Great Khural, the Government, and the National Security Council are paying special attention to the issue. And the issue is currently being studied by a workforce of the Parliamentary Standing Committees on Economy and Budget. During this crucial time, the production of wool and cashmere and gold industries will play important role in supporting the economy, budget revenue, and financial stability. We have the opportunity to acquire an income of USD 2-4 billion from exporting combed cashmere.”

With a total of 10 thousand tons of cashmere to be prepared this year, the Development Bank of Mongolia is currently planning to put out loans with low interest to support cashmere buyers. Based on the study done by the workforce of the Parliamentary Standing Committee on Economy, the Government of Mongolia will also support the ‘Cashmere’ programme. The loan amount that will be financed by the Development Bank of Mongolia will be MNT 300 billion, with an interest of 12 percent. Talks are currently being held to have the loans given with an interest rate of 3 percent, and the leftover 9 percent be settled through subsidy. As the loan is to be solely used for buying cashmere, with aims to keep the price of cashmere at the same amount as last year, and support herders in increasing their income, it must be strictly monitored, highlighted Speaker G.Zandanshatar and Head of the Parliamentary Standing Committee on Economy J.Ganbaatar.

As for the gold sector, there are currently 66 projects that are ready to be implemented in the framework of the Ministry of Mining and Heavy Industry’s policy to support the producers. However, the matter of giving special permits, and supporting them with investment and financing persists to be an issue, said Head of the Geology and Mining Policy Coordination Department at the Ministry B.Munkhtur.

Speaker G.Zandanshatar gave directions to the officials to accelerate the operations of ‘Erdenes Alt Resource’ LLC, subsidiary of ‘Erdenes Mongol’ LLC, employ workforce consisting of the top mining professionals in partnership with MNCCI, support private entities in putting out bonds and issuing shares, and realize the initiative to establish the Herders’ Corporation.