Daily Update: April 27, 2021

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The surge of coronavirus cases in India isn’t just a crisis for the emerging economy—but for the entire world. India recorded more than 350,000 new infections on Monday, marking more than 2 million cases in a seven-day period and the most of the entire crisis. Countries and companies alike have lifted trade embargos to send India critical assistance as scenes of the pandemic’s worst-case scenario—overwhelmed hospitals running out of oxygen; doctors pleading for international aid as patients suffocate; a desperate lack of raw materials to make COVID-19 vaccines—unfurl in real time.

And as India’s population suffers, its economy may not be far behind, regardless of which containment measures are ultimately imposed. 

Indian oil refiners have thus far refrained from sharply cutting their crude capacity despite the alarming increase in COVID-19 cases, but now may be forced to scale back their runs in anticipation of depressed oil demand nationally, analysts told S&P Global Platts.

Last year, oil demand in India declined 470,000 barrels per day during the first wave of the pandemic to the lowest level of oil-product consumption in nearly two decades. S&P Global Platts Analytics has revised its full-year 2021 outlook for India's total oil product demand growth to 400,000 barrels per day, from 440,000 barrels per day last month, and may make further adjustments depending on outcomes of the situation.

"I think we could see run rates in India easing to some extent in April and beyond, given the increase in the number of pockets witnessing lockdowns and rising infection numbers," Alex Yap, a senior oil analyst at S&P Global Platts Analytics, said.

The onslaught of new COVID-19 cases will also depress India’s gasoline demand, which is expected to fall 701,000 barrels per day in April, according to S&P Global Platts Analytics. This marks an 11.5% decline and stunts the strong rebound in domestic gasoline consumption in recent months.

Indian Prime Minister Narendra Modi claimed in an April 20 national address the country was well-prepared to combat the surge and urged leaders of the country’s various states to only implement lockdowns as a last resort. Now, some lockdowns have been implemented and mobility has been restricted in regions across India.

Global demand for India’s crude exports could potentially limit how constrained the production pressure becomes. 

The global oil market has been buoyed with resurgent activity and a promising recovery. But the crisis in India, as the world’s third-largest oil consumer and a vital customer for many members of OPEC and its allies, could interfere with the market’s rebound. Still, OPEC+ delegates told S&P Global Platts that the coalition may raise crude production rates regardless of the situation.

"We remain vigilant on the situation of India but [made] no recommendation to delay the increase in production," one delegate who participated in the technical committee meeting told S&P Global Platts, adding the coalition likely will meet again toward the end of May to continue reviewing its plans. "If the situation worsens, OPEC+ can make a decision at its next meeting."

The group will make the official decision upon meeting on April 28 to review market conditions and assess member compliance with quotas, but have already endorsed the plan to increase their oil output.

"In the market, we see some optimism and positive dynamics in the indicators of population mobility and the recovery in demand from the largest consumer countries," Russian Deputy Prime Minister Alexander Novak said in his opening remarks to the Joint Ministerial Monitoring Committee, according to prepared remarks seen by S&P Global Platts. "At the same time, we must closely monitor the situation and the spread of the coronavirus that is taking place, especially in some countries of the Asian region."

Regionally, Asia’s liquified natural gas demand is also likely to suffer due to the situation in India.

Few areas of India’s commodities economy have remained unscathed as the COVID-19 crisis has worsened. While exports haven’t been affected, the majority of India’s domestic agriculture commodity demand has disappeared—with domestic demand for palm oil, grains, and sugar absent from the markets, sources told S&P Global Platts. The country is the world’s largest buyer of palm oil and a primary consumer of grains and sugar.

Today is Tuesday, April 27, 2021, and here is today’s essential intelligence.

Uncertainty in the Global Economy

Economic Research: U.S. Biweekly Economic Roundup: The Recovery Accelerates Amid Consumer, Housing, and Industrial Gains

The economic recovery gained momentum in March amid a surge in consumer spending, including a near-record-high rise in retail spending. Housing also remained strong, with both new home sales and construction soaring. Meanwhile, industrial activity firmly recovered after a weather-induced pause in February, up 1.4% for the month.

—Read the full report from S&P Global Ratings

The Future of Credit

Market Volatility

Lithium Prices Rally Cobalt Prices Correct

The lithium carbonate CIF Asia price rose 11% in March to $10,000 per tonne — the biggest monthly increase since the price recovery began in January. There are signs prices are nearing a peak, however, with an improving supply outlook.

—Read the full article from S&P Global Market Intelligence

Container Ship Charter Rates Continue Upward Momentum as Tonnage Markets Run Dry

Container vessel time charter rates have risen to 10-year highs amid an ongoing bull run in container freight markets, according to an index published by German ship broker Harper Petersen & Co. Time charter rates for a ship with a capacity of 8,500 twenty-foot equivalent units (TEU) registered at $54,000/d on April 23, the highest assessment in more than 10 years.

—Read the full article from S&P Global Platts

Expanding the Non-USD Denominated S&P GSCI Single Commodity Index Series

Concerns of a rising U.S. dollar may pose a hindrance to initiating commodity exposure from outside the U.S. Most commodities around the world are priced in U.S. dollars, so when the value of the U.S. dollar rises, the value of commodities typically falls.

—Read the full article from S&P Global Dow Jones Indices

RIP SPACs: July 2020 – April 2021

Even for a financial mania, SPACs didn't last long. These highly speculative schemes have whipsawed from nowhere to everywhere and now back to nowhere – all in a matter of months. Live fast, die young. S&P Global Market Intelligence’ obituary for the short-but-colorful life of special purpose acquisition companies (SPACs) is a bit facetious, of course. But there's no denying, to use a metaphor favored by cynical Wall Streeters who have seen this sort of thing before, that the SPAC bubble is no longer being pumped up like it had been. Why the deflation? SPAC saturation.

—Read the full article from S&P Global Market Intelligence

Technology & Innovation

Semiconductor Supply Shortage and U.S. Policy Response Mark A Renaissance For Domestic Manufacturing and Equipment Investments

U.S. administration change does not alter the status quo with China. There has been no letup in the tense relationship between the U.S. and China, which anchors how S&P Global Ratings evaluates the sentiment shift, or lack thereof, in the tech supply ban on Chinese entities, tariffs, and the merger and acquisition (M&A) regulatory approval process. S&P Global Ratings economists believe the Biden Administration will adopt a more multilateral and predictable approach to China, yet tensions between the two countries will persist and the tariffs and export restrictions imposed by the Trump Administration will remain.

—Read the full report from S&P Global Ratings

Euskaltel Becomes 2nd Spanish National Operator to Go Private

With few privately held operators remaining in Western Europe, Spain has provided a boost to the presence of private operators of scale in the region with recent M&A activity. After years of focusing on its mobile expansion, MásMóvil Ibercom SA has turned its eye to fixed line assets, acquiring private Portuguese cable operator Nowo Communications SA in 2020, and announcing the takeover of Spanish cable operator Euskaltel SA in March 2021 for €2.0 billion, turning another operator private.

—Read the full article from S&P Global Market Intelligence

Security, Now More Than Ever

Fear sells. And that deeply seated truism, which has been amplified during the uncertainty and anxiety of the ongoing pandemic, has helped turn information security into one of the hottest parts of the overall tech M&A market right now. S&P Market Intelligence’s data shows that infosec buyers have doled out as much money in the first three months of 2021 as they typically do in a full year.

—Read the full article from S&P Global Market Intelligence

Amazon Poised to Beat Q1 Street Estimates, Provide E-Commerce Insights

Amazon.com Inc. is poised to report strong first-quarter earnings April 29 that analysts say will provide an early glimpse into the e-commerce company's outlook in 2021 as the U.S. economy reopens after a major slowdown caused by the pandemic.

—Read the full article from S&P Global Market Intelligence

ESG in the Time of COVID-19

Listen: Biden Climate Goals Ignore Oil Demand Outlook: Louisiana Senator Cassidy

Louisiana sits at the crossroads of US climate policy, from experiencing some of the earliest effects of rising sea levels and changing weather patterns to depending on fossil fuels for economic growth. We spoke with US Senator Bill Cassidy, Republican-Louisiana, about how the Biden administration's climate policies are playing out in his state. He contends the White House's climate ambitions ignore just how dependent the US is on fossil fuels given the pace of cleaner alternatives. S&P Global Platts also asked Cassidy about the Interior Department's leasing moratorium, how offshore drillers are shifting assets out of Louisiana, and what he expects on US-OPEC relations under the Biden White House.

—Listen and subscribe to Capitol Crude, a podcast from S&P Global Platts

Norway-Focused Lundin Makes First-Ever Certified Carbon-Neutral Crude Sale

Register Now Lundin, which is a third-owned by Sweden's Lundin family, said the 600,000 barrel sale of Edvard Grieg crude oil to Italian refiner Saras had been certified carbon-neutral by certification company Intertek, taking into account all "life of field" emissions, from exploration through to development and production.

—Read the full article from S&P Global Platts

Volvo, Uber Join Call for EU-Wide Ban on Gasoline, Diesel Cars By 2035

Volvo, Vattenfall and Uber are among 27 companies calling on the EU to ban the sale of new gasoline and diesel cars by 2035 in order to accelerate the transition to electric cars. Register Now The EU Commission is expected to propose new targets in June as part of its "Fit for 55" package of legislation, which is intended to put the EU on track to cut overall emissions by at least 55% by 2030 and reach net zero emissions by 2050.

—Read the full article from S&P Global Platts

Hydrogen 'No Silver Bullet' for Decarbonization: Panelists

Hydrogen could comprise up to 15% of the global energy mix over the next three decades, but it is expected to serve more of a complementary role in meeting climate goals, panelists said in an April 26 webinar. "Of course, it's not a silver bullet – it's one part of what we need to decarbonize," said David Bryson, Uniper's chief operating officer.

—Read the full article from S&P Global Platts

The Future of Energy & Commodities

Watch: Market Movers Europe, Apr 26-30: Oil, Gas, And Steel Enter Results Week; EU Power Prices Soar

In this week's highlights: It's results week for oil and gas majors; another key OPEC+ meeting; Gazprom holds investor day; French nuclear demand; and the continued surge in steel prices.

—Watch and share this Market Movers video from S&P Global Platts

Number of Wells Drilled In Permian, Eagle Ford Make Substantial Recovery

After the number of drilled but uncompleted wells demonstrated a dramatic drop across multiple U.S. basins in the past year, heightened drilling activity and stable commodity prices are starting to reveal a recovery of young DUCs.

—Read the full article from S&P Global Platts

Written and compiled by Molly Mintz.