This morning in metals, Shell’s chief executive says $80 oil is good for energy infrastructure investment, China’s Baowu is reportedly in talks to acquire a rival and base metals prices dropped on Tuesday.
$80 Oil? Shell CEO Says It’s Not Unreasonable
In a CNBC interview, Shell CEO Ben van Beurden said $80 oil would not be unreasonable and would support energy infrastructure investment.
Van Beurden added some of the Trump administration’s quotas on steel imports have impacted the company’s construction projects.
MetalMiner’s Take: Shell is probably right in estimating the world can afford $80/barrel oil prices without harming growth; certainly, the U.S. economy is testament to that at the moment.
But rising steel costs due to import tariffs are causing oil companies headaches when funding new infrastructure projects, projects the industry desperately needs to overcome transportation bottlenecks and meet rising refined product demand overseas.
Outside of the U.S., oil majors are pushing ahead with large investments in a buoyant refining market. Exxon just announced a half-billion-dollar upgrade to its giant Fawley refinery in the U.K. to meet rising demand, surely a sign the oil price and demand trump construction costs.
Baowu Eyeing Rival Firm
According to a Reuters report, the Chinese steelmaking heavyweight China Baowu Steel Group is in talks to acquire rival Magang Group.
Per the report, the combined output of Baowu and Magang last year surpassed total U.S. production.
Metals Prices Drop
Base metal prices struggled on Tuesday, according to a Reuters report, on the heels of a one-day closure of Chinese markets.
After surging Friday, LME copper dropped 0.8% on Tuesday.