Donald Trump has led the US into an escalating trade spat with China that seems to be growing in size almost weekly. Will there be unintended consequences to its energy industry and strategy?
After China implemented counter tariffs to the US’ steel and aluminium import tariffs, Trump immediately proposed counter-tariffs on US$50 billion of Chinese goods, targeted at high tech products instead of mass consumer goods. He then complained a day late of ‘unfair retaliation’ when China fought back with proposed tariffs on key products from states that supported Trump in the last election, including soybean from the Midwest, the single largest US export to China last year. His solution? Another round of tariffs, this time with a higher target of US$100 billion of exports. China only exported US$170 billion of goods to the US in 2017; this is getting closer and closer to a blanket tariff regime, which could affect goods from smartphones to clothes.
China’s response to the US has been surgically precise, targeting areas that will hurt Trump politically. It hasn’t responded to the latest round of proposed tariffs yet, but if it wanted to, it could turn its eye to US energy exports. The first VLCC carrying US crude to China set sail in February 2018, and the string of LNG export projects on the US Gulf Coast is dependent on China’s soaring LNG demand – projected to double in the next five years – to succeed. According to Standard Chartered analysts, as reported in the Wall Street Journal. “China has become a major market for sales of U.S. crude abroad, accounting for about a quarter of shipments this year. But the U.S. accounts for a relatively small share of China's oil imports - just 4%, the analysts said. That ‘strong asymmetry’ means tariffs are not out of the question. A tariff would not necessarily cause a significant bottleneck for U.S. shale output, but would likely complicate marketing significantly and increase its discount on international markets"
Bloomberg also reports that “the Middle East is emerging as a potential beneficiary of the brewing trade war between the U.S. and China. If China goes ahead with its proposal to slap a 25% tariff on polyethylene and liquid propane, which were among 106 American goods targeted, buyers in the Asian nation may look elsewhere for alternatives to pricier U.S. supplies. And the energy-rich Middle East with plenty of petrochemical supplies looks well-suited to meet the substitution requirements. The region is already China’s biggest source for polyethylene - one of the most commonly used plastics in the world - and can further boost exports to the country along with another major seller South Korea, according to Goldman Sachs Group. In particular, Iran stands out as a likely beneficiary as the Persian Gulf nation can sell the gas at a discount to regional contract prices, said FGE consultant Ong Han Wee. “Iran is an attractive alternative,” he said. “Chinese companies will have to diversify their supply sources more toward Iran."
Trump says that ‘trade wars are easy to win’ but a negotiated settlement in the near future seems more likely than an outright ‘win’.
Something interesting to share?
Join NrgEdge and create your own NrgBuzz today
Already, lubricant players have established their footholds here in Bangladesh, with international brands.
However, the situation is being tough as too many brands entered in this market. So, it is clear, the lubricants brands are struggling to sustain their market shares.
For this reason, we recommend an impression of “Lubricants shelf” to evaluate your brand visibility, which can a key indicator of the market shares of the existing brands.
Every retailer shop has different display shelves and the sellers place different product cans for the end-users. By nature, the sellers have the sole control of those shelves for the preferred product cans.The idea of “Lubricants shelf” may give the marketer an impression, how to penetrate in this competitive market.
The well-known lubricants brands automatically seized the product shelves because of the user demand. But for the struggling brands, this idea can be a key identifier of the business strategy to take over other brands.
The key objective of this impression of “Lubricants shelf” is to create an overview of your brand positioning in this competitive market.
A discussion on Lubricants Shelves; from the evaluation perspective, a discussion ground has been created to solely represent this trade, as well as its other stakeholders.Why “Lubricants shelf” is key to monitor engine oil market?
The lubricants shelves of the overall market have already placed more than 100 brands altogether and the number of brands is increasing day by day.
And the situation is being worsened while so many by name products are taking the different shelves of different clusters. This market has become more overstated in terms of brand names and local products.
You may argue with us; lubricants shelves have no more space to place your new brands. You might get surprised by hearing such a statement. For your information, it’s not a surprising one.
Regularly, lubricants retailers have to welcome the representatives of newly entered brands.
And, business Insiders has depicted this lubricants market as a silent trade with a lot of floating traders.
On an assumption, the annual domestic demand for lubricants oils is around 100 million litres, whereas base oil demand around 140 million litres.
However, the lack of market monitoring and the least reporting makes the lubricants trade unnoticeable to the public.
Headline crude prices for the week beginning 11 February 2019 – Brent: US$61/b; WTI: US$52/b
Headlines of the week
Midstream & Downstream
Global liquid fuels
Electricity, coal, renewables, and emissions