Oersted Books $4 Billion Impairments, Walks Away From Two US Offshore Projects — Commodities Roundup

MARKET MOVEMENTS:

--Brent crude oil is up 1.3% at $86.11 a barrel

--European benchmark gas is up 0.8% to EUR48.40 a megawatt hour

--Gold futures are down 0.2% at $1,991 a troy ounce

--LME three-month copper futures are down 0.2% at $8,103.50 a metric ton

--Wheat futures are up 0.9% to $5.61 a bushel

TOP STORY:

Oersted Books $4 Bln Impairments, Walks Away From Two US Offshore Projects

Oersted booked a 28.4 billion Danish kroner ($4.02 billion) impairment charge in the third quarter related to its U.S. offshore wind portfolio and said it will stop the development of two wind farm projects off the coast of New Jersey amid spiraling costs and supplier delays.

The news sent shares lower. At 0852 GMT shares traded down 21% at DKK268.

The Danish renewable-energy company had previously warned of up to DKK16 billion of impairments after flagging increasing supply-chain risks at U.S. projects, while a lack of favorable progress on U.S. tax credits and higher interest rates were also sending project costs higher.

Since then, the situation has worsened, with further supply-chain issues, higher interest rates, and the lack of a funding adjustment at its Sunrise Wind project off New York's coast leading to the higher-than-expected impairment, the company said.

OTHER STORIES:

BHP CEO Says China Commodity Demand Robust Despite Economic Struggles

China's demand for commodities including iron ore and copper remains robust, the chief executive of mining giant BHP Group said, even as the country's economic recovery disappoints and its property sector struggles.

Mike Henry said China's appetite for copper-used widely in manufacturing and construction-is even stronger than the world's largest miner by market value was anticipating six to 12 months ago and that economic headwinds haven't translated into reduced commodity demand more broadly.

Authorities have recently stepped up stimulus aimed at re-energizing consumer spending and shoring up China's troubled property market-measures cited by Citi analysts this week as a tailwind for iron-ore prices as they upgraded their own short-term forecast for the steel ingredient.

Still, Henry cautioned that China's economic outlook continues to be murky as the latest data stokes concerns about the fragility of its recovery. China is the world's top buyer of iron ore, copper and a number of other metals.

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China Factory Activity Slides Into Contraction, Caixin PMI Shows

A private gauge of China's factory activity fell into contraction in October, suggesting continued economic headwinds despite Beijing's recent efforts to shore up growth.

The Caixin manufacturing purchasing managers index fell to 49.5 in October from 50.6 in September, falling into contractionary territory for the first time in three months, according to data released Wednesday by Caixin Media Co. and S&P Global. The 50-mark separates expansion from contraction.

Total new orders increased for the third consecutive month, but the pace of growth slowed for two months in a row, according to Caixin.

External demand continued to decline, with new export orders falling for a fourth straight month, said Caixin. The employment subindex, which was in negative territory for the seventh time in eight months, hit its lowest point since May as manufacturers cut jobs.

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MARKET TALKS:

Palm Oil Edges Higher on Rising Crude Oil Prices

1011 GMT - Palm oil prices edged higher on rising crude oil prices after falling earlier in the session. Stronger crude-oil prices boost palm oil's appeal as the vegetable oil can be used as biodisesel feedstock. However, China's weaker-than-expected PMI data cast concerns over the country's demand for palm oil, AmInvestment Bank said in a research note. China's sluggish factory activity signals that the economy remains fragile and needs more stimulus measures, it said. RHB Retail Research pegged the support level for crude palm oil at MYR3,623 and resistance level at MYR3,812. The Bursa Malaysia Derivatives contract for January delivery is MYR5 higher at MYR3,684 a ton. (sherry.qin@wsj.com)

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Metal Prices Fall Ahead of US Federal Reserve Meeting

0836 GMT - Metals prices are falling, with all eyes on today's U.S. Federal Reserve meeting. Three-month copper is down 0.3% to $8,097.50 a metric ton while aluminum is 0.1% lower at $2,244.50 a ton. Gold meanwhile is down 0.4% to $1,986.60 a troy ounce, having slipped below $2,000 an ounce late Tuesday. Gold prices are likely to slip further according to Nicky Shiels, head of metals strategy at MKS Pamp, who says that "Without significant escalation in the Middle East, fatigue sets in and haven prices are at risk of a pullback." She adds that along with the Fed meeting, investors will need to watch for U.S. Treasury funding announcements and higher rates. (yusuf.khan@wsj.com)

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Iron-Ore Futures Rise on Strong Demand

0228 GMT - Iron-ore prices are higher in early Asian trade on strong demand. The intensity of production cuts by Chinese steel mills has lessened while the terminal consumption of iron ore has stabilized at a high level, analysts at Baocheng Futures say in a research note. The resilience of demand has propped up iron-ore futures, they add. Overall market sentiment is optimistic as favorable policies to stabilize China's economic growth are in place, they say. However, investors should be wary that the profitability of steel mills is still deteriorating, with the proportion of profitable mills continues to decline, they add. The most-traded iron-ore contract on the Dalian Commodity Exchange is up 1.8% at CNY913.5 a ton. (sherry.qin@wsj.com)

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BHP's Latest Jansen Project More Costly Than Anticipated

0050 GMT - BHP will spend more on the second stage of its Jansen potash project in Canada versus Morgan Stanley's expectations, its analysts say in a note. The miner late Tuesday approved a $4.9 billion investment in the project's second phase, 14% higher than MS's $4.3 billion forecast. The analysts say they had expected higher so-called synergies with the project's first stage. Other metrics were mostly in line with expectations, they say. "We see this announcement as having negligible/small negative impact" based on MS's estimates, although consensus estimates for stage-two capital expenditure are unavailable, they add. (rhiannon.hoyle@wsj.com; @RhiannonHoyle)

(END) Dow Jones Newswires

November 01, 2023 06:38 ET (10:38 GMT)

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