Big boost for NZ’s gas supply – and a setback for the climate-change warriors

Here’s   a  bit of good  news  on the  energy  front to  mitigate some  of the  gloom  created by soaring costs, potential  black-outs and rising  carbon emissions.

Genesis  Energy  reported this week  New Zealand’s gas supply has been boosted  after a $72m project at the Kupe gas production station near New Plymouth has been  finished.

The inlet compression project, undertaken by Genesis and its Kupe Joint Venture partners, operator Beach Energy and NZ Oil & Gas, increases production back to the plant’s full capacity of 77TJs a day, the equivalent of supplying around 15% of NZ’s natural gas demand.

Genesis’ group manager Kupe JV Craig Brown said despite some Covid-19 supply chain delays, the project was delivered within budget and with no lost-time injuries from 170,000 person-hours on site – a testament to the strong safety focus of the team on the ground. Continue reading “Big boost for NZ’s gas supply – and a setback for the climate-change warriors”

Investors see promising signs of recovery in infant formula sales in China

After  a  rough  ride  since  Covid-19  struck, the New Zealand economy  is  in   better   shape   than might  have been  predicted  at the  onset  of the  pandemic.  Yet labour  shortages,  an energy crisis  in Europe  and  China, and  massive  inflationary  pressures suggest  that  the  passage  ahead   will  be  anything  but  smooth.

With  the  government abandoning  the  elimination  strategy  and  moving  towards  living  with  endemic  Covid, the  country  is adjusting  to  the  prospect  of  a  new  normal.  But  without  any  sign of  the  number of  cases  of the Delta  variant  diminishing, restrictions  may  persist  for  longer  than  might  have been  imagined  just  weeks  ago.

It’s  a  blow  to  industries  looking  to  inflows  of  workers  to ease  labour  shortages, particularly  in the  rural  regions,  which  last  season  sustained  the  economy  with  the  production of  commodities  that  were  in  relatively  tight  supply  in  world markets,  fetching excellent  returns. Continue reading “Investors see promising signs of recovery in infant formula sales in China”

Emergency measures introduced in UK as energy bills soar – and NZ should brace for rising prices, too, thanks to exploration ban

Soaring energy  bills are a  problem for  firms,  households,  and  the  government. This  was  a  headline  in  The Economist last week – but it  can’t  happen here, can it?

After  all,  NZ has   plenty    of energy.  Unlike Europe, 80%  of  its electricity is  from renewable  sources. And  according  to oil industry  authorities, NZ is  surrounded  by a massive  continental  shelf — the fifth  largest in the  world, beneath  which  lie  vast  quantities  of  undiscovered  natural gas and, probably, some light oil.

So  surely  NZ  can face  the  future  with confidence?

Well,  no:  let’s not forget Prime Minister  Jacinda  Ardern had her “non-nuclear” moment and  placed a ban on new offshore exploration permits  for  oil  and  gas.  Since  then,  as  international oil explorers gave  up  their  offshore   exploration  licences, supplies  from existing  producing  wells have begun to  diminish for several reasons.

Higher  costs  are  starting  to  flow  into  household and  business  gas  bills. Vector  is  increasing  Ongas LPG  cylinders  from  $115.026  to  $125.82. Continue reading “Emergency measures introduced in UK as energy bills soar – and NZ should brace for rising prices, too, thanks to exploration ban”

Why NZ should get behind Miles Hurrell as he aims to broaden Fonterra’s product range

As  New Zealand moves  towards  reconnecting with the world,  62%  of  the   business  leaders  surveyed  in the  NZ  Herald’s “Mood  of the  Boardroom”  say  they are not  satisfied with the government’s  plan  for  reopening the country.  International business is  being  lost due to border difficulties.

So  the  NZ economy  again looks likely to be propped  up by the primary  sector. On  that  front, the  news  is  positive.  International markets  are  exhibiting  strong  demand  for our products,  with the  result  that export  prices  are even more  buoyant  than  seemed  likely   just  three  months ago.

Lamb is  fetching   record  prices   and  dairy,  despite  some  earlier predictions that global production  would  push  down prices, has  moved  in  the  other  direction,  to  the  extent   that Westpac senior  agri-economist  Nathan  Penny   this  week  raised  his  forecast  for  Fonterra’s farmgate  milk price this  season  by  75c  to $8.50kg/MS.  That would surpass the co-operative’s previous record high of $8.40kg/MS paid in the 2013/14 season.

Fonterra’s own forecast is for a  payout  between  $7.25 and $8.75kg/MS,  with  a  mid-point of  $8. That’s ahead of its $7.54  last season. Continue reading “Why NZ should get behind Miles Hurrell as he aims to broaden Fonterra’s product range”

AUKUS – it’s all very well expressing our moral repugnance but that won’t halt China’s bullying

“AUKUS  logic  is  morally  repugnant,  and NZ  must  resist  it”  ran the  headline  over a leader- page  feature  in the  Dominion-Post recently.

In  the article beneath that advice, Thomas  Nash, co-director of the independent  think-tank, New Zealand Alternative,  argued the  AUKUS  alliance  between Australia, the  United Kingdom  and the United  States has  triggered a  dangerous line  in commentary  questioning this country’s nuclear-free  status.

Nash  says  many of the opinion writers appear to prioritise  a  militarist  worldview  but  he  contends if we  are to  enjoy a  peaceful  future, we should  do the  exact  opposite  “and  forge closer  relations  that  share our  anti-nuclear  values”.

NZ should resist  pressure to  fall  into line with  the military  power  of the  US, the  UK and  Australia.

Instead of focusing  our  diplomatic  and  security  efforts on the  Five  Eyes, he argues, we should strengthen our  relationships  in Asean  countries, Latin America,  and in our neighbouring nuclear-free Pacific  Islands. Continue reading “AUKUS – it’s all very well expressing our moral repugnance but that won’t halt China’s bullying”

Lift in commodity prices gives boost to the economy – here’s hoping we can keep on shipping our goods to market

New Zealand’s Covid-battered  economy  is  once  more sustained   by  its  primary  industries, as  international tourism languishes  and  earnings  from  its  international education arm are  all  but  invisible.

Despite  high  charges    for   shipping,     an  exchange   rate stronger  than   exporters  would  like   and  (some  would  say)  a  government   which  does  little  to  encourage  farmers, output  from the  rural  regions   is   again pumping  the  lifeblood   into   an  economy  which might otherwise be  gasping for air.

News  from  the  ANZ  this  week indicated  its  World Commodity Price Index lifted 1.5% in September, partially unwinding the previous month’s fall. The lamb sub-index is now at a record level, driven by stronger prices for all cuts.

ANZ Agri Economist Susan Kilsby reported dairy and forestry both regained some ground and aluminium and meat prices  were strong. Continue reading “Lift in commodity prices gives boost to the economy – here’s hoping we can keep on shipping our goods to market”

Covid has camouflaged cracks in the Cabinet and hidden failures in the govt’s performance

Is  the  political  tide which  Labour  rode  in  triumph  to   victory  last  year    beginning  to  ebb?  The  September  Colmar  Brunton    poll pointed  at   least  to  it  being  on the  turn.

Not  that  political  pundits    saw  it  that  way.  They  were  too  heavily  focused  on  how  National’s  leader  Judith  Collins  had  crashed to  a  new  low  point and canvassing  how  soon  the  caucus  dissidents   would  coalesce   to  overthrow  her.

Those  experts  hardly   noticed  that  Prime  Minister  Jacinda  Ardern’s  once  stellar popularity   has  moved  off  its  peak  and  is  now  down  at  44% — even  though  the  communication  skills  which  propelled  her  to  the   heights   have  been  in  daily  evidence  during  the  latest  Covid  Delta  outbreak.

The  other   curious  feature   of  the  mainstream  media’s  analysis  of  the  Colmar  Brunton sampling was  the almost  universal  view  that   the ACT party  is    sucking  the  oxygen   out  of  National,  excluding  the  rather  different prospect   that  the  parties  of  the  right  are gaining  while  support  for  the  parties of  the  left  are   now  easing, admittedly  from    an  exceptional  high. Continue reading “Covid has camouflaged cracks in the Cabinet and hidden failures in the govt’s performance”

Soaring aluminium prices look likely to encourage Rio Tinto to press for extending its Tiwai Point sweetheart deal

As  the  price  of   aluminium breaks  new  records,  closing in   on  $US3000  a  tonne,  global  giant  Rio Tinto  must  be  having  a  quiet  chuckle  to  itself.

Only  a   year  ago it  was  threatening   to  close  the  Tiwai Point  aluminium  smelter,  consigning  it  to  the  scrap  heap  with  the  loss  of  700  jobs,  directly,  and  another 1600  indirectly.  For Southland’s  economy   it  would have  been  a  mortal   blow.

At  that  time, aluminium  was  fetching  only $1800  a  tonne.

Rio  Tinto   said   the  smelter  was  uneconomic  because the  price of  electricity  was  too  high.  In July   last  year it said  it would close    the  operation  because  of  high  costs and a challenging market.

The decision to close the smelter had disappointed politicians and local power firms as it came when the COVID-19 pandemic began to cripple the economy.

Some  economists  argued  NZ  should  let  it  go  and  divert  the  Manapouri  electricity, the  cheapest  in  the  country,   to  other  uses. Continue reading “Soaring aluminium prices look likely to encourage Rio Tinto to press for extending its Tiwai Point sweetheart deal”

Latest lift in auction prices is an encouraging sign for the fortunes of dairy farmers

The good  news   was  running  in  favour  of  New Zealand’s  meat  producers early this week.  Today it is running in  favour  of our  dairy  farmers.

The  first  Fonterra  global  dairy  trade  auction in  three weeks  had  the  most  bidders  in  a  year and  charted  prices  on   a  rising  trend,  confirming  the  firm  tone  at the  previous  event   was  not  a  one-off.

The global dairy trade price index posted its biggest increase since early March, when it jumped 15%.

The key WMP product rose 3.3%, SMP was up 7.3% and both butter and cheese each rose almost 4%. Prices rose 4% overall in USD terms, although they were only up 1.2% in NZD terms, held back by a firming currency.

The average price for WMP was  US$3691 (NZ$5200) a tonne, with gains across all contract periods. The average price is sitting 24%  higher than at the same time last year. Continue reading “Latest lift in auction prices is an encouraging sign for the fortunes of dairy farmers”

South American curbs on beef exports bode well for NZ’s prospects

New Zealand’s beef exports may suddenly be  in high demand from  overseas  markets, in   the  wake  of  the world’s largest beef exporter, Brazil, suspending its beef exports to its No. 1 customer, China, after confirming two cases of “atypical” mad cow disease in two separate domestic meat plants.

China and Hong Kong buy more than half of Brazil’s beef exports.   NZ’s  sales are relatively  modest, by comparison, but  reached  36%   of  our total  beef  exports   last  season. 

The  other  big exporter  to  China,  Argentina,  in  June  decided  to   restrict  exports, with the  aim of  boosting domestic  supply.  Argentinian beef exports are to be  limited to 50% of the average monthly volume exported from July to December 2020.

Because  Argentina was the fifth largest beef exporter in 2020 and the second largest supplier to China, its cut in export volumes has the potential to have a significant impact on global beef trade.

NZ   producers  who  were  reported  to be  heading  into spring  with some confidence could  find  prices — which were  already  strong — climbing  even  higher. 

Rabobank,   in  a  recent  report,  says  pricing remained elevated over the past three months. This high pricing comes off the back of strong demand from China and suppressed beef export volumes from Australia,.

The report says Argentina’s restrictions will be reviewed at the end of this month.

Meanwhile   China  is   facing  its  own  problems  through its  poor  job  of  curbing  swine  fever. With  one  of the  world’s   highest rates  of  pork  consumption,  China’s  failure has   wrought  havoc in  its  domestic  supplies,  costing  between $50bn  and $120bn, according  to the Asian  Development  Bank.

If  China   faces  years-long  disruption in  pork  supplies, as  some reports  suggest,  ,  the  outlook for    beef producers, here   and  with other  exporters,   should  shine  even  more  brightly.