Daily Update: March 9, 2022

Start each business day with our analyzes of the most pressing developments affecting the markets today, along with a curated selection of our latest and most important news on the global economy.

China’s status in international markets could change as the country seeks to strengthen its trade partnerships with Russia while its relations with the United States and Europe remain troubled.

As Western sanctions hit the Russian economy and reduce the flow of key commodities like oil, wheat and nickel to the United States and Europe, China is monitoring developments and may strengthen its existing trade ties with Russia, according to S&P Global Commodity Insights. Industry watchers are already predicting that China will become a major buyer of Russian wheat, soybeans, metals and polymers.

According to S&P Global Ratings, the lingering trade conflict between the United States and China could restrict trade and capital flows and weigh on economic growth. US-EU trade disputes with China over solar panel manufacturing – in addition to existing supply chain disruptions – have the potential to divide the industry in the long run.

“Diversifying China’s energy supply has been central to Russia’s eastern pivot, while Russian gas is central to China’s energy diversification away from the Middle East and Australia,” he said. said S&P Global Commodity Insights in an analysis yesterday. “Russia has become China’s third largest supplier of natural gas, including pipeline gas and LNG, and is currently its second crude supplier after Saudi Arabia, which makes Beijing’s geopolitical position – somewhere between Moscow and Washington – increasingly important in the current conflict between Russia and Ukraine.

The solar energy industry has suffered from the trade impasse between the United States and China, as the two countries’ energy transitions and climate actions gain momentum. Last summer, the United States blocked imports of some Chinese solar products over allegations of forced labor in the Xinjiang Autonomous Region. Allegations that Chinese manufacturers are improperly avoiding tariffs have sparked new trade disputes between the two superpowers.

US President Joe Biden last month announced his administration’s plans to expand solar tariffs on bifacial panels and the first five gigawatts of solar cells imported each year from China and levied by the Trump administration. The United States House of Representatives passed the America COMPETES Act, aimed at combating what the United States considers China’s alleged anti-competitive business practices. The law aims to curb China’s alleged circumvention of anti-dumping and countervailing duties on solar energy components by channeling exports through other Asian economies. The regulations have drawn mixed reactions from market participants, according to S&P Global Market Intelligence. Domestic solar makers supported the commercial provisions of the bill, but energy project developers have expressed concerns about their potential cost impacts.

EU lawmakers have signaled that similar bans should apply to products made around the world using forced labor.

Demand for solar and energy storage systems has been reduced by current logistics and supply chain issues. Trade disputes have slowed U.S. solar panel imports since mid-2021, when U.S. solar power players pushed back on alleged forced labor abuses in China and urged the U.S. Commerce Department to extend tariffs on Chinese solar products, according to an analysis by Panjiva, which is part of S&P Global Market Intelligence. In the fourth quarter of last year, the number of shipping containers delivering solar panels to US ports was down 7% year-over-year, although the number was up slightly from the previous quarter.

Today is Wednesday, March 9, 2022and here is today’s essential intelligence.

Written by Molly Mintz.


Economic Research: Global Macro Update: Early Forecast Reflecting Russian-Ukrainian Conflict

S&P Global Ratings provides an abridged global off-cycle macroeconomic forecast in response to market developments related to the Russian-Ukrainian conflict. These views, which are a preview of its upcoming credit conditions forecast, are designed to give S&P Global Ratings analysts and stakeholders a first impression of the macro effects of the conflict.

—Read the full report from S&P Global Ratings

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Capital markets

No easy answer: sector and factor responses to US rate hikes

Although higher rates are generally considered negative for risky assets, the early stages of a monetary tightening cycle have never been disastrous for the US stock market. However, while the overall market may be doing just fine, the same may not be true for the various sectors and factors that make up a broad benchmark like the S&P 500®. The historical period for which S&P Dow Jones Indices has comprehensive data for the various S&P 500 GICS® sectors and factor indices is approximately three decades. However, the rate cycle is moving slowly, with only four “take-offs” times since 1994.

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

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International trade

Immediate U.S. ban on Russian energy will have biggest impact on oil flows

The United States will immediately ban imports of Russian oil, LNG and coal in response to its war on Ukraine, President Joe Biden announced on March 8, calling the flows a “main artery of the Russian economy. while predicting that the policy would further increase global and US flows. Fuel prices. Crude futures rallied on reports that a ban was imminent, but fell back after the announcement. NYMEX first-month crude stood at $123.70/bbl on March 8, up $4.30, while ICE first-month Brent was at $127.98 /b, up $4.77. The ban on new transactions for Russian energy imports takes effect immediately, but the United States will give companies 45 days to terminate any existing contracts, a senior Biden administration official said in a call telephone with journalists.

—Read the full article from S&P Global Commodities Outlook

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Solar energy accounts for approximately 58% of resources seeking to connect to the PJM system

Solar power generation has overtaken natural gas in PJM Interconnection’s resource connection queue, tripling over the past two years to nearly 94,000 MW, or approximately 58% of resource queue. queuing, with gas-fired plants constituting 14.8% of queuing generation. In 2021, PJM’s board approved $920 million in 118 core transmission projects, according to the network operator’s 2021 regional transmission expansion plan which was released on March 8. The RTEP annual report conveys the results of the planning study throughout the year and explains the rationale for improving the transmission system. Needs.

—Read the full article from S&P Global Commodities Outlook

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Energy and raw materials

Listen: IEF chief says crisis in Russia exacerbates risks from insufficient upstream investment

The Russian crisis has upended the energy world significantly, posing massive new risks to supply, demand and prices. Joe McMonigle, Secretary General of the International Energy Forum, joined the latest episode of Capitol Crude to discuss some of these important changes. He sees no real disruptions in oil supply resulting from the Russian crisis so far, and he continues to see insufficient upstream investment as the main risk to energy markets going forward. He was also asked about the current dynamic between OPEC+ and oil-consuming countries, and whether the Russian crisis is changing the scope or timing of the energy transition.

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

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Technology and media

Next in technology | Episode 55: The What, Where, and Why of Web3

We are witnessing an evolution of digital transactions whose different elements are grouped under the banner of Web3. Analysts Jackie McGuire and Jordan McKee join host Eric Hanselman to explore the merger of blockchain, cryptocurrencies, NFTs, and more. Billions of dollars change hands through decentralized transactions, but they only flow through a few parties that define markets with early-stage technologies. It’s wild and woolly today but changing rapidly.

—Listen and subscribe to Next in Tech, a podcast from S&P Global Market Intelligence

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Events to come

Live webinar and Q&A: The Russian-Ukrainian military conflict and its ripple effect on ratings and the global economy

Please join senior analysts from S&P Global Ratings and its Chief Global Economist for a live interactive webinar on Friday, March 11, during which they will provide their thoughts on the impact of the Russian-Ukrainian military conflict and its ripple effect on ratings and the global economy. Key discussion points include the global macroeconomic impact and fallout from the military conflict; sovereign rating actions and expected rating trajectories; the impact of sanctions on Russian banks and the fallout on European financial institutions, including insurance companies; and the impact of sanctions on Russian companies and related entities.

—Register for the webinar S&P Global Ratings

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