BNN - Thursday, May 23, 2024 - 03:00 p.m. (ET) - Segment #1

it. Sullivan's crossing new episode on ctv [ ] >> Andrew: hi, there. Welcome to "commodities." >>> Let's kick off with the energy complex as always. And we have seen a bit of pressure on crude over the past couple of days. In fact oil trading near three-month lows. One factor weighing on crude prices U.S. manufacturers have been seeing a jump in prices for a whole bunch of inputs and of course that could raise the threat of a pick-up in goods inflation -- goods inflation. The fed yesterday indicating that it's still not fully reassured that inflation is under control. >>> Let's have a look at oil over the past year. On the political front in the U.S. the senate democrats say they are opening an investigation into a meeting involving former president trump with oil and gas executives last month and they say they wanted to determine whether Mr. Trump offered a "policies for money transaction" and pe did in fact ask for a billion dollars in campaign contributions so could he delete president biden's climate regulations. >>> Let's have a look now at where the metals are trading. Reuters says there's been a vicious short squeeze playing out in new york. That helped push copper to record highs just a few days ago. Copper slipping once again. But there is a massive scramble apparently to move metal over to warehouses in the united states to cover people's short positions. Here is an interesting take, though, from reuters. They reckon that the world copper stockpile has now gone to a three-year high. In china plenty of copper and we are hearing reports that users of the stuff in particular middlemen manufacturers who would say take copper and make pipes and fitting for long things like air conditioners are refusing to buy it at these prices.

>>> And finally let's have a look at the bloomberg dollar index, see how the U.S. currency is doing. Marginally higher today but it has been weaker over the past few weeks and that tends to be good for commodities. >>> Going to take a break. Plenty more action in the world of energy and materials coming up. [ ] (Upbeat instumental music)Canadians are facing a newnormal with interest rat and investment options. The Capital Direct OneIncome Trust is in a growing asset class thatprovides stability and is income-generating forportfolios. Here from Capital Direct areEire Gorman and Aaron Narayan, great to see you again. Thank you for havingus back, Mark. Eire,how are interest rates impacting the Capital DirectOne Income Trust? It's really important tounderstand the timeline of the loans that make upthe income trust. These are fixed-term vehiclesthat don't have the volatilityof a variable product. That means we're less-vulnerable to interest rate changes for18-24 months. Aaron, what arethe pros and cons for the trust if interestrates go down? First off, we love stability. Looking forward, we believe interest rates willact in our favour. If rates go down then (Unclear)or now Cora drops which means the cost of capitalis actually cheaper. And what if interest ratesstay around these levels? Aaron: If interest ratescontinue to stay the same we continue to kick out similarreturns as we have been for our investors which makethem extremely happy. So the trust holdsresidential mortgages. Based on what you're seeinghow would you say Canadian homeowners are coping in thisnew interest rate environment? This is a good news story. Canadians arefinding ways to cope. Our mortgage investments andflexible lines of credit have allowed homeowners toconsolidate at a lower rate and continue todo the things they love while owning their own homes. As we said here, homeownershipis so important to Canadians and we've seen the choices thatthey have made to remain in this privileged category. And it's also important to notethat throughout this new normal we've kept our loaned valueat a very comfortable 52%. If advisors or investorsare interested how do they reach you? Yes, Portfolio Managers andFinancial Advisors can find us atincometrustone.com. And for direct investorsyou can call us anytime at 1-800-625-7747. . It's spring time in paris and the kings and queens of clay have come out to play Tennis played on another planet That is a piece of art right there Ooo lala! Roland garros on tsn and tsn+ [ ] >> Andrew: new research from bloomberg nes indicates that canadian crude oil is becoming more competitive in terms of production costs and the opening of the transmountain pipeline expansion is good news. Let's get more on this pricing story. We are joined by ty lue of bloomberg nes. Thanks very much for coming on the show. >> Thank you for having me. >> Andrew: just give us a quick bit of context here. How does canada's oil industry fit into the global oil market? I mean we are one of the world's biggest producers. >> Yes, yes, for sure.

>>> Canada's definitely a major player in the global oil market. If you put that into context if you look at some of the major countries in opec such as I reckon uae they have production capacity of 4.8 million barrels a day and 4.6, 4.7 million barrels a day respectively. And canada has 4.6 million barrels a day. So canada is definitely up there with the big boys of opec. Moreover, the U.S. imports about 60% of its oil from canada so U.S. refiners are also reliant on U.S. -- on canadian oil. >> Andrew: we are looking at a chart here, it's quite busy, but it's fascinating that canadian in situ oilsands, the break-even now about $42 a barrel comparing favourably with quite a few jurisdictions. >> Yes, yes for sure. If you look at canadian oilsands like two major categories the mining operations which are really open style, open pit mining and then those are very expensive. Those are about $74 per barrel. Like you said if you look at the in situ processes they can break even 40 to $50 per barrel. So if you compare that to the rest of the world in terms of break-evens they are right there in line very competitive. >> Andrew: and what are the big problems of course with the mining is that it's got big up front costs. It is hard to compare, isn't it? Because oilsands it's sews different as you know from say shale it. Has these long reserves. >> Yes, yes for sure. So canadian -- oilsands projects they have a lot up front big up front capex but the thing is once you get them up and running they can run and run for a long time. If you compare it to the U.S. shale it's not really apples to apples comparison because in U.S. shale because you have very fast decline rates in the beginning, so you have to drill many wells just to keep production [indiscernible]. In situ projects are pretty much in line with the break-evens for U.S. shale. Shale break evens anywhere from $35 to $50 per barrel but if you are talking about the open pit mining projects of the canadian oilsands much more expensive. >> Andrew: what are the big swing factors that affect oilsands costs? >> I think the outlook for canadian oilsands probably two big swing factors. The first one is on emissions. So oilsands are very emissions intensive operations and the emission [indiscernible] that were in the past years would probably limit growth so that puts a lot of uncertainty for the oilsands industry.

>>> On the second uncertainty basis are differential for the same commodity but in different locations. And because historically canada is a very infrastructure constrained market. They don't have enough -- they don't have sufficient take-away capacities so what happens is we have seen a lot of volatility in canadian oil process or oil basis from time to time. But the new pipeline that came online should go a long way in helping alleviating that. >> Andrew: we had better leave it there, tai, thanks for coming on the show. >> Thank you. >> Andrew: that's tai lu of bloomberg nes. >>> A copper company solariser resources just walked away from a financing deal with a chinese mine they are week after facing a seemingly endless review by the federal government. Of course the federal government has sought to curb chinese especially foreign state-owned investments in our natural resources. China's been the main target. Our guest says we are losing ground to china in strategic metals and in some ways our policies are playing into their hands. We are joined by heather pero director of natural resource at the macdonald laurier institute. Heather, thanks for coming on the show. >> Thank you for having me. >> Andrew: one criticism I've heard voiced about canada's restrictions on chinese purchases of natural resource firms or stakes in them is that there isonfusion. It's not clear what rule book the government is playing to. >> Yes, absolutely. So try to clear things with up the invest canada act. We are all sharing these concerns about china. We are seeing that they are manipulating the market and we do need to reduce our dependence on them but at the same time they are the biggest player investing in the mining industry. It is certainly the inspector in a pick and will then the federal government in a pickle. It's not illegal for chinese investors to invest in canada. It's not illegal for canadian miners to sell to china and yet we do know there is manipulation there and security concerns and so we are trying to find the way forward but it does start to feel like it is being done on a case by case basissies, that there is no clarity. If you are headquartered in canada what you can and cannot do and it depends on the political winds at the time. >> Andrew: because they have acted, they have restricted a deal that involved lithium in argentina for example with no clear connection to canada's resource sector. >> Well, and this is where it's becoming again like you say it isn't clear for junior miners. Is there a risk to headquartered canada? Is it a risk to negotiate the chinese. Is it only for critical minerals. Are there other sales you can make. And so there is legitimate concern that it isn't clear that we know that there will be some, you know, political oversight but it depends on the case by case basis and that's not good for making investment decisions. >> Andrew: what would you like to see canada do, though, to become a player in critical minerals? It's kind of an annoying fray. It's so broad, I know. Is carp critical mineral? Going with the vagueness there, sorry about that. But what principles would you like to see canada follow here? >> So I think we have allowed or the chinese have certainly done a good job from their perspective of having that dominance, of having their hands in all the pots of many important critical minerals. I will say for them the ones that serve electric vehicles or batteries or solar panels which are so important to their economy. That now we appreciate that we are falling behind and we saw what happened to germany and russia with the [indiscernible] pullout from there and it caused a lot of pain. In the short-term you say this is nice cheap russian gas but in the long-term you see why that security risk is not good. So I think with the canadian response has mainly been is to punish, to use sticks to prevent companies from working with chinese selling to the chinese. I think the direction we have to go is buy carrots, provide other sources of a friendly investment so that they continue to invest, that they continue to grow, that they have buyers that don't happen to be chinese and not just punish them when they do work with the chinese. >> Andrew: one point you've made is that in some ways we are playing into their hands. You say we are doubling down on energy and industrial systems that depend on chinese processes rather than ones in which we are self-sufficient. What do you mean by that? >> So I mean it's well documented that the chinese you know control the critical minerals. They don't control the mining a lot world's biggest miner but when they don't control the mining they control the processing and we are seeing

Copyright protected and owned by broadcaster. Your licence is limited to private, internal, non-commercial use. All reproduction, broadcast, transmission or other use of this work is strictly prohibited.

Transcripts