Benchmark crude oil prices continue to rise after a steady increase in the first quarter.
Market participants are looking forward to the meeting of the OPEC+ Ministerial Monitoring Committee later this week.
Quotations for June futures for Brent on the London ICE Futures exchange as of 8:05 a.m. ET amounted to $87.25 per barrel, which is $0.25 (0.3%) higher than the level at the close of the previous trading. By this time, the price of May futures for WTI in electronic trading on the New York Mercantile Exchange (NYMEX) had risen by $0.28 (0.3%) to $83.44 per barrel.
The NYMEX and ICE Futures were closed on Friday, March 29, due to Good Friday.
In March, Brent rose by 4.6% and WTI by 6.3%, with the rise recorded for the third month in a row. In the first quarter, prices rose by 13.6% and 16.1%, respectively, according to Dow Jones Market data.
In 2023, Ukraine became one of the top three exporters of chocolate to the European Union, supplying 22 thousand tons of the product, Eurostat reported. According to its data, Ukraine accounted for 13% of EU chocolate imports.
Only Switzerland (62 thousand tons, 36% share) and the United Kingdom (61 thousand tons, 36% share) supplied chocolate to the EU.
At the same time, the EU countries supplied 867 thousand tons of chocolate and chocolate bars to foreign markets.
Germany was the largest exporter, with 221 thousand tons, accounting for 26% of the total. The second place was taken by the Netherlands with 123 thousand tons and 14% respectively, and the third place was taken by Poland with 115 thousand tons and 13%. Belgium, known for its sweets, exported 96 thousand tons (11%).
The five largest export partners outside the EU included: The United Kingdom, which bought 315 thousand tons of chocolate from the EU (36%); the United States – 72 thousand tons (8%); Russia – 65 thousand tons (7%); Canada – 31 thousand tons (4%); Australia – 27 thousand tons (3%).
Finnish company Posiva Solutions has developed a concept for the construction of a deep disposal facility for the decommissioned Ignalina Nuclear Power Plant (INPP) in Lithuania, the plant said in a statement.
According to INPP Director General Linas Baužys, quoted in the statement, this is an important stage in the construction of deep burial facility.
“This month we started public consultations with municipalities. From now on, as we continue them, we will have an idea of how the future radioactive waste burial ground will physically look like and what specific measures will be taken to ensure its safety,” Baužis said.
The burial site will be several hundred meters deep. It will be an engineering structure designed to safely isolate radioactive waste. It is planned to be operational in 2068 and its location will be approved by 2047. The concept will be adjusted depending on the progress of the project development.
INPP signed a contract with a Finnish company for the amount of 262 thousand euros in January 2022. According to calculations made at that time, only the construction of of the burial ground will cost 1 billion euros, its use – another 900 million euros.
As reported, INPP was shut down on December 31, 2009, the term of work to stop its operation – until 2038. Lithuania pledged to close the plant upon joining the European Union, which co-finances these works.
The plant is equipped with the world’s most powerful Russian RBMK reactors, built in the 1980s. Work on dismantling the RBMKs is expected to start in 2028. INPP will issue separate tenders for this work.
Ignalina Nuclear Power Plant, LITHUANIA, Posiva Solutions, RADIOACTIVE WASTE
Ukraine’s real gross domestic product (GDP) grew by 5.3% in 2023 compared to the previous year, when it fell by 28.8%, according to preliminary data released by the State Statistics Service on Thursday.
According to the data, nominal GDP last year amounted to UAH 6 trillion 537.8 billion, with a change in the deflator of 18.5%.
The State Statistics Service clarified that in the first quarter of 2023, the decline in real GDP compared to the same period last year amounted to 10.3% of GDP, after which it grew by 19.2% in the second quarter, 9.6% in the third and 4.7% in the fourth.
Earlier, in December last year, the statistical agency estimated a 10.5% decline in the first quarter, followed by a 19.5% increase in the second and a 9.3% increase in the third.
Nominal GDP in the fourth quarter amounted to UAH 1 trillion 933.0 billion, compared to UAH 1 trillion 778.4 billion in the third quarter, UAH 1 trillion 463.9 billion in the second quarter and UAH 1 trillion 362.5 billion in the first quarter, according to the State Statistics Service.
As reported, in January, the National Bank of Ukraine estimated the country’s GDP growth in 2023 at 5.7%, and its nominal value at UAH 6.51 trillion. The NBU maintained its GDP growth forecast for 2024 at 3.6% (nominal UAH 7.58 trillion), slightly downgrading it for 2025 from 6.0% to 5.8%. At the same time, for the first quarter of this year, the NBU improved its GDP growth forecast to 7.1% from 5.4%, expecting it to slow to 4.8% in the second quarter.
When approving the draft state budget for the second reading in early November 2023, the government improved its estimate of GDP growth last year from 2.8% to 5%, but downgraded it for 2024 from 5% to 4.6%. According to the Ministry of Economy, GDP growth in January-February this year was 3.6%.
In its updated EFF program with Ukraine, the IMF estimated real GDP growth in 2023 at 5% and nominal GDP at UAH 6.5 trillion. It forecasts a slowdown to 3-4% this year, and an increase in nominal GDP to UAH 7.75 trillion.
For more details on macroeconomic indicators of Ukraine and the world, please see one of the video analyzes of the Experts club think tank – https://youtu.be/w5fF_GYyrIc?si=Ymo-FlMFNGfLLdK-
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Ukraine’s Debt Sustainability Analysis (DSA), conducted by the International Monetary Fund (IMF) as part of the third review of the EFF Extended Fund Facility (EFF), provides for a partial debt write-off to achieve such sustainability, so it is likely that such a write-off will be one of the points of Ukraine’s expected soon proposal to restructure its Eurobonds, analysts interviewed by Interfax-Ukraine believe.
“The IMF sees our public debt as sustainable with a debt/GDP ratio of 82% in 2028. At the same time, the IMF predicts that without restructuring, Ukraine’s public debt will grow to 91.2% of GDP in 2028, which means that to achieve sustainability, Ukraine should reduce this debt by 9.2% of GDP, or about $21 billion,” said Oleksandr Parashchiy, head of research at Concorde Capital.
“From this we can conclude that the IMF sees the potential to write off the state debt this year by about $15 billion. This is a very large amount, given that the main object of such a write-off should be Eurobonds, the total amount of which is $21.2 billion,” he said in a comment to Interfax-Ukraine on Thursday.
ICU Group financial analyst Mykhailo Demkiv believes that the memorandum is vaguely written, that it is impossible to clearly define the parameters of the restructuring, and everyone can see what they want there, but the market is expecting the debt to be written off, “except for some super-confident people.”
According to him, the IMF may be deliberately giving the Ministry of Finance a kind of backlash in the negotiations so as not to bind it too much and put it in a worse position.
“Optimists expect 30-40% (of write-offs), pessimists expect 40-50-75%. Personally, I expect that there will be a write-off, I am guided by 40%,” the expert told the agency. According to him, proposals to write off 70-75% contradict the statements of the Ministry of Finance about plans to return to the market.
Demkiv added that he does not expect the Ministry of Finance to make payments on Eurobonds (repayment + interest payment) until 2027, although there are optimists who see room for this in the DSA.
“As for the warrants, I don’t know if they will be included in the restructuring perimeter. There have been reports that investors want to block the restructuring of the guaranteed debt (of Ukrenergo) so that these securities are not included in the perimeter,” the ICU Group analyst also noted.
According to Paraschiy, it is right that the IMF excluded debts to Russia in the amount of about $3.6 billion (principal) to analyze Ukraine’s debt sustainability, because it is obvious to everyone that Ukraine will not repay or service them.
“What I see as the problem with the IMF’s calculation (not worrying about the 82% in 2028) is the calculation of the public debt for 2028. If we calculate all of Ukraine’s debt receipts, which the IMF itself predicts, and take into account all exchange rate differences, it turns out that Ukraine’s public and guaranteed debt at the end of 2028 will be approximately 87.3% of GDP,” added the head of Concorde Capital’s analytical department.
He explained that according to these calculations, Ukraine will need to reduce its debt by less than $9 billion (or about $6.4 billion this year) rather than $21 billion to reach the ratio of 82% of debt to GDP in 2028.
“That is, the difference/error in the forecast is quite significant for the amount of potential write-off – more than twice. It is not clear how the IMF explains this difference, except that it has planned some contingent liabilities and “other” for the equivalent of 4.3% of GDP,” Parashchiy said.
According to Demkiv, the positive reaction of Ukrainian Eurobond holders to the publication of the updated memorandum with the IMF, which resulted in a 10% rise in the cost of the securities, up to 30-38 cents per dollar, is due to the IMF’s improvement of its assessment of Ukraine’s debt at the end of last year from 87.1% of GDP to 82.9% of GDP.
“If the value of the debt improves, then less needs to be written off. And another point that some have noted is that the wording on the debt-to-GDP parameter has become a little softer: from “must” to recommended,” the ICU analyst explained, adding that such a positive reaction could also be influenced by the allocation of EU funds and improved prospects for receiving funds from the United States in April.
As reported, the IMF in an updated memorandum on the results of the third review of the program with Ukraine noted that “a decisive restoration of debt sustainability and maintenance of adequate international reserves will require a fairly deep debt adjustment.” The Fund added that even with such a “deep adjustment,” restoring debt sustainability would also require substantial fiscal adjustment and exceptional donor financing.
The documents do not explicitly mention the desirability of partial debt relief, but the IMF states that the public debt should be reduced to 82% of GDP by 2028 and to 65% of GDP in 2033, while under the baseline scenario it will be higher by almost 9 percentage points and almost 6 percentage points, respectively, in these years.
The restructuring goals also state that gross financing needs should average 8% of GDP in the post-program period (2028-2033).
In addition to reducing the debt to 82% of GDP by 2028, the restructuring also aims to ease the debt service flow on external obligations to 1-1.8% of GDP (from $1.9 billion in 2024 to $3.5 billion in 2027).
According to the third review, the Ukrainian authorities and their debt advisors are finalizing technical work to design a debt operation that meets the objectives of the debt sustainability program. They plan to present initial proposals to creditors in the near future, in line with their intention to complete the restructuring by mid-year and before the debt moratorium expires in August 2024.
“As part of the treatment of external commercial debt, which we plan to complete by mid-2024, we will strive to obtain adequate debt relief, including from the restructuring of external commercial debt, in 2024 and beyond in accordance with the program parameters,” the Ukrainian authorities said in an updated memorandum on financial and economic policy.
As reported, on the eve of the IMF’s approval in late March 2023 of a new four-year, $15.6 billion EFF program for Ukraine, the Group of Official Creditors of Ukraine (the Paris Club) provided financial guarantees for this program following a meeting with representatives of the IMF and the WB. They provide for the extension of the standstill on Ukraine’s debt payments to the Group’s countries for the period of its validity (2023-2027). The condition for such a postponement is similar actions on the part of Ukraine’s private external creditors, mainly Eurobond holders.
Recently, Reuters reported that foreign holders of Ukraine’s Eurobonds are negotiating the formation of a creditors’ committee to conduct a restructuring dialogue that could begin on the eve of the IMF’s spring meeting scheduled to begin on April 17 in Washington.
Dry, warm weather is forecast for April 1 in Ukraine. According to the Ukrainian Hydrometeorological Center, there was precipitation on Monday. The wind is mostly southerly, 7-12 m/s, in the Carpathians, during the day and in the western regions, gusts of 17-22 m/s in some places.
The temperature at night will be 5-10° Celsius, in the western regions 9-14°, during the day 19-24°, in the highlands of the Carpathians and the coast 14-19°.
No precipitation in Kyiv on Monday, April 1. South wind, 7-12 m/s. The temperature will be 8-10° Celsius at night and 21-23° Celsius during the day.
According to the Borys Sreznevsky Central Geophysical Observatory. On April 1, the highest daytime temperature in Kyiv was 20.3 in 2016, and the lowest nighttime temperature was -8.7 in 1931.
On Tuesday, April 2, there will be no precipitation in Ukraine, only at night in the Carpathians and Transcarpathia, during the day in the western and some northern regions there will be short-term rains, some thunderstorms.
South wind with a shift to the west, 7-12 m / s, at night in the Carpathians, during the day in Ukraine, in some places gusts of 15-20 m / s, in the highlands of the Carpathians 25-30 m / s.
The temperature will be 9-14° at night, 19-24° during the day, in the western regions and on the coast in some places 11-16°.
In Kyiv on Tuesday, April 2, partly cloudy weather, without significant precipitation. South wind with a shift to the west, 7-12 m / s, gusts of 15-18 m / s during the day. The temperature at night will be 12-14°, during the day 21-23°.
