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China Emerges Nigeria’s Leading Source of Imports with $1.6bn

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  • China Emerges Nigeria’s Leading Source of Imports with $1.6bn

It emerged at the weekend that China is now Nigeria’s leading source of imported goods with an import value of $1.6 billion (N478 billion) equivalent to 20 per cent of Nigeria’s total imports.

This is, according to the merchandise trade data released by the Nigerian Bureau of Statistics (NBS) in its latest foreign trade statistics for the third quarter of 2016.

According to the NBS data, Belgium emerged the second largest source of imports in the review period, with an import value of $1.1 billion (N331billion).

The NBS data put the total value of trade at N4.72 trillion, representing an increase of 16 per cent on the preceding quarter.

The data, however, showed a trade deficit of N104 billion, which compared with N482 billion in the second quarter of 2016.

Analysts at FBN Quest noted that the increase in imports in a recession in the first three quarters of last year was due to the weakness of the naira exchange rate.

Analysis of the NBS data showed that total exports stood at N2.31 trillion in Q3 last year while the total value of imports was N2.41trillion. This represented increases of 29 per cent Quarter-on-Quarter (Q/Q) and 6 per cent q/q respectively.

A further analysis of the NBS report showed that the value of imports from other African countries amounted to $290 million (N88 billion)

However, Economic Community of West Africa States (ECOWAS) countries accounted for just 10 per cent of Nigeria’s total trade.

In terms of exports, crude oil was the largest contributor with a total value of N1.9 trillion ($6.2 billion). Meanwhile, the total value of agricultural products exported stood at N14.4 billion ($50 million).

Frozen shrimps and prawns accounted for 37 per cent and sesame seeds 34 per cent of total agricultural exports in the third quarter of 2016.

Experts believe the Federal Government of Nigeria (FGN)’s import substitution strategy will have a significant impact on imports in the years ahead.

“Nigeria is heavily dependent on imports. However, given the current foreign exchange illiquidity, we expect the FGN’s import substitution strategy to have a significant impact over time. Furthermore, consistent growth in agriculture and a significant boost in the manufacturing sector should make the country more export-oriented in the medium term,” said analysts at FBN Quest.

The federal government had recently reduced import duties on more than 89 items in various sectors of the nation’s economy.

The reduction approved by President Muhammadu Buhari, is to promote development in critical sectors of the economy, and is part of its 2016 Fiscal Policy Measures.

A circular issued by the Ministry of Finance said the measures supersede the 2015 Fiscal Policy Measures.

According to the circular signed by the Minister, of Finance, Mrs. Kemi Adeosun, the directive was made up of the Supplementary Protection Measures (SPM) for implementation together with the ECOWAS CET 2015 – 2019.

The minister explained that the ECOWAS CET, which will cover the 2017 to 2019 fiscal periods, is composed of three categories made up of an Import Adjustment Tax list of 173 tariff lines, a national list consisting of 91 items and an import prohibition list of 25 items, which is applicable to certain goods originating from non-ECOWAS member states.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Crude Oil

Crude Oil Pulled Back Despite Joe Biden Stimulus

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Crude Oil Pulled Back Despite Joe Biden Stimulus

Crude oil pulled back on Friday despite the $1.9 trillion stimulus package announced by U.S President-elect, Joe Biden.

Brent crude oil, against which Nigeria’s oil is priced, pulled back from $57.38 per barrel on Wednesday to $55.52 per barrel on Friday in spite of the huge stimulus package announced on Thursday.

On Thursday, OPEC, in its latest outlook for the year, said uncertainties remain high in 2021 with the number of COVID-19 new cases on the rise.

OPEC said, “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.”

Governments across Europe have announced tighter and longer coronavirus lockdowns, with vaccinations not expected to have a significant impact for the next few months.

The complex remains in pause mode, a development that should not be surprising given the magnitude of the oil price gains that have been developing for some 2-1/2 months,” Jim Ritterbusch, president of Ritterbusch and Associates, said.

Still, OPEC left its crude oil projections unchanged for the year. The oil cartel expected global oil demand to increase by 5.9 million barrels per day year on year to an average of 95.9 million per day in 2020.

But also OPEC expects a recent rally and stimulus to boost U.S. Shale crude oil production in the year, a projection Investors King experts expect to hurt OPEC strategy in 2021.

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Crude Oil

OPEC Says Uncertainties Remain High in 2021

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OPEC Says Uncertainties Remain High in 2021

The Organization of the Petroleum Exporting Countries (OPEC) on Thursday said global uncertainties remained high going forward in 2021 but kept its oil demand forecast unchanged.

In the cartel’s latest oil outlook for 2021, oil demand is expected to increase by 5.9 million barrels per day year on year to 95.9 million barrels per day. The prediction was unchanged from December’s assessment.

However, OPEC and allies, said: “Uncertainties remain high going forward with the main downside risks being issues related to COVID-19 containment measures and the impact of the pandemic on consumer behavior.”

“These will also include how many countries are adapting lockdown measures, and for how long. At the same time, quicker vaccination plans and a recovery in consumer confidence provide some upside optimism.

Crude oil rose to $57 per barrel this week after incoming US President Joe Biden announced it would inject $1.9 trillion stimulus into the world’s largest economy.

But the recent rally in the commodity and stimulus announcement is expected to boost US crude oil output and disrupt OPEC+ production cuts strategy for the year.

The 2021 supply outlook is now slightly more optimistic for U.S. shale with oil prices increasing, and output is expected to recover more in the second half of 2021,” OPEC said.

Still, OPEC, in its forecast “assumes a healthy recovery in economic activities including industrial production, an improving labour market and higher vehicle sales than in 2020.”

“Accordingly, oil demand is anticipated to rise steadily this year supported primarily by transportation and industrial fuels,” the group said.

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Crude Oil

Brent Crude Oil Rose to $56.25 Per Barrel

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Brent Crude Oil Rose to $56.25 Per Barrel

Oil price surged following the declaration of Joe Biden as the President-elect of the United States of America last week after Trump’s mob invaded Capitol to disrupt a joint Senate session.

Also, the large drop in US crude inventories helped support crude oil price to over 11 months despite the second wave of COVID-19 crushing the world from Asia to Europe to America.

Brent crude oil, against which Nigerian Crude oil is priced, rose to $56.25 per barrel on Friday before pulling back to $55.422 per barrel on Monday during the London trading session.

Experts attributed the pullback to the rising number of COVID-19 cases in Asia with about 11 million people already locked down in Hebei province in China.

Covid hot spots flaring again in Asia, with 11 million people (in) lockdowns in China Hebei province… along with a touch of FED policy uncertainty has triggered some profit taking out of the gates this morning,” Stephen Innes, chief global market strategist at Axi, said in a note on Monday.

China, the world’s largest importer of crude oil, has joined the United Kingdom and others declaring full or partial lockdown to curb the second wave of COVID-19.

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