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Support margins as Russia naphtha imports to Asia drop to a 1-year-low
The flow of Russian naphtha to Asia fell to an all-time low in February after new drone attacks on Russian refinery infrastructure. This led to higher prices in the East for the raw plastic material. Naphtha can be used as a feedstock to produce petrochemicals, which are then used in the production of plastic bottles, electric vehicle components and consumer products. Since Washington announced tougher sanctions against entities in the Russian oil business, Asian refiners have seen their profits from making naphtha increase by around 40%. Industry sources have said that the risk of Russian supplies could complicate a global naphtha market already complex. Since 2022, when Europe banned Moscow’s oil products imports due to the Ukraine conflict, Russia has moved most of its exports from Europe to Asia. The preliminary data from LSEG/Kpler ship tracking showed that Russian naphtha exported to Asia in February fell to a record low of 480,000-580,000 tonnes. This trend is likely to continue until the end of May or early June, when supplies will improve after Russian refineries return from their seasonal maintenance. The data shows that the major buyers of Russian naphtha are companies in China, India and Taiwan. FGE analyst Yew Jiing Seah stated that the decline in exports was likely due to increased drone attacks by Ukraine on Russian refineries late in January and early in February. The Volgograd refinery, which produces 340,000 barrels per day, was also attacked as were the Ryazan refinery with 378,000 barrels per day and the Ilsky refinery at 134,000. Traders in Russia said that some cargoes of January loadings were moved to February due to stormy weather at Black Sea ports. This contributed to a reduction in exports. The traders said that Trump's new sanctions may cause some delays in March loadings. The Red Sea and Strait of Hormuz tensions in the past two years have forced many shipments via east of Suez, to reroute through Africa. This has increased costs and reduced the discount on Russian Naphtha. A Singapore-based trader of naphtha said that Asia's margins for naphtha have also increased due to concerns about disruptions in the supply of Iranian condensate as a result Trump's new sanctions. Condensate, an ultra-light oil, is typically processed in splitters to make naphtha. Profit margins in the refining industry Naphtha prices rose to $120 per ton compared to Brent crude on Thursday. They were $85.60 before the announcement of sanctions. A petrochemical dealer in India said that the current strength of naphtha margins was due to Russian supply risks, but Asia's demand remained subdued as a result of maintenance at crackers in India. The traders refused to name themselves as they weren't authorized to speak with the media. Analysts said that exporters from Africa and the Middle East will likely increase shipments to the east, taking advantage of the shortfall in naphtha supplies. According to Kpler, the share of Algerian Naphtha that has arrived in Asia this month is already 28% or 282,000 tonnes higher than it was in January.
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Oil prices drop for the first time since November, as economic uncertainties weigh
The oil prices fell on Friday and are headed for their first monthly decline since November as the uncertainty about global economic growth, fuel demand, and Washington's threats of tariffs outweighed concerns over supply. Brent crude futures for May, the more active contract, fell 31 cents or 0.4% to $73.26 per barrel at 0133 GMT. Meanwhile, U.S. West Texas Intermediate crude crude dropped 30 cents or 0.4% to $70.05 per barrel. Front-month Brent expires later on Friday. Both benchmarks will post their first monthly decrease in three months. Tony Sycamore, IG's market analyst, said that a number of factors, including fears of an economic slowdown in the U.S. and tariffs as well as OPEC+ plans for increased supply in April, are reducing investors' appetite for risk and lowering prices. He said that the only argument against WTI was that it has fallen significantly. Technical charts show WTI to be well supported between $65-$70 per barrel. Donald Trump, the U.S. president, announced on Thursday that his proposed tariffs of 25% on Mexican and Canadian products will go into effect on March 4 along with an additional 10% duty on Chinese goods. Data showing that U.S. unemployment claims rose more than expected the week before also weighed on investor sentiment. Another government report confirmed the slowdown in economic growth in the fourth quarter. Oil prices rose more than 2% in the US on Thursday, as concerns about supply resurfaced following Trump's revocation of a license granted to U.S. major Chevron for operations in Venezuela. Sources close to the discussions said that the cancellation of the license could lead to a new agreement being negotiated between the U.S. oil producer and the state-owned PDVSA for the export of crude to other destinations than the United States. Eight OPEC+ source said that OPEC+ members are debating whether or not to increase oil production in April, as planned, or to freeze it, as they struggle to understand the global supply situation due to new U.S. sanctions against Venezuela, Iran, and Russia. Florence Tan reports.
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California wildfire fund could shield Edison's balance sheet from fire claim claims, says company
Edison International's CEO stated on Thursday that California's wildfire fund of $21 billion may protect the balance sheet of Edison International if it is determined that equipment owned by Edison's electric utility was responsible for a deadly Los Angeles blaze last month. Southern California Edison is one of California's largest utilities and is currently facing an increasing number of lawsuits that claim its power lines were responsible for the Eaton Fire near Pasadena. Edison International CEO Pedro Pizarro told investors that the California Wildfire Fund has a total of $21 billion, and is largely untapped. This fund allows utilities in California to recover wildfire-related claim payments. He said, "We have faith in the fund." Eaton Fire is one of many fires that erupted in Los Angeles on 7 January, causing the costliest natural disaster in American History. The cause of the major fires including Eaton has not been revealed. Edison executives told investors on a conference called that SCE is likely to begin burying additional lines underground in an effort to mitigate wildfires. Investors are worried that the company may face massive liability claims. The shares of Edison International have dropped 35% since the wildfires began.
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Trade frictions with China are sparked by RPT-Trump’s new tariffs
The giant Chinese steel industry faces increasing pressure this year on its exports as it deals with another wave of trade frictions caused by President Donald Trump's tariffs. Trump announced earlier this month that he would impose 25% tariffs starting March 12 on all imports of steel and aluminum into the United States. List of countries that announced plans or measures in response to Trump's new tariff proposals. VIETNAM Vietnam announced on Friday, March 7, that it will impose a temporary antidumping levie of up to 27,83% on certain steel products imported from China. The announcement that Vietnam had launched an anti-dumping investigation in July surprised the market because it was made earlier than expected. Vietnam was China’s top steel export destination in the year 2024. It accounted for 12.77 million tons or 11.5% of China’s total steel exports, which reached a record high. SOUTH KOREAN The South Korean industry ministry announced last week that it had decided, on a provisional basis, to impose tariffs of up to 38% on Chinese imports of steel plates used in shipbuilding. Last year, China exported 8.19 million tonnes of steel to South Korea, which is the second largest steel market in China. India's steel minister stated earlier this month that it could impose a tax of 15-25% for a limited time on imported steel from China due to the "serious threat" posed by cheap imports. China's steel imports from India reached their highest level in seven years in the first nine-month period of the financial year which began in April. EUROPEAN UNION The European Commission is examining whether it should tighten the current system of import quotas for steel to protect EU producers against Trump's new tariffs.
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Talen Energy announces higher profits for the full year on lower operating and energy costs
Talen Energy, a utility company, reported a higher annual profit Thursday, thanks to lower operating and energy costs. Shares of the company rose 2.6% during extended trading. In 2024, the utility reported operating, maintenance, and development costs of $592 millions, down approximately 8% from a previous year. Energy costs fell by about 8%, to $797 millions. Talen had another opportunity in November to convince regulators that its agreement with Amazon to provide more electricity for a data center located at the nuclear power plant of Talen's utility in Pennsylvania was approved. The Federal Energy Regulatory Commission rejected the agreement that month, which would have increased the capacity of Talen's Susquehanna Plant to 480 Megawatts from its previous 300 Megawatts. They noted that transferring power to a single client could increase power bills and lead to grid reliability issues. Talen of Houston, on the other hand, reported a 17 percent drop in its annual operating revenue, which fell to $2.12 Billion. The company reported an annual net income of $998m attributable stockholders, up by about 63%. (Reporting and editing by Shounak dasgupta in Bengaluru)
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Alberta projects C$5.2-billion budget deficit if Trump tariffs proceed
Alberta, Canada's oil producing province, forecasted a deficit of C$5.2billion ($3.5billion) for fiscal 2025/26 if U.S. Tariffs were implemented. This would result in a decrease of government revenues as well as slowed economic growth. The outlook shows a dramatic change in Alberta's financial health following a budget surplus of C$5,8 billion expected for the current fiscal period. It also illustrates the uncertainty Canadian policymakers face as they deal with the tariff situation. How can you plan a budget with so many unknowns? What will the U.S. President say or not say over the next few days, weeks, and months? Nate Horner, Alberta's finance minister, told reporters. The province's revenue forecast for 2025-2026 was C$74 billion. This is C$6.6 billion less than the C$81 billion third quarter forecast in 2024-25, due largely to lower oil prices and royalty payments. After growing by an estimated 3% in the past year, it said that its Gross Domestic Products growth will slow to 1,8% in 2025, and to 1,7% in 2026. Alberta also said that it forecasts deficits of C$2.4bn and C$2.0bn for fiscal years 2026/27/2027/28. Alberta's annual budget document reflects its expectations of a "moderate" U.S. - Canada trade conflict, which could include tariffs and retaliatory actions. Horner explained that Alberta's budget was based on the analysis that a tariff of 25% would not be sustainable for the U.S. Economy. Instead, the province is looking at a 15% tariff average for the year for most goods, and 10% for oil. He said that Alberta does not know what U.S. president Donald Trump will do, beyond what he's publicly stated. The province makes its "best guess and most reasonable" as to what it faces. Trump has proposed that a 10% tariff be implemented on all U.S. crude oil imports from Canada, and a 25 percent tariff on other Canadian goods starting March 4. Canada responded by announcing that it would impose tariffs of C$155 billion on U.S. products. There has been some confusion regarding the timing and duration of the tariffs. The province warned that if a 25% tax was imposed on all non-oil products, Alberta's revenue loss would be greater and its deficit could reach C$8.7billion in 2025/26. Alberta's budget shows that without tariffs, its deficit would be C$2.9billion. The province's finances are also being affected by lower global oil prices, a dramatic increase in population, and a new tax reduction. Alberta's economy is heavily dependent on oil prices because of its oil sands reserves. Tariffs are expected to widen the discount between Canadian heavy crude and the benchmark West Texas Intermediate crude in the United States. The discount is projected to increase to $17.10 a barrel on average in 2025/26 from $13.20 a barrel in 2024-25. Alberta said, however, that its energy sector was well-positioned to meet this challenge. This is in part because a weaker Canadian Dollar will help cushion the impact of tariffs. Alberta oil is sold in U.S. Dollars, so a weaker Canadian dollar increases the value for Canadian oil producers. The report said that other sectors like agriculture and manufacturing will be more adversely affected by tariffs. Consumers are expected to also be more cautious. Alberta announced that it would double its annual contingency funds from C$2 to C$4 billion. This will give the province more flexibility in dealing with what it calls "increased uncertainty" on the economy. (Reporting and editing by Caroline Stauffer, Marguerita Choy, and Amanda Stephenson)
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Edison International's quarterly cost estimates are higher than expected
Edison International, a U.S. utility company, missed its adjusted profit forecast for the fourth quarter of 2014 on Thursday due to higher costs and interest rate. The cost of maintaining and building critical infrastructure such as electric grids is increased by higher interest rates. Analysts' estimates for adjusted earnings per share of $5.68 were higher than the company's expectation of $6.34. Maria Rigatti, chief financial officer of the TKM Settlement Fund, said in prepared remarks that the new range is 44 cents higher than what was recently approved ($1.6 billion) The TKM settlement is the amount of money the utility can recover from the Thomas Fire, Koenigstein Fire, and Montecito Mudslides in 2017. The company didn't provide a breakdown on its quarterly expenses but it did see a rise of nearly 7% in operating costs from 2023 and an increase of nearly 16% in interest expenses by 2024. The company said it was also still reviewing the fires that occurred in California but, as of 27 February, had not yet determined if its equipment was responsible for the Eaton Fire. Southern California Edison's subsidiary is being sued by multiple parties alleging its equipment was used in the Eaton fire, which was one of the wildfires that spread across Los Angeles late last month. The Eaton Fire scorched approximately 14,000 acres and destroyed over 9,400 structures. It killed 17 people. The damage caused by the fire is estimated to cost $22 billion, before discounts or settlements. The lawsuits claim that Edison failed to maintain its transmission and delivery lines and seek damages, including for lost wages, costs of rebuilding, and other claims. The Rosemead-based California company reported that, excluding adjustments and other costs, it had a profit per share of $1.05, which was lower than the $1.09 estimated by analysts polled at LSEG. (Reporting from Seher Dareen in Bengaluru and Vallari Srivastava; Editing by Mohammed Safi Shamsi).
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Arcadium Lithium, the target of Rio Tinto's purchase, posts a loss due to falling lithium prices
Arcadium Lithium reported a loss for the fourth quarter of 2018 on Thursday due to low lithium prices, which are used in electric vehicle batteries. After a glut of supply and a softer adoption rate for EVs, lithium prices have fallen more than 80% since their peak in November 2022. Rio Tinto has agreed to buy Arcadium, and shareholders have approved the sale. The transaction is expected to be completed by March 6. Rio Tinto intends to create a separate lithium division once it has completed the $6.7 billion purchase. The new business will take control of Rio’s $2.5 billion Rincon lithium project in Argentina, but not the controversial Jadar project in Serbia. Arcadium Lithium posted a quarterly net loss of $14.20 million or 1 cent per share. This compares to a quarter-ago net income of 37.7 million or 9 cents per shares. The quarter's revenue was $289.06 million, which is higher than the estimates of $269.06 millions. It reported revenues of $1 billion for the entire year. This compares to $885 million around 2023. Analysts had predicted a full-year revenue level of $986.6 millions. In 2024, the volume of lithium hydroxide and carbonate sold was slightly lower than a year ago, as spodumene production at Mt. Cattlin, Western Australia. Arcadium announced last year that it would place its Mt. Cattlin will be put into care and maintenance at the end of the second half of 2025, due to the price decline. According to LSEG, the Philadelphia-based firm reported adjusted earnings per common share of one cent. This is in line with analyst expectations. (Reporting from Seher Dareen, Bengaluru. Editing by Krishna Chandra Eluri.)
Wall Street shares mixed as European stocks rattled by tariff risk
The major Wall Street indexes were mixed Thursday, as new U.S. economic data hurt sentiment. European stock markets also fell after U.S. president Donald Trump threatened to impose tariffs of 25% on imports coming from the region.
Data showing that the number of jobless claims was 242,000, compared to estimates of 221,000, dampened some risk-taking.
As supply concerns returned, oil prices rose over 2%. Trump revoked Chevron's license to operate in Venezuela.
The MSCI index of global stocks fell by 0.44%, and the euro weakened. The benchmark yields on U.S. Treasury bonds rose following the U.S. economic data.
The Dow Jones Industrial Average fell 194.94 points or 0.45% to 43,628.06, while the S&P 500 dropped 13.49 points or 0.23% to 5,942.52; and the Nasdaq Composite declined 169.15 or 0.89% to 18,906.11.
Investors focused on signs that AI spending is increasing in the industry as they sold shares of Nvidia after it reported its earnings late Wednesday.
Trump caused confusion on Wednesday by announcing that the duties would go into effect on April 2 - a month later than originally planned.
A White House official said that the March 4, 2014 deadline for levies was still in effect, "as of now", causing further confusion about U.S. Trade Policy.
Trump has also proposed a "reciprocal tariff" of 25% on European cars and goods.
The STOXX 600 closed down 0.5% after reaching a record high Wednesday. Automaker and component maker stocks weighed down the index in response to potential tariffs.
Michael Brown, Senior Research Strategist at Pepperstone, said: "We are almost in a position where there is too much news, leaving traders paralysed. They don't know which to focus on and, especially with Trump, they do not know what is a negotiation gambit or a serious policy proposition."
It makes sense to reduce the risk of assets, especially those with higher risks, given the level of uncertainty.
According to a poll, the ECB is expected to cut its deposit rate to 2.5% again next week.
The yield on the benchmark 10-year U.S. notes increased 4.9 basis points, to 4.298%.
The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve rose by 2 basis points, to 4.092%.
Emerging Market Stocks fell by 1.05%, to 1,123.50.
US GROWTH JITTERS
Dollar index (which measures the greenback versus a basket including the yen, euro and yen) rose by 0.69%.
The Federal Reserve is expected to reduce interest rates by two quarter points this year. The first reduction will likely occur in July.
On Friday, the Personal Consumption Expenditure Index (PCE), which is preferred by the Fed as an inflation indicator, will be released.
"Markets have started to lose confidence in U.S. economic growth," Shoki Omori said, chief global desk Strategist at Mizuho Securities. Nvidia's shares fell over 4%, despite the fact that the U.S. chipmaker gave a positive growth forecast for the quarter.
Bitcoin, the cryptocurrency, fell by 0.31% at $84,191.44, after a drop of nearly 12% in the first three days this week.
In a client note, Standard Chartered's global head of digital asset research, Geoff Kendrick warned clients not to buy the dip yet.
He said, "Stay Patient." "These losses are rarely good and I think that the biggest capitulation will still be coming."
A stronger dollar pushed spot gold to a new two-week low. U.S. Gold Futures ended 1.2% lower, at $2.895.9.
(source: Reuters)