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European steelmakers warn of trade and pricing risks despite strong quarterly earnings
The top European steelmakers' first-quarter earnings were better than expected, but they warned that trade tensions around the world, low European prices, and market volatility will cloud the outlook for the remainder of the year. ArcelorMittal, which reported on Wednesday a smaller-than-expected drop in its quarterly core profit, flagged trade disruptions as a risk to its 2025 steel demand forecasts, particularly in the U.S. and China, sending its shares down more than 5%. Aditya Mittal, CEO of world's second largest steelmaker Aditya Mittal, said that increased uncertainty over global trade terms is damaging business confidence. If not resolved quickly, it could cause further economic disruption. SSAB, which also reported a smaller-than-expected drop in earnings on Tuesday, said the proximity of its facilities to customers, and specialised products helped cushion the immediate impact of new U.S. tariffs, but warned of a "more uncertain than usual" second-quarter outlook in its steel division. Aperam, a steel company based in Luxembourg, also reported results slightly above expectations Wednesday. It attributed this to the higher volumes it saw in Europe as well as the consolidation of the U.S. business. Aperam is a manufacturer of stainless steels and specialty alloys. It operates mostly in Brazil and the EU, with limited exposure to the U.S. The group warned of further pricing pressures on earnings for the second quarter. However, it is expected to improve in comparison with the performance from the previous three-month period. Its shares fell in the early trading after it admitted that it is difficult to give a forecast for future quarters. Timoteo Di Maulo, group CEO, said that it was difficult to make reliable projections in this volatile environment. Maxime Kogge is an Oddo-BHF Analyst. He believes that the second quarter will bring relief, as trade restrictions are expected to increase prices. European players may also reduce their exposure to China and restructure efforts could pay off. The European steel industry is facing a combination of high energy prices, cheap Chinese producers, and higher tariffs for exports to the United States at a time where the global market is already struggling with excess capacity. The Organisation for Economic Co-operation and Development (OECD) said earlier this month that "the global steel excess capacity will continue to rise, (...) fueled by cross-border investment by Chinese steel firms." ArcelorMittal's assessment of the Asian market was mixed. It expects that the strong demand in India will continue, supported by the new Indian safeguard duty of 12% on steel imports from China. The group believes that in China, overcapacity will continue to result in low steel spreads, which is the difference between the price of steel and the cost to produce it. ArcelorMittal, despite its cautious tone in its statement, reaffirmed their 2025 investment plans and noted that European steel spreads were rebounding, supported by the European Commission’s Steel and Metals Action Plan. They also noted trade barriers against imported goods and an anticipated rise in Germany’s infrastructure spending. On May 8, Outokumpu Oyj, a Finnish steel company, and Acerinox, a Spanish steel company will report their first quarter results.
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U.S. stocks and global stock prices fall on the back of GDP decline and crude price drop
Wall Street stocks plunged sharply, pulling down their European counterparts as well, due to a waning investor appetite for risk following a disappointing U.S. economic report, a series of disappointing data, and mixed earnings results. The benchmark Treasury yields in the United States are headed to their seventh consecutive session of declines due to no progress being made on tariff negotiations. The dollar grew and crude oil prices fell. The Nasdaq, which is dominated by tech stocks, was the worst performing of the three major U.S. indexes. All three U.S. indexes of stocks were headed for their third consecutive monthly loss on the last day in April. The first three months in 2025 saw a contraction of the U.S. Gross Domestic Product (GDP). U.S. president Donald Trump blamed Joe Biden, his Democratic predecessor and said that his tariffs will eventually lead to a booming economic. Peter Cardillo is the Chief Market Economist of Spartan Capital Securities, based in New York. He blamed Trump. Cardillo stated that Trump's policies were responsible for the numbers. "They have created uncertainty. When you create uncertainty, no one will put their foot down on the accelerator." Cardillo said that they are seeing it as earnings come in. "Guidance is being withdrawn." The ongoing multi-fronted trade war has continued to cloud the U.S. earnings season. Companies are increasingly reducing or pulling back their guidance because of the fog of uncertainty surrounding tariffs. Wall Street pared its losses following the release of positive economic indicators. Personal Consumption Expenditures (PCE) price index unchanged on a monthly basis and stronger-than-expected consumer spending. Meta Platforms, Microsoft and other members of the "Magnificent 7" group of companies that are involved in artificial intelligence, will report their results after the bell. Positive results could reverse Wednesday's decline. Jay Hatfield is the portfolio manager of InfraCap, a New York-based company. He said, "We believe it's irrational that people sell tech stocks so hard, especially when we have big kahunas to report." If we made this call today, we would be explaining why the market is up 2%. The Dow Jones Industrial Average dropped 466.73, or 1.15 %, to 40 061.02, while the S&P 500 declined 83.29, or 1.50% to 5,477.54, and the Nasdaq Composite was down 343.74, or 1.97% to 17,117.58. The U.S. GDP data has caused European stocks to erase their previous gains. The MSCI index of global stocks fell by 8.10 points or 0.97% to 823.21. The pan-European STOXX 600 fell by 0.12% while Europe's FTSEurofirst 300 fell by 3.70 points or 0.18%. Emerging market stocks increased 4.65 points or 0.42% to 1,110.64. MSCI's broadest Asia-Pacific share index outside Japan closed up by 0.78% to 580.07 while Japan's Nikkei gained 205.39, or 0.57% to 36,045.38. The dollar's gains were maintained after a series of mixed economic data from the United States. The dollar index (which measures the greenback versus a basket including the yen, the euro and other currencies) rose by 0.26%, to 99.42. Meanwhile, the euro fell 0.19%, to $1.1363. The dollar gained 0.3% against the Japanese yen to reach 142.75. The sterling fell 0.5% to $1.339. The Mexican peso fell 0.35% against the dollar to 19.626. The Canadian dollar rose 0.08% against the greenback, to C$1.38. The yield on the benchmark U.S. 10 year notes dropped 1 basis point from late Tuesday to 4,164%. The 30-year bond rate rose by 1.5 basis points, from 4.648% to 4.6626% late Tuesday. The yield on the 2-year bond, which is usually in line with expectations of interest rates for the Federal Reserve (Federal Reserve), fell by 4.5 basis points, to 3.613% from 3.658% at late Tuesday. Trump's trade conflict has eroded demand prospects, causing oil prices to fall further. This is their biggest drop in almost 3-1/2 years. U.S. crude dropped 1.89%, to $59.30 per barrel. Brent was down to $63.22 a barrel on the same day. The dollar's strength has led to a decline in gold prices. Spot gold dropped 0.39% to $3302.72 per ounce. U.S. Gold Futures dropped 0.66% to an ounce of $3,297.00.
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Gold prices fall on hopes of rate cuts after weaker US data
Gold prices recovered some of their losses on Wednesday, as the bets that U.S. Federal Reserve would cut rates increased after weaker than expected first quarter U.S. economic growth. At 10:57 am, spot gold fell 0.2% to $3,308.52 per ounce. ET (1457 GMT). Bullion fell over 1% in the morning session but is on track to record its fourth consecutive month of gains, with a 6% increase so far in April. U.S. Gold Futures dropped 0.5% to $3318.50. The data showed that the U.S. Gross Domestic Product contracted by 0.3% on an annualized basis last quarter as businesses imported goods in anticipation of tariffs expected from the Trump Administration. Gold is still in a bullish market, and the data released today suggests that initial Fed rate reductions will be easier, which should benefit gold, said Tai Wong. An independent metals trader added that given gold's recent sharp rise to $3,500, it may continue to trade sideways. The Fed will resume cutting rates if it sees clear signs of an economy in decline by June. This could be by as much as a whole percentage point at the end of the calendar year, traders predicted on Wednesday. Low interest rates are also conducive to the growth of non-yielding gold bullion as a hedge against financial and political turmoil. Last April 22, it reached a record-high of $3,500.05 an ounce. The U.S. Personal Consumption Expenditures (PCE) Price Index was unchanged in march after increasing by 0.4% in the previous month. The quarterly PCE, excluding volatile components such as food and energy, grew at a rate of 3.5%. This is a significant increase from the 2.6% growth in October-December. Wong said that gold has largely shrugged off the lowest reading in core PCE in the past pandemic, due to the sharp rally it experienced earlier, following the unexpected contraction of U.S. Gross Domestic Product. The biggest data on jobs this week is the U.S. monthly employment report, due on Friday. This could provide more insight into the Fed's outlook for interest rates. China's markets are closed for the Labour Day holiday from May 1-5. Silver spot fell 0.9%, to $32.68 per ounce. Platinum dropped 1.1% to $866.74. Palladium slipped 0.1% to $933.50. (Reporting by Anjana Anil in Bengaluru; Editing by Sahal Muhammed)
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Record gold prices dampen demand during Indian festival
The gold demand was lower than usual on Wednesday, during an Indian festival where buying gold is considered auspicious. Retail consumers reduced purchases due to the record-high price rally. Indians celebrated Akshaya Tiritiya, which is the second largest gold-buying holiday after Dhanteras. Surendra Mehta is the secretary of the India Bullion and Jewellers Association. Mehta stated that big retail chains were doing better than small retailers because they were offering discounts for jewellery-making charges. Near-record prices were stretching consumers' budgets. The domestic gold price hit a new record of 99,358 Rupees per gram this month. On Wednesday, it was around 95,000 Rupees, almost 30% higher than the previous Akshaya Tithi festival. Saurabh Gadgil said that despite record high gold prices, consumers are still positive. Many people exchange old jewellery for new pieces to help manage their budgets for weddings and festivals, he added. On Wednesday, Indian dealers offered a discount Up to $20 per ounce above official domestic prices. This includes 6% import duties and 3% sales taxes. Sachin Jain CEO of World Gold Council India operations said that the gold demand during Akshaya Tritiya could have been lower in volume, but the value could be the same, or even slightly higher, he added. Retailers, big and small, offered discounts on the cost of jewellery to attract retail buyers. A jeweller in Hyderabad said that many people still prefer to invest their money by buying coins and bars. "Demand is lower than normal, but better than expected by the industry." Mehta of IBJA said that despite record-high prices retail sales did not suffer. (Reporting and editing by Ed Osmond, Rajendra Jadhav)
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London Metal Exchange increases fees after scrapping OTC trading plan
The London Metal Exchange has decided to increase fees for contracts using LME prices instead of requiring that private bilateral deals be traded between members and their clients on its platform. Sources in the industry said that members of the LME had complained that the plan was too expensive and that COMEX, for example, does not require this requirement. In a whitepaper published last year, the exchange first proposed its plans to force members to conduct private transactions, also known as OTC trades, through its electronic trading platform Select. The revised plans will be subject to a consultation until the 13th of June, and include hedged LME contracts for Select. If market monitoring shows that controls on the exchange are encouraging more OTC trading, then LME will move forward with its original proposal. The LME said that it would double the fees for OTC trades, which are not exchange-related. This was announced in a press release issued by the exchange on Wednesday. The fee for using LME rates in OTC contracts is $2.36 per lots. This would be about 10 U.S. dollars per ton for copper, where one lot equals 25 metric tonnes. Since publication of the paper, the LME owned by Hong Kong Exchanges and Clearing has spoken to its members and to the metals market as a whole about its plans to increase transparency and liquidity. Matthew Chamberlain, Chief Executive Officer of LME, said: "We have carefully listened to these views. They have allowed us to refine certain elements in order to better meet the different needs of different segments of the market." Earlier in the year, it was reported that the Futures Industry Association and the Association for Financial Markets in Europe sent a letter together to the LME expressing their members' concerns over these proposals. The LME has tried to address the concerns of its members about the hedging of LME contracts and block trades up to 10 lots, for the most liquid contracts. This includes the benchmarks for three months. The report said that "the feedback received suggested there should be differentiation between different metals." The LME analyzed factors like bid/ask, the size of the trade book, the average size, and notional size. The LME proposes 15 lots, or 375 tonnes, for aluminium; 10 lots, or 250 tonnes, for copper, lead, zinc, and other metals; and 5 tons, or 30 tons, for nickel. Plans also include expanding the definitions of short-dated carry-trades from 15 to 60 days as long as contracts to buy or sell are within 15-days of each other. This can save money for buyers and sellers on the physical market who want to change delivery dates. Reporting by Pratima Dasai and Eric Onstad, Editing by Jan Harvey & Freya Whitworth
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Czech Government to Take Majority in Nuclear Power Project worth $18 Bln
The Czech government has agreed to an updated model of financing for the construction of two new nuclear units. It will also take a major stake in this project, worth at least 18 billion dollars, from CEZ, according to Prime Minister Petr Filia. This will relieve CEZ of some of its financial burden. CEZ is owned 70% by the Czech state. The remaining 30% shares are free to float at the Prague Stock Exchange. CEZ agreed to build a new reactor in its Dukovany plant using state loans and guaranteed financing. However, it sought another solution when the government increased the project from one to two units. It said it couldn't afford to take on such a large amount of debt. The financing model was a major obstacle to a deal being reached with South Korea's Korea Hydro & Nuclear Power, a subsidiary of Korean utility KEPCO. This company was selected last year to construct the plant. Fiala announced that contracts with South Korea's KHNP will be signed on May 7th. Zbynek Stanjura, Finance Minister, said that the government will provide loans to finance the new units. After signing contracts with the European Union, the government will apply for approval. (Reporting and editing by Jason Hovet, Jan Lopatka)
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Spain's grid denies that solar is to blame as a blackout blame game explodes
Spain's grid operator denied Wednesday that solar power was responsible for the country's biggest blackout. Prime Minister Pedro Sanchez, however, came under increasing pressure from his critics to explain what went awry. After a power failure that caused trains to stop, airports to close, and people trapped in lifts, Sanchez’s opponents blamed low investments in a system which increasingly relies upon intermittent solar and wind energy. Sanchez announced an investigation by the government and stated that he wanted answers from private companies who feed electricity into the grid. He said that he had not ruled out the possibility of a cyber-attack, although REE, a grid operator owned in part by the state has dismissed this. The political fallout of deadly floods that struck the East and South of Spain, killing more than 220 people, is still a problem for Spain's authorities. REE (headed by former Socialist Minister Beatriz Corredor) has pinpointed the cause of the outage as two separate incidents in substations located in southwest Spain. However, it says that the exact location of these incidents is still unknown and it is still too early to determine what caused them. Corredor, in an interview with Cadena SER radio on Wednesday, said that it was incorrect to blame the outage of Spain's high renewable energy share. She said that "these technologies are already stable, and they have systems which allow them to function as a conventional generator system without any safety concerns," adding that she did not consider resigning. According to REE data, just before the system collapsed, solar energy was responsible for 53%, wind power for 11%, and nuclear and natural gas for 15%. Energy Minister Sara Aagesen stated that the government gave power companies until late Wednesday to submit data on "every millisecond of those five seconds", when on Monday the system lost 15GW, which is equivalent to 60% demand. This led to a disconnect from the rest Europe. MALFUNCTIONING REE Political opponents claimed that Sanchez took too long to explain the power blackout and that he was trying to cover up REE's failures. In an interview with RTVE, Miguel Tellado said that since REE had ruled out a cyber-attack, the only thing we could point to is the dysfunction of REE. The company has state funding and its leaders are therefore appointed by the government. Sanchez's announcement of a government investigation was rejected by Sanchez, who called for an independent investigation conducted by the Spanish parliament. The Spanish government has said that it asked for the "maximum transparency and collaboration" from private energy companies to identify the cause of this outage. Ignacio Sanchez Galan said that REE should explain the cause of the blackout. The company's operations are not to blame, he added. Antonio Turiel, a Spanish National Research Council energy expert, told Onda Vasca, a radio station owned by the Spanish government, on Tuesday, that the fundamental issue was grid instability. He said that "a lot of renewable energy was integrated without the responsive stabilisation system that should have existed", adding that vulnerabilities were caused by "the unplanned, haphazard integration" of a variety of renewable systems. The government is expecting private and public investments of 52 billion euro through 2030 for upgrading the power grid to handle the surge in demand due to data centres and electric cars. Aelec, a utility lobby, said this was not enough. Jordi Sévilla, chair of REE until 2020, wrote an opinion piece for Cinco Dias that the government is moving too quickly to decommission the nuclear power plants, which can provide stable production to offset the peaks in intermittent renewable energy. He said that the government's plan to invest in the grid was "planned from a desk, with too many renewable messianisms and a deaf eye towards the technical issues associated with such a significant change in Spain's mix of energy." Reporting by David Latona in Madrid, Pietro Lombardi in Barcelona and Aislinn Laing; Writing by Charlie Devereux and Editing by Peter Graff & Barbara lewis
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Public Service Enterprises report higher profits on colder weather
Public Service Enterprise Group, an electric and gas utility, reported a higher profit in the first quarter on Wednesday. The colder weather during winter boosted demand for heating. Ralph LaRossa, the CEO of the New Jersey-based company, said that cold spells caused the winter peak demand to be the highest in six years. PSE&G's electricity distribution and natural gas segment of Public Service Enterprise posted an operating revenue increase of 14.2% during the first three months, partly due to new transmission rates. PSE&G has experienced a quarterly increase in the number of large load requests for new service connections. As of March 31st, this pipeline had a total capacity of over 6,400 MW. The company's operating revenue increased to $3.2 billion for the three-month period ended March 31, up from $2.8 billion one year earlier. In February, the U.S. Energy Information Administration predicted that power demand would reach record levels in 2025 and in 2026 as a result of a surge in energy usage in AI data centres and increased domestic production. Utility's net income for the first quarter rose from $532 to $589, or $1.18 a share. Interest expenses rose by 17.6%, to $241 millions, during the third quarter. Total operating expenses increased by nearly 17%, to $2.43 Billion. Public Service Enterprise offers electric and gas service to approximately 4.3 million New Jersey customers. PSEG Power, a division of Public Service Enterprise Group, also operates nuclear power plants. According to LSEG, the company reported a quarterly profit of adjusted $1.43 per common share. This was below analysts' expectations of $1.44, which were based on average estimates. (Reporting and editing by Shreya Biwas in Bengaluru, Katha Kalia in Bengaluru)
Oil price outlook dims due to tariffs and potential OPEC+ production boost
An oil price poll on Wednesday showed that OPEC+’s decision to reduce supplies and a demand outlook clouded with trade disputes between China and the U.S. will have a negative impact on prices in 2018.
In April, a survey of 40 analysts and economists projected that Brent crude would average $68.98 per barrel in 2025. This is down from the estimate of $72.94 in March. U.S. crude oil is forecast to average $65.08 a barrel, down from last month's $69.16 estimate.
Ole Hansen is the head of commodity strategy for Saxo Bank. He said that crude oil would be caught in a dilemma between fears about a slowing economy and an increase in OPEC+ production, on one hand, and support due to sanctions and low prices that could hurt production growth by high-cost producers.
The U.S. has announced a series of tariffs that are tit for tat. This has dampened global economic growth. Oil prices fell to their lowest level in four years earlier this month due to concerns over tariffs.
The International Energy Agency (IEA) lowered its forecast for demand growth to 730,000 barrels a day this month. The Organization of the Petroleum Exporting Countries, or OPEC, also lowered its forecast growth this month. Now, they expect growth of 1.3 millions barrels a day by 2025.
Analysts said that if the OPEC+ plan to increase supply is carried out as planned, it will have a negative impact on oil prices. Sources say that several members of the group will propose to the group at its meeting on May 5 that it accelerates oil production increases in June for the second consecutive month.
Some analysts say that further OPEC+ increases may not occur.
Florian Grunberger is a senior analyst at Kpler. He said that while the medium-sour crude oil market in general remains tight, OPEC+'s production cuts, including revised compensation plans, are unlikely to be completed as planned by 2025 due to mounting risks for demand.
HSBC stated in a note dated April 15, that lower oil prices would slow the growth of supply, but with a delay. The first to respond will be U.S. shale.
"With average half-cycle breaksevens at $60 per barrel, it is inevitable that oil prices will continue to rise if they remain at the current levels of $65 a barrel Brent/lower $60s a barrel WTI ..."
(source: Reuters)